Glossary of Terms for Understanding a Business Electricity Bill

Business electricity bills in Spain are technical documents that combine regulated components with commercial prices. For an SME or industrial business, understanding their structure helps with reviewing costs, detecting metering errors, and assessing contract terms. This glossary brings together key concepts relating to electricity bills in Spain.

Supply Identification and Basic Structure

Before analyzing the amounts, it is advisable to identify the supply point and the applicable tariff. The bill usually includes the following details:

• CUPS (Unified Supply Point Code): A code that uniquely identifies each electricity supply point in Spain. It is used to identify the supply in any dealings relating to it.
• Contracted capacity: The capacity the customer agrees to contract for the supply, expressed in kilowatts (kW). Under the 3.0TD and 6.1TD tariffs, capacity is contracted for different periods. Capacity overages are billed in accordance with the regime applicable to the tariff and the supply conditions; it cannot be stated that every overage always incurs a penalty.
• Network access tariff: Determines the applicable regulated structure based on the characteristics of the supply, including voltage and capacity. Common business tariffs for low- and medium-voltage supplies include:
  • 2.0TD: For low-voltage supplies with contracted capacity of 15 kW or less.
  • 3.0TD: For low-voltage supplies with contracted capacity above 15 kW.
  • 6.1TD: For medium-voltage supplies connected at voltages equal to or above 1 kV and below 30 kV.
  • Note: Other network access tariffs exist for high-voltage supplies (such as 6.2TD) and other consumption profiles. These should be checked in accordance with the regulations in force and the specific characteristics of the supply.

Regulated Components: Network Access Charges and System Charges

Network access charges and system charges are distinct regulated components that are not individually negotiated with the retailer. The CNMC establishes the methodology and values for network access charges; system charges are determined by the Government. Network access charges cover the costs of transmission and distribution networks, while system charges finance other regulated costs of the electricity system.

Network Access Charges

These are regulated amounts associated with the use of transmission and distribution networks. They are structured in terms of capacity and energy:

1. Capacity charge: An amount associated with the contracted capacity in each applicable period. It is paid for the available capacity in accordance with the tariff.
2. Energy charge: A variable amount associated with the kilowatt-hours (kWh) consumed. Under the 3.0TD and 6.1TD tariffs, it varies according to the time period.

System Charges

These are regulated amounts that finance specific costs of the electricity system, such as support for renewable energy, the costs of territories outside the Iberian Peninsula, and other regulated costs. They are distinct from network access charges and are shown on the bill according to the applicable terms and periods; they are not accurately described as a single amount applied to the total or as a component that is necessarily separate from the time-period breakdown.

Commercial Components: Energy and Capacity

The retailer’s offer may include commercial prices for the energy and capacity charges. These prices and the associated conditions depend on the contract. The bill also includes the applicable regulated components; therefore, when comparing offers, it is advisable to review the total cost and distinguish the commercial portion from the regulated portion.

• Energy price: May be linked to the wholesale market or set using other contractual formulas.
• Commercial capacity charge: A commercial price associated with the contracted capacity, in addition to the regulated capacity component.
• Retailer’s margin: May form part of how the offer is structured or calculated; its terms should be reviewed in the contract.

In the regulated market (PVPC), the price is calculated using a methodology that incorporates wholesale market references and other elements provided for in the regulations. The hourly pricing structure may vary depending on the regulations in force and the metering characteristics. It is therefore advisable to consult up-to-date information from the CNMC or the reference retailer to find out the exact calculation details for each period.

Time-of-Use Pricing: Periods P1 to P6

Under the 3.0TD and 6.1TD tariffs, the capacity and energy charges are structured by period. The allocation of periods P1 to P6 depends on the tariff, the regulatory calendar, the area, and the season. There is no general rule under which P4 and P5 are holiday periods, nor should each period be described as a fixed demand band. To identify the applicable hours and days for a supply, the relevant calendar must be consulted.

Shifting consumption to lower-cost periods can reduce the energy charge, but the price difference depends on the regulated values and the contracted offer. Optimizing capacity is a separate measure: under tariffs with multiple capacity periods, the contracted capacity for each period is reviewed in line with the supply’s needs; it is not adjusted simply because an energy period is cheaper. Savings depend on the consumption profile, the contract, and the applicable costs; no general percentage can be guaranteed.

Technical Consumption Concepts

Active and Reactive Energy

• Active energy: Energy converted into useful work (heat, light, or movement). It is measured in kilowatt-hours (kWh) and forms part of the energy charge.
• Reactive energy: Energy required for the operation of some electromagnetic equipment, such as motors, although it is not directly converted into useful work. It is measured in kilovolt-ampere reactive hours (kVArh).

Power Factor and Surcharges

The power factor relates active energy to apparent energy. For supplies subject to reactive energy billing rules, a reactive energy charge may apply when the relevant thresholds and conditions are not met. Whether the surcharge applies depends on the tariff and the applicable rules; it cannot be inferred solely from a power factor below 0.95 for any supply. Correcting the installation, for example by using capacitor banks where appropriate, may reduce billable reactive energy.

Taxes and Other Items

• Special Electricity Tax (IEE): A state tax whose general rate, as indicated in the references, is 5.11269632%; it applies to billed items in accordance with the regulations, excluding meter rental. Some supplies may qualify for exemptions or reductions if they meet the legal requirements.
• VAT: Value Added Tax, applied in accordance with the regulations in force and the applicable taxable amount.
• Metering equipment rental: An amount charged for using the meter when it is owned by the distribution company. The regulated or applicable price depends on the characteristics of the supply and the relevant regulations.

How to Apply This Glossary to Business Management

To review electricity costs, it may be useful to analyze bills and the contract periodically:

1. Verify the CUPS and tariff: Check that the tariff matches the voltage and characteristics of the supply, consulting the full list of network access tariffs in force.
2. Analyze time periods: Review consumption by period in accordance with the applicable calendar and consider whether consumption can be shifted to lower-cost hours. Capacity optimization is analyzed separately, taking capacity periods and the demand profile into account.
3. Review the power factor: If reactive energy is billed, check the applicable regime and consider appropriate corrective measures.
4. Compare commercial offers: Review the total cost and all commercial components, including energy and capacity charges, as well as the pricing formula, margin, and other contractual terms. Network access charges and system charges are regulated, but their amounts and application in each offer should be checked.