What is a regulated electricity rate
First of all, we are going to explain what exactly a regulated electricity rate is. If you have looked at offers and you have come across both options, you should know what each one is. In this case it is a rate that is regulated by the government. It is also known as the PVPC rate. Consumers who do not exceed 10 kW of power hired, which are the majority. There are hardly a handful of companies that can offer this rate.
An important point is that in the regulated electricity rate the price changes constantly. In fact, it changes every hour. The marketers go to a public auction to buy the price of electricity for each hour. This means that there may be a significant difference in price from one time of day to another.
This last thing we mentioned can be positive or negative if we compare it with the free rate. Why do we say this? If we contract a regulated tariff, we don’t know how much we are going to pay, since we will be subject to ups and downs that may occur. This can be a positive, as it may be lower than what free market rates offer, but it could also be a negative.
It should also be borne in mind that the regulated market rates they have no permanence. You will be able to change when you want, without having to pay any penalty. But as a negative point, it has the volatility of prices, which can go up and down constantly and that can be a problem when energy is expensive in the markets.
What is a free market rate?
On the other hand we have free market rates. Here we have endless options, as they number in the hundreds. Each one can have its rules, its rates and they are not subject to anything. It is basically the same as if we hire Internet at home or a mobile fee; we will find many options, with very varied rates.
The price What you are going to pay will be established by the company you hire and will appear in the contract. They will always have a profit margin, so on paper you will pay more than in a regulated rate. But of course, as we have seen there will be moments and moments. It may or may not compensate you more to have one rate or another.
In the free market you are not going to pay by the hour, but you can have a rate in which it always costs the same, another in which there are two daily slots, etc. This will depend on the company and you can choose the rate that most interests you in your case. A positive point is that you can know in advance how much are you going to pay for each kWh.
These rates can have offers, discounts, combine them with other products… After all, the range of options can be very wide. Therefore, there will be users who are very interested in a specific rate, while others may pay less with the regulated rate. You should bear in mind that in many cases the free market rates are usually permanent and to change you would have to pay a penalty.
In short, these are the main differences between a regulated or free rate to hire electricity. As you can see, there is not one that is better than another, but that will depend on each user, on the circumstances and possible options that exist at that moment.
