The electric blackout that affected Portugal, Spain and part of Western Europe in late April raised doubts among consumers about the impact on electricity invoice. With the electrical system under pressure and the prices of the gross market oscillate, many wonders if they will pay more at the end of the month.
According to the Energy Services Regulatory Entity (ERSE), it all depends on the type of contract that each consumer has with their power supplier. The essential question is whether the price of electricity is indexed to the daily market or has been agreed as fixed.
Clients with fixed fare should not feel changes
According to the same source, consumers with fixed price contracts should not see significant changes in the invoice.
In these cases, the variation of the gross price has a limited or null impact, since the trader has already bought the energy it provides in advance.
ERSE clarifies that many companies in the sector use time market approval strategies, which allows stable prices, regardless of daily market fluctuations.
Indexed contracts exposed to variation
On the other hand, consumers with indexed rates to the daily market may feel an increase in the invoice. As the regulator explains to Newsthis type of contracts exposes the client to the evolution of the time price practiced in the gross market, which suffered sharp fluctuations after the blackout.
It refers to the same source that “these impacts are a consequence of the option of this type of contract”, noting that indexed offers are not majority in the residential market, but require greater financial literacy from consumers.
GROUND MARKET AND PRICE DEFINITION FACTORS
The definition of prices in the gross market depends on the relationship between supply and search every hour of the day. It writes to ERSE that this balance is affected by the exchanges of electricity between European electrical systems and the operational decisions of transport network managers.
Generalized supply cut on April 28 impacted this balance and contributed to pricing volatility. Still, this fluctuation is not automatically reflected on consumer invoices with fixed contracts.
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System stabilization mechanisms
ERSE points out that the Portuguese system has mechanisms to mitigate market oscillations. Among them is the purchase of renewable energy at a guaranteed price, which acts as an automatic cost stabilizer.
According to the same source, renewable production time sales auctions were also resumed.
In the latest, held on March 25, virtually all energy was sold at about 40 euros by Megawatt-Hora, a value considered stable and beneficial for traders and, ultimately, for consumers.
Volatility is not new in the electricity sector
Remember that this volatility is not unprecedented. By way of example, it indicates that in the two-day space, between April 30 and May 2, 2024, the average price per megawatt-hour ranged from 53 euros to 15.60 euros, both in Portugal and Spain.
This type of variations was already part of the market dynamics long before blackout, and consumers with indexed contracts should be prepared for these fluctuations.
Blackout will be investigated at European level
The blackout of April 28 originated in a widespread cut in electric supply, which affected not only mainland Portugal but also Spain, Andorra and part of France. Failures were recorded at airports, traffic congestion and difficulties in fuel supply.
The European network of electricity transport network managers has already announced the creation of an investigation committee to investigate the causes of the incident, which has classified as “exceptional and serious.”
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