HOW DOES THE ELECTRICAL SECTOR WORK?

Understanding the Complex World of Electricity

The world of electricity is indeed complex, with constant rumors and tariff changes, and the lack of transparency from higher authorities doesn't help. As electricity users, we have the right to be informed, and it's best to start from the source. In this article, we'll review the companies or "agents" involved in bringing electricity to our homes.

Before and After Sector Liberalization

Pre-Liberalization: Before the sector was liberalized, all activities related to the generation, transmission, and sale of electricity were grouped together. Users had only one option: accept it or live without electricity.
Post-Liberalization: The implementation of Law 54/1997 of the Electricity Sector changed everything, dividing the sector into specific activities. Companies can now specialize in only one activity, or in the case of the "big ones," multiple divisions. These include:

1. Generators: Responsible for producing electricity (thermal, hydroelectric, or renewable energy plants).
2. Transporters: Handle the high-voltage transmission, which is not suitable for final consumption.
3. Distributors: Own and manage the networks that deliver electricity to supply points, converting it from high to medium and low voltage, making it suitable for consumption. They handle meter readings, charge for meter rentals, and manage any technical modifications, ensuring the quality of the supply.
4. Retailers: Use the distributor's infrastructure to deliver electricity bought on the Wholesale Market to our homes, provide the service, and bill us for it. As users, we are customers only of the company performing this activity.

The last two have direct contact with electricity users and are therefore of most interest.

Regulated Market vs. Free Market

Transition to the Free Market: The electricity sector is currently transitioning from the Regulated Market to the Free Market, a process that began on July 1, 2009. The slow pace of this change is mainly due to user distrust, stemming from a lack of information.User Confusion and Fear: Many users are unaware that they can choose their electricity retailer since July 2009, staying with the same old company without knowing they could switch for better prices or services. This ignorance is compounded by fears of being left without electricity during the switch, concerns about contract commitments, and the dreaded "paperwork."

Similarity to the Telecommunication Sector

A few years ago, a similar situation occurred in the telecommunications sector. The market transitioned from a state monopoly to multiple private companies. Users had similar fears, which are likely greater in the electricity sector since it is a basic, legally essential service.

Current Tariff: PVPC

Currently, the TUR (Tariff of Last Resort), renamed PVPC (Voluntary Price for Small Consumers) since February 1, 2014, is the most competitive tariff. It is regulated by the government, with prices that can change every three months. The PVPC is offered by the CUR (Last Resort Retailers), which are the regulated market divisions of the large companies, although some Free Market companies also offer it.

Conclusion

Understanding the various components and changes in the electricity sector can help users make informed decisions about their electricity services, potentially leading to better prices and improved service quality.

Source: Holaluz.com

Link: Hogarmania - How the Electricity Sector Works