How to select the best electricity tariff for your home in 2024

How to select the best electricity tariff for your home in 2024
24 January

In the last couple of years, one of the most recurring issues of concern in our country and in nearby nations has been the energy issue, driven by the constant increases in this energy sector due to various reasons.

This situation has motivated many users to inquire more about the energy market, in order to better understand the options available for supply. Due to this growing concern, in this text we will focus on explaining the differences between the two types of markets available for electricity contracting: the free market and the regulated market.

When a user is faced with the need to formalize an electricity contract for his residence, it is essential to take into consideration the specific energy demands of his home. This is because, depending on the particular needs, it may be more convenient to opt for one or the other market.

Regulated electricity market, what conditions does it offer?

Electricity contracts signed under the conditions of the regulated electricity market can only be formalized with a reduced set of marketing companies, known as reference marketers.

These companies do not have the freedom to choose the contractual conditions they offer to users, since they all offer their customers the same conditions, offering only the so-called PVPC (Voluntary Price for the Small Consumer) tariff, in which the State unilaterally establishes the price of energy.

This tariff is characterized by having different electricity schedules, so that energy does not have the same cost depending on the time it is consumed, establishing three different price brackets each day: the valley, the flat bracket and the peak bracket.

Having a contract included in the regulated market makes it possible to know the price of electricity tomorrow, since each day, from 8:15 p.m. onwards, the energy prices for the following day are published hour by hour, so that it is possible to know how much consumption will cost in advance.

The reference marketers, designated for this select group of companies, are not authorized to include mandatory permanence clauses, nor can they apply promotions or discounts. In addition, a maximum contracted power limit of 10 kW is established for users, which may not be exceeded under any circumstances.

Despite these restrictions, users with contracts under these conditions can access the benefits provided by the bono social eléctrico. This bonus constitutes an aid for the payment of bills intended for the most vulnerable consumers, as long as they comply with the requirements established in the application.

Free electricity market, what conditions does it offer?

Contracts formalized under the conditions of the free electricity market can be established with a large group of electricity companies. This market is home to numerous companies that offer their services under their own contractual conditions, with the aim of attracting their target public.

Companies operating in this free market have the ability to present their potential customers with a variety of prices, promotions and discounts, competing with each other to offer the most attractive contractual conditions to users.

Consumers who choose to enter into contracts in this market are free to select the power they consider necessary for their homes, without restrictions. However, it is important to note that contracts established in this market are not eligible to receive the state aid known as bono social eléctrico.

Which of the two markets is more attractive to contract?

When signing an electricity contract, it is crucial to analyze the current trend in electricity prices before deciding on a particular market. The choice between the regulated market and the free market will depend to a large extent on fluctuations in the wholesale electricity markets.

When electricity prices show an upward trend, i.e. an increase in energy costs, the free market usually offers more favorable conditions compared to the regulated market. In these circumstances, opting for the free market becomes the optimal choice for contracting.

On the other hand, if at the time of activating the supply the trend in electricity prices is downward, it is likely that the conditions of the regulated market will outperform most of the options offered in the free market. This is because prices in the regulated market are at a lower point compared to those in the free market. 

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