The month of January will begin this year with an additional cost on the electricity bill. The sharp reduction in the cost of the megawatt hour (MWh) recorded this December comes to an end and financial analysts expect that in the coming weeks it will recover the level of 44 euros. This will mean a 10% increase in the domestic electricity bill with respect to the bill for the last month of the year, when the storms that hit Spain contributed with water and wind to sink the price of light to its lowest level since May of 2016.

This carousel on the electricity bill affects 38% of households in Spain that have contracted the Voluntary Price for the Small Consumer (PVPC) - the old regulated rate - or a contract in the free market with an electricity indexed at the wholesale price. The rest of the consumers usually pay a fixed kilowatt price that this year has been above the market itself, as can be seen from the rate comparator published by the National Commission for Markets and Competition (CNMC).

The origin of these ups and downs lies primarily in meteorology. If it rains and is windy, renewable energy takes control of the market and produces a reduction in the price of electricity due to its lower cost. In the month of December, for example, only wind turbines covered in some day more than half of the country's energy demand. The result was that on December 21 and 22 the price of one megawatt hour was around 2 euros, while on the same days last year it exceeded 64.

To the part of the receipt linked to the cost of energy are added the ones known as tolls, which represent another 40% of the domestic bill and are aimed at financing the regulated costs of the electrical system. This includes the items of 7,000 million euros charged by electricity for transport and distribution networks, premiums for another 7,000 million for renewable energy installed in the first decade of the century or, among other items, system aid extrapeninsular to compensate for the higher cost of electricity in the Canary Islands or the Balearic Islands. In total, 17,704 million euros per year.

This cost will remain frozen for the sixth consecutive year from next January 1, so you can not cushion the expected rise of the other half of the bill. The regulated part of the receipt is jointly designed by the CNMC and the Ministry of Ecological Transition after years of strong discrepancies. The body that directs José María Marín Quemada designed a draft that included a reduction of the domestic invoice close to 2% from January, but this is still pending after being sent to the State Council. For its part, the ministry has not processed its share of tolls, which has prevented it from lowering the receipt.

With the regulated part and the taxes frozen, the cost of electricity is in the hands of energy price fluctuations. 2019 has been a fairly favorable year with a cost of electricity of 47 euros per MWh. This supposes a reduction of 16.5% with respect to the previous year, which translates into a reduction close to 6% of the domestic receipt - since the energy represents just over a third of the final cost - and even greater for companies and industry where tolls are lower.

The last month of the year has been especially favorable in terms of energy prices with a cost of megawatt hour of 33.8 euros, an unknown level since May 2016. But this beneficial ramp comes to an end and is on its way of becoming a suffered cost. The electric futures markets that are traded in the Omip market anticipate again a cost of 43.25 euros for January and 47 euros for the whole of 2020. On the other hand, the price of electric futures in the market of BME is somewhat higher for the month of January (44 euros) and coincides at 47 euros for the whole of next year. That is, the light will rise in the coming weeks but will remain at a stable level compared to 2019 during the remainder of the exercise.

Despite the reduction, Spain has remained in 2019 in the list of European countries with the most expensive price of electricity for homes. The price of one kilowatt hour amounted in June - last available data - to 24 cents including taxes, only exceeded by the records of Germany, Denmark, Belgium and Ireland and 11% more expensive than in the rest of the European Union. For an average annual consumption of 3,500 kilowatt hours, the annual bill would be around 840 euros. On the other hand, business and industrial consumers enjoyed in the first half of the year a price below the Community average, according to Eurostat.

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