Spanish electricity bills could change again in November

The changes come as tensions around the Strait of Hormuz push energy prices back into the spotlight

Households across Spain could see a change in their electricity bills from November, with the Government planning to cut two taxes on electricity in response to the latest energy crisis. At the same time, some of the country's biggest energy companies are offering customers longer-term deals to protect them against unpredictable prices.

Under the planned measures, VAT on electricity would fall from 21% to 10%, while the Special Electricity Tax would be reduced from 5.1% to just 0.5%. The reductions, if implemented, are not expected to appear on bills until November, and are subject to confirmation.

The changes come as energy prices continue to be affected by tensions in the Middle East and disruption around the Strait of Hormuz. These developments have pushed natural gas prices up and contributed to renewed volatility in electricity markets.

Spain's electricity market is not as dependent on gas as it was during the 2022 energy crisis, but prices can still experience sharp increases. Wholesale electricity prices have reached peaks of €300 per megawatt-hour at points this year, leaving consumers looking for greater certainty over what they pay.

Electricity deals that last for years

Against this backdrop, Endesa, Iberdrola and Repsol are offering contracts that keep the price of the energy consumed fixed for periods well beyond the usual one-year arrangement.

Endesa has introduced tariffs with fixed energy prices for three and five years. Iberdrola launched a 10-year option in March, adding to its existing range of longer-term deals, including a five-year tariff. Repsol also offers a five-year contract through its Tarifa Tranquilísima.

These deals could appeal to households that would rather have greater certainty over their energy costs than risk sudden changes in market prices. However, there is an important detail to bear in mind before signing up.

The fixed price applies only to the energy consumed, measured in kilowatt-hours. Other parts of the bill, including network charges and taxes, can still change, so a long-term contract does not guarantee that the total amount payable each month will remain the same.

Around three in four electricity consumers in Spain are on the free market, where suppliers offer their own tariffs. Those on the regulated PVPC tariff are more directly exposed to fluctuations in wholesale electricity prices.

The proposed tax cuts could reduce electricity costs from November, although the amount households save will depend on their bills. Meanwhile, anyone considering a longer-term tariff should check the small print, as fixing the price of electricity consumption doesn't mean the entire bill will stay the same.

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