Changes to regulated costs and the VAT increase on electricity for 2025

From 1 January 2025, Spanish consumers will experience significant changes to their electricity bills due to the updates to regulated costs and the return of VAT to 21%. These changes will affect all residential consumers and small businesses that use the 2.0TD tariff (installations with contracted power below 15 kW) regardless of their electricity company or contracted tariff.

Changes to Regulated Costs

Regulated costs, which include transmission and distribution tolls, electricity system charges, capacity payments and the funding of the social tariff, have been updated in accordance with the regulations established by the Government. The OCU recommended that regulated costs be itemised on bills to make them more intelligible and transparent, but not all utilities do so.

For users on the 2.0TD tariff (contracted power below 15 kW), the new prices break down as follows:

New transmission and distribution tolls 2025

These costs are those intended for the maintenance of the power grid that carries energy from the production plants to your home or business. Set by the National Markets and Competition Commission (CNMC) and published in RAP/DE/009/24, the new costs are as follows.

• Contracted power:

+ Peak period: rises from 22.401746 €/kW/year in 2024 to 22.958932 €/kW/year in 2025

+ Off-peak period: falls from 0.776564 €/kW/year in 2024 to 0.442165 €/kW/year in 2025

• Energy consumed:

+ Peak period (P1): rises from 0.033081 €/kWh in 2024 to 0.034234 €/kWh in 2025

+ Flat period (P2): falls from 0.019184 €/kWh in 2024 to 0.01654 €/kWh in 2025

+ Off-peak period (P3): falls from 0.000557 €/kWh in 2024 to 0.000079 €/kWh in 2025

New electricity system charges 2025

These charges cover costs such as support for renewable energy and international interconnections. The new charges, approved by the Ministry for the Ecological Transition and the Demographic Challenge (MITERD), and published in Order TED/1487/2024 on 26 December, are as follows:

• Contracted power:

+ Peak period: rises from 2.989915 €/kW/year in 2024 to 3.971618 €/kW/year in 2025

+ Off-peak period: rises from 0.192288 €/kW/year in 2024 to 0.255423 €/kW/year in 2025

• Energy consumed:

+ Peak period (P1): falls from 0.043893 €/kWh in 2024 to 0.058305 €/kWh in 2025

+ Flat period(P2): rises from 0.008779 €/kWh in 2024 to 0.011661 €/kWh in 2025

+ Off-peak period (P3): rises from 0.002195 €/kWh in 2024 to 0.002915 €/kWh in 2025

New capacity payments and OMIE remuneration 2025

Capacity payments are the costs included in your electricity bill to ensure there is enough capacity in the electricity system to meet demand at all times. OMIE remuneration is what this body, the Iberian Energy Market Operator, receives for managing the electricity market and setting prices in the wholesale market. The new payments, also published in Order TED/1487/2024 on 26 December, are as follows:

• Peak period (P1): falls from 0.000926 €/kWh in 2024 to 0.00078 €/kWh in 2025
• Flat period (P2): falls from 0.000154 €/kWh in 2024 to 0.00013 €/kWh in 2025
• Off-peak period (P3): not affected in this period

Social tariff 2025

The cost intended to fund the social tariff has also increased, rising from 0.006 €/day to 0.01 €/day. This represents an annual increase of approximately 1.50 € for consumers.

The social tariff is a discount on the electricity bill obtained by the most vulnerable groups due to socio-economic conditions and is regulated by the Government.

VAT increase on the electricity bill 2025

The VAT applied to electricity returns to 21%, after having been reduced to 10% depending on electricity market prices in recent years. This change will have a direct impact on bills. For example, a bill of 75 € with VAT at 10% will become 82.5 € with VAT at 21%.

Impact on the Bill

These adjustments to regulated costs and the VAT increase will translate into a general rise in the total of electricity bills for most consumers during 2025.

If, for example, we take the electricity bill of a household with a contracted power of 3.5 kW and consumption in January of 275kWh (75kWh at Peak, 75kWh at Flat and 125kWh at Off-peak), the 2024 bill would have been 54.89€ whereas the 2025 one would be 60.79€, 10.75% more (5.9€).

(as starting prices we have estimated a power price at Peak of 0.090€/KW/day and 0.029€/kW/day at Off-peak, with an energy consumption cost of 0.198€/kWh at Peak, 0.125€/kWh at Flat and 0.091 €/kWh at Off-peak)

Conclusions

• The main increase in the 2025 bill is driven by the return of VAT to 21%
• The rest of the regulatory changes favour consumption during low-demand hours (off-peak and flat) and penalise consumption during high-demand hours (peak).