One of the many aspects to take into account when trying to lower the cost of your electricity bill is the type of tariff you choose. Consumers have the freedom to choose between two types: the regulated market or the free market. This is a decision that can directly influence the amount they pay. However, often we don't even know which tariff we are on ourselves.
Both options have advantages and disadvantages, as well as having the same access charges - which are established by the Government - and the same taxes. The difference, therefore, is in the price it costs to produce electricity. In the regulated market, also known as the PVPC (Voluntary Price for the Small Consumer), the price is fixed by the Government according to the cost of energy in the so-called wholesale market, that is, the market for big corporations.
Taking this into account, in the regulated market approximately 65% of the price is fixed and is linked to the access tolls and taxes, while the remaining 35% will depend on the fluctuation of the electricity market. This means that only if you have this tariff will you suffer the increase in the cost of energy, although you will also benefit when its price falls.
On the other hand, the free market involves all trading companies, and it is they that directly determine the price and the conditions in which energy is bought. Your bill will not vary, like in the case of the PVPC, depending on the fluctuation of the electricity market, rather you will pay the same rate each month.
The question is: which is the better choice? The answer is relative, as it will depend on every consumer. Although the regulated market has traditionally been considered cheaper, it is impossible to rank them. The suitability of one option or the other depends on many circumstances and on your type of consumption. Moreover, remember that in the regulated market you will feel any price rises, while in the free market the opposite applies. The best solution, without a doubt, is to compare what the market offers and to opt for whatever favors you the most.