Millions of households face runaway gas bill hikes

The rise in the price of electricity has focused the attention of Spanish society for more than a year.

27 August 2022 Saturday 16:43
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Millions of households face runaway gas bill hikes

The rise in the price of electricity has focused the attention of Spanish society for more than a year. But in parallel, another essential supply for millions of homes has become more expensive at the same speed: natural gas.

The price that many consumers now pay to heat running water, heating or, to a lesser extent, cook is notably higher than that of months ago. Not in vain, gas has been the main responsible for the increase in the electricity bill, hence the Government has capped the cost of this raw material for electricity generation. The increase in the cost of natural gas bill has been less noisy, but equally unstoppable.

The around 6.4 million households with gas bills on the free market – energy companies set their prices – are receiving the updates as their annual contracts expire. Reviews are carried out every year and a large part of these are concentrated in the second semester. Business sources in the energy sector confirm that companies are reviewing rates upwards, with increases in the price per kilowatt hour of up to 50% and 100% and, in some cases, 200%, depending on the company and the client.

This newspaper has contacted some of the main energy groups in Spain, which have admitted price increases in reviews of annual natural gas contracts, without specifying a figure. “They are high”, they comment from one of the companies. All attribute it to the significant increase in the price of gas in the wholesale market, which has reached record highs this week, and stress that not all of the rise in raw material affects the final sale price to the consumer. "If we don't increase the rate, we would work at a loss," they comment in one of the companies.

La Vanguardia has also verified price updates for natural gas customers in different distributors, where increases of between 60% and 200% are observed for the next twelve months. María Reyes, a resident of Ripollet (Vallès Occidental, Barcelona), received the notification in mid-July. In the last invoice sent by her company, they informed her that the price per kilowatt hour of her rate would go from 0.0556 euros to 0.10625 euros (without taxes) as of September 15, when she has to renew the contract annual. With these new conditions, the company informs you that, according to its estimates, you will pay 2,864 euros for natural gas next year (with taxes and fixed costs included), compared to the 1,700 euros that you will have paid in total in the last twelve months. 68% more expensive – see attached article for more details on this case.

"In this letter we want to inform you of the new price applicable in your contract for the annual period from September 13, 2022", reads the letter received by another natural gas customer -he prefers not to give his name-. The surprise for him has been capital. They raise the kilowatt hour from the 0.07163 euros that he paid until now to 0.3102 euros. In this way, the company specifies that the estimated annual cost of its gas tariff would go from 1,087 euros per year to 5,150 euros with taxes and fixed charges, 280% more. As in the previous case, the energy company informs you that you can terminate the contract without penalty at any time. "Of course, I've already done it," says the affected.

“The natural gas market is experiencing an unprecedented price escalation and many people can even triple the bill; we have focused on the cost of electricity when now the biggest problem we have is gas”, insists Jorge Morales, specialist in the energy market.

In addition to the free rate, households can also go to the regulated natural gas market, called TUR (Last Resort Rate). The price is set by the Government based on different indicators – the main one is Brent – ​​and in September of last year it intervened by decree to update it. The objective is to prevent the bill of the 1.6 million customers covered by this rate from skyrocketing. The cap works as follows: the maximum increase in the cost of the raw material in its calculation formula is limited to 15% until January 1, 2023. This is how they contain the price of the rate, which is reviewed every quarter, comments Pedro Cantuel, expert in the energy market.

There are three sections of the TUR, although the majority of domestic consumers are in section 1 (hot water but without heating) and section 2 (hot water and heating). Your receipt has also risen in price –see graph–, although less than it would have done if it had not been intervened by the Government. According to calculations by the Ministry for the Ecological Transition carried out at the end of June –before the current increase in gas prices–, since the 15% limit on raw materials came into force, TUR 1 customers have saved 73 euros per year and those of the TUR 2, 222 euros. A recent comparative study by Facua also indicates that free market rates are up to 291% more expensive than those of the regulated market.

However, the increase in the cost of the raw material that is pending to affect the regulated rate as a result of the cap applied by the Government will be recovered in future reviews. Be that as it may, putting on the heating this winter will be much more expensive.



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