The natural gas receipt will drop by 9% from October due to the VAT cut

The natural gas rate will go down about 9% from next month October for clients of the regulated market. The Government’s decision to reduce VAT from 21% to 5% will make it possible to mitigate an average rise of 5% that was about to occur for domestic consumers due to the result of the formula that sets gas prices quarterly and that reflects the evolution of international markets.

With this measure, the Government puts a brake on the price increase that was being registered in gas at the gates of autumn when consumption increases. This reduction also comes at a time when Spain has to face a reduction of consumption to meet the savings target set by Brussels.

At the end of next week, the Government will present the contingency plan that it has prepared for the European Commission in which it must detail the energy saving measures that it is going to put in place to help increase safety supply in Europe. At the same time, Teresa Ribera’s department has to convince the Community Executive not to take into account the increase in the use of gas necessary to produce electricity for export to countries such as France and Portugal with combined cycles within these objectives and leave the open door to a lower reduction obligation for industries.

This price reduction of the last resort gas tariffs will also mean that the price difference offered by marketers in the free market.

Level of competition

According to data from the comparator of the National Markets and Competition Commission, an average consumer you can expect to pay more than double if you contract the gas in the free market than if it is within the regulated rate, a difference that has been accentuated since the decision of the Government to intervene the gas rate in March 2022.

The Council of Ministers decided to set a limit of 15% on the increase raw material cost max in its calculation formula until January 1, 2023, which opened the door to generating a gas tariff deficit that is expected to be compensated in the coming years when a reduction in the cost of the raw material corresponds.

This market situation is detrimental to the small gas marketers that had customers households on the free marketsince they now have an economic incentive to return to the regulated market to avoid increases and with one less sales pitch for their commercials.

When the price of gas returns to normal, customers on the regulated market will continue to have the power to switch back to the free market and, therefore, not make against the amounts that have not been paid right now. This situation can cause higher increases for those who remain in the regulated market and who, generally, are those with less purchasing power.

The measure can also give another twist, since any client that electrifies part of its supply (gas cooker with ceramic hob) would also stop paying this amount or at least part of it depending on its consumption.

To all this casuistry another key factor can be added. If the sustainability fund comes into force and electricity prices register a sharp drop due to the measures of intervention being carried outthe incentive to electrify consumption will be greater and, once again, all those with less capacity to assume these expenses will have to bear the surcharges of accumulated consumption.

In terms of gas customers, the share of the five main operators represents 94.6%. The rest of operators add 431,034 gas customers. Among the small operators, those with the greatest growth are the MET group and the Factor Energía group, with an increase of around 2,800 and 1,400 customers, respectively, according to the latest data from the CNMC.

Customers supplied at the last resort rate are 1,525,344 (19.12%), increasing by 3,726 clients compared to December 2021. In terms of natural gas sales during the first quarter of 2022, the demand for natural gas reached approximately 107.93 TWh, increasing by 8.84% compared to the same period of the previous year.

According to Enagás data, up to August, gas consumption in Spain increased by 5.1% due to the strong increase in its use for electricity generation (85.7%), while conventional use fell by 15.2%.


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J. A. Allen

Author, blogger, freelance writer. Hater of spiders. Drinker of wine. Mother of hellions.

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