why we are all paying the gas cap

The gas cap was a relief to PVPC customers. The measure of setting a maximum for the price of gas has had a beneficial effect for whom their electricity rate depends on the daily price. But this measure, now it wants to be implemented throughout the European Union, has its fine print. Implications that affect all consumers; also to those on the free market that had a price already agreed with the marketers for the kilowatt hour.

The cap on gas is not free. Limiting the price of gas to €40/MWh is not as simple as forcing gas companies to apply it. To compensate these companies, the measure is accompanied by compensation. In other words, they are paid the difference between the real price of gas and those €40/MWh.

What benefit does it have then? The gas cap target is to prevent the price of gas from being transferred to the rest of the energies due to marginalist system, but if the gas itself has a skyrocketing price, that continues to affect the energy market. If it weren’t for this compensation, gas companies wouldn’t pay to produce it and many would directly choose not to do so. Which in practice would mean running out of power at specific times.

This gas compensation was seen by PVPC customers From the first momentbut now we see that free market customers are not exempt either.

With the renewal of the electricity contract come surprises. The decree of the cap on gas entered into force on April 26, although it began to be applied from June 15. Now the situation is taking place that this compensation is also being applied to free market clients who are renewing their contract. In other words, if you had a contracted rate before April 26, at the time the periodic renewal touches, the compensation for the cap will be added to the price of gas.

Invoice Compensation

The compensation to the top of the gas can suppose an increase of more than 20 euros, in invoices that did not reach 50 euros.

A scare of up to 40%. The rise in the bill is considerable. According to clients consulted by Xataka, their rate has increased by almost 40% due to the addition of the cap to the price of gas. In the case of Iberdrola, bills that were around 45 euros have increased to almost 70 euros per month, with equivalent consumption.

From paying about 21 cents per kilowatt hour, the consulted user explains that now he pays about 34 cents per kilowatt hour, if we count the amount of the gas cap. In other words, despite the fact that the cap itself has contributed to lowering the cost of a kilowatt hour in the wholesale market, in practice its implementation implies paying a significant extra. A compensation that is not only paid by PVPC customers linked to the wholesale market, but also by all consumers.

The measure was created with all customers in mind. “The effect will be immediate for consumers with a PVPC rate and progressive for the rest, which will be incorporated into the mechanism as their contracts are updated, renewed or changed,” explained Teresa Ribera, Minister for Ecological Transition.

The gas cap mechanism has ended up spreading the impact of high gas prices to all consumers. The customers with the PVPC rate were the first to see it, but the companies have decided to extend this compensation to all customers in order to be able to face the payments they must make to the gas companies.

This surcharge is already explained in all new rates. Customers who have seen your renewal will have been surprised, but new customers should be well informed. Companies like Iberdrola with its Stable plan either Endesa with its One Luz rate They already inform that the regulated cost of financing must be added to the marked prices to the top of the gas, which can lead to additional costs to the bill.

In other words, if we change companies, we must be aware that a gas cap will also be added, which can represent a very important percentage of the final price.

There is not much escape. The measure is approved until next May 2023. If you have contracted an electricity rate and it has to be renewed before this date, you will begin to be charged compensation for the gas cap. The few users who will not be affected by this additional amount will be those who have an old contract and its validity extends for several years. It is recommended to be aware of any changes that the electric company seeks to implement.

Unfortunately for the pockets of Spanish customers, there is no easy solution. Gas conditions the entire electricity market and although the cap on gas has been an emergency patch to curb the price of a kilowatt hour, the high prices of energy and gas ultimately mean that energy companies end up deriving this compensation to all their customers.

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