Most of us, when we see a utility bill, find numerous items that we do not understand or do not know if they are correct or should be on that bill or not.
This is especially important because choosing the right electricity rate can make a significant difference in monthly spending, even if we consume the same amount. That’s why many people wonder: which electricity rate is better? The answer depends on the type of home, the number of people in the house, consumption habits, and whether we concentrate electrical use at certain times.
At Gumper, we want to explain more about the essential elements of contracting an electricity rate.
Before comparing prices, it is important to understand that in Spain there are mainly two large options: regulated market rates (such as PVPC) and free market rates. Within each, we can find modalities such as fixed price, indexed rate, or time-of-use rate (with peak, flat, and valley periods).
In general terms, the best electricity rate is usually the one that fits your actual consumption: not always the cheapest in advertising is the most profitable when we analyze the price per kWh, the contracted power, and possible extra services.
Under normal conditions, the items that must appear on a utility bill are:
- The contracted power: which determines the maximum number of devices that can be running at the same time.
- The energy consumed: which refers to our electrical consumption.
- The electricity tax: which is a special tax on the total power and energy.
- The rental of the meter
- The Value Added Tax (VAT): which is 21% of the total bill.
One point that generates a lot of confusion is the difference between marketer and distributor. The marketer is the company with which we contract the rate and that issues the bill. However, the distributor is the one that manages the electrical network in the area, takes care of the meter, and handles external breakdowns. You cannot choose the distributor, it is assigned according to the location of the home.
If we consider changing marketers, we should take into account several factors, not just the price, and look at everything each company offers to choose the one that best suits our needs.
So, what electric rate is better? For most households, the best option is usually a rate that combines a competitive kWh price, no commitment, no mandatory additional services, and a power level adjusted to what is necessary. In homes where more is consumed at night or on weekends, a time-of-use rate can be interesting to take advantage of off-peak hours.
Some of the features to consider when choosing one company or another are:
- That it does not require a commitment
- That it does not maintain a fixed price
- That it does not work with green energy
And of course, the price. In this case, companies usually talk about a discount percentage, but one should not be fooled by those discounts and consider what price the discount is applied to.
A common mistake when comparing rates is to focus only on the initial discount and not on the real kWh price after the promotional period. It is also advisable to check whether the rate is fixed price (more stable but sometimes more expensive) or indexed (it can be cheaper in some months, but also more unpredictable).
On the other hand, there are marketing companies that require you to contract an additional service, such as insurance, to determine the rates. One must be very careful with this because most of the time it is just another way to inflate the bill, as our home insurance would generally cover that type of service.
Moreover, one of the factors that most influences savings is not just the rate, but the contracted power. Many homes have more power than necessary, which causes them to pay more each month, even if they consume little. Correctly adjusting the power can reduce the fixed part of the bill without affecting comfort, as long as the limits of simultaneous use are not exceeded.
To choose a good company and save on the electricity bill, the National Commission of Markets and Competition is the most reliable website for online comparisons, as it is a government agency, a non-profit organization, and is properly regulated.
As a final recommendation, if you want to correctly choose which electric rate is best for your case, review these points before contracting:
- Price of kWh (not just the discount).
- Cost of power and whether you can adjust it.
- Commitment and penalties.
- Mandatory additional services (maintenance, insurance, inspections).
- If you are interested in a stable rate or a time-based rate (time-of-use).
Comparing well before hiring is the key to not overpaying. A suitable choice can make a big annual difference, especially in homes with high consumption or with electric heating, electric water heaters, or air conditioning.
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