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Spain's fake discounts raise Electricity bills by 12%

Source: FACUA - Sat 21st Mar 2015
Spain's fake discounts raise Electricity bills by 12%

So-called 'discounts' offered by electricity companies can actually raise the electricity bill by up to 12%.

This is what the comparative study carried out by Spanish consumer association FACUA reveals about the free market rates.

FACUA compared the rates offered in February by Ibedrola, Endesa, Gas Natural Fenosa, EDP Energía and E.On with the most common rate among households, a semi-regulated Voluntary Price for Minor Consumers (PVPC, according to its initials in Spanish). The resulting report revealed the tricks electricity companies use to make customers believe their discounted rates are better than the PVPC.

With the Plan Hogar (Home Plan) offered by Iberdrola, the average user (4.4 kW and 366 kWh/month) pays 89.06 Euros per month, 11.9% more than the 79.62 Euros paid with PVPC in January. Ibedrola has two offers, Conect@ Luz (Connect Electricity), which costs the same user 78.52 Euros per month, only 1.4% less compared to PVPC; and Plan Iberdrola Hogares (Iberdrola Homes Plan), which amounts to 82.89 Euros, 4.1% more expensive than PVPC.

With the fake flat rate offered by Gas Natural Fenosa, the average user pays 83.63 Euros, 5% more. The same company offers the Tarifa Online Luz (Online Electricity Tariff), which charges 76.87 Euros per month, 3.5% less. Gas Natural Fenosa also offers the Óptima Luz (Optimal Electricity) rate, which the average user pays 81.96 Euros per month, 2.9% more than PVPC.

E.On offers two rates: Adiós Sorpresas (Bye Surprises), which charges 87.30 Euros per month for the average user, 9.6% more expensive than PVPC; and Tarifa de luz 100% online (100% Online Electricity Tariff), which charges 79.39 Euros per month, 0.3% less.

The Tarifa One Luz (One Electricity Tariff) offered by Endesa charges 78.86 Euros, only 1% less compared to PVPC. Finally, with the current rate offered by EDP Energía for Fórmula Luz Sin Funciona (Formula Electricity No), the average user pays 76.10 Euros, 4.4% less.

Discounts offered, but on higher rates

FACUA warns that companies mislead users with many of the offers, announcing discounts in the contracted electric load or energy used which are not applied over PVPC, but over much higher rates, or tired to hiring other services (which are billed). Some discounts are only applied during the first hired year and then the bills rise even more starting from the second year. Moreover, FACUA warns that there are no flat rates in the electricity sector and that those advertised with this name are a fraud.

The association also warns against the fraudulent practices of large electricity companies sales representatives which go to users' private homes to offer them discounts in misleading ways or trick them into thinking they have been sent from the same company for a simple data check. The list of reported cases of forged contracts received by FACUA has been growing and the electricity sector is the second most reported one by consumers.

The association keeps warning that abandoning the PVPC is not an advisable decision in the best case scenario and it could be absolutely counterproductive if the user signs a contract with the highest rate, offered by the three largest companies.

Moreover, these contracts limit the rights of users and do not include the obligations imposed on the electricity companies in different sections of the sector regulations which only apply to the PVPC. FACUA has been requesting that the Government changes the legislation in this respect to avoid this situation.

The "offers"

Among the offers of Gas Natural Fenosa there are fake flat rates with annual usage limits. If these are exceeded, the rates calculated for each kWh are more than double those of PVPC: 34.09 cents (26.80 cent plus tax), 108% more than the 16.40 cents (12.89 cent plus tax) of the average PVPC in January.

Iberdrola uses a 10% discount over its own kWh rate as an advertising strategy in its Plan Hogar. However, this is actually 25.7% more expensive compared to the PVPC rate of last January. This way the energy price is still high (13.2% more expensive) even after applying the discount.

Another offer by Ibedrola, the Plan Iberdrola Hogares, offers a rate which is lower than the PVPC one after applying a 10% discount but is tied to contracting a Electricity Protection Service which then makes the bill amount to 9.9% more than what the average user pays with PVPC.

Recommended Reading :

* Spain sees average electricity bill increase 13.3% Jan-Dec 2014

* EU to investigate Spain's illegal energy bills

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