Free market versus regulated market: what is the cheapest electricity rate?

The general rise in prices in recent months has caused many people to become interested in the economy in order to optimize their finances. Two of the most commented terms have been those of free market and regulated market. Knowing which market governs the contracted electricity rate and the advantages or disadvantages of each of them is essential to be able to choose the offer that best suits in different cases. Gana Energía, the low-cost electricity marketer, provides the keys to both types of markets and what differences will you have in the electricity bill.

Free market or regulated market: what is the difference?

before knowing what consequences each tariff has on the cost of electricity, depending on whether they belong to the regulated market or, on the contrary, to the free market, it is necessary to understand what makes them different from each other.

The big difference between the two markets it is based on who marks the cost price of electricity. In the regulated market or tariffs with a voluntary price for small consumers (PVPC), the price is given by the wholesale market auction each day; that is, by the law of supply and demand of the electricity market, to which must be added the costs imposed by the Government.

However, in the free market, each company is responsible for creating and pricing their rates, thus setting their own business strategy. For this, the PVPC rates They have a different price each hour of the day per kWh, in addition to being governed by hourly discrimination, both in price per kilowatt consumed and in the power supplied. Regarding free market rates, companies have greater freedom to offer different offers that can be adapted to the customer’s consumption habits, giving options to choose rates at a fixed price, at cost price, with time discrimination or without it.

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Another of the peculiarities is the variety of offers in the electricity market. While in the free market there are more than 100 marketers operating and offering their rates, there are only eight companies that operate in the regulated market.

The regulated market rate is only available for supplies with a power less than 10kW, which corresponds to rates aimed at households. In addition, these customers are the only ones who can request and benefit from the social electricity bonus.

What rates allow greater savings?

In this case, no type of free market or regulated market rate is cheaper by itself; So what makes the difference?

Regulated market rates they range a lot in price when an important event for society takes place, such as the case of the Covid19 pandemic or the recent conflict between Russia and Ukraine. In these cases, the general economy is affected and affects the electricity sector, increasing the cost per MWh in the wholesale market and, therefore, the PVPC rates. This means that these rates are mainly characterized by having a higher instability in prices.

For their part, the free market rates are much more stable and also, thanks to the variety of types of rates and companies, the supply and the price can be adapted to the needs of each client.

Even so, from Gana Energía, it is always recommended to analyze the consumption and the contracted power to know which is the best option to observe savings on the bill.

How do I know what rate I have?

  • Check the company’s customer area: the name of the rate is always found in the contracts section. If this nomenclature includes PVPC means that the rate belongs to the regulated market.
  • On the electricity bill: as in the previous point, if PVPC appears in the section where the type of contract or its data is developed, the rate will be from the regulated market.
  • If the marketer that manages the contracted rate is one of the eight that operate in the regulated market.

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