Which option is more profitable between the free market and the regulated light market?

One of the issues that has been most present in recent months in our country and in neighboring countries, is that of energy, this is fostered by the continuous rises that suffered this sector due to various reasons. So much so, that many users have decided to learn more about the energy market, therefore, in this entry we  will focus on commenting on the differences between the two markets in whichmay be subject to the electrical contract; the free market and the regulated market.

When making an electrical contract in a home, we must always keep in mind take into account the energy demands that our home presents, because depending on the existing needs we will be more interested in one market or another.

What is the regulated market?

The so-called regulated light market is one that is regulated by the Central government, supervised by the Ministry of Industry, Energy and Tourism, offering

a single rate for all customers who are subject to it, known as PVPC (Voluntary Price to the Small Consumer).

This rate is also known as the hourly electricity rate, since the prices of the energy vary every hour depending on the supply and demand of electricity, for this reason a total of twenty-four different prices are established each day.

These prices are set from one day to the next, so every night we can check the price of light tomorrow, to know the exact price of electricity.

Users whose contracts are within the PVPC rate present a hourly price discrimination in three mandatory periods, these are the known as valley section, peak section and flat section. Within this market, only those denominated as marketers of reference, which must adapt energy prices based on the guidelines of the Government.

What is the free market?

This market is presented as an alternative to the regulated market, appearing in 2009, in This market is operated by a large number of companies that set prices and conditions of the contracts freely, thus emerging a multitude of alternatives in terms of rates available to choose from.

These rates are much more varied, with stable price alternatives from the energy, rates that also have hourly discrimination or even the possibility of

hire flat energy rates. In order to know which alternative is best for each case, a study of the consumption, as well as the conditions offered by both markets, in this way we will be able to know which option is better between PVPC or free market.

Free rate and regulated rate: Conditions and differences. Once the basic characteristics of both markets are known, the question arises as to which is the most advantageous option to hire, since that will determine whether it is better to hire the free or regulated tariff, for this we will compare both options based on the main conditions of both alternatives:

• Price: While with the PVPC rate we obtain 24 different prices daily, In the regulated market, prices will be contracted in advance with the electric company.

• Power to be contracted: With the PVPC rate, the maximum power that can be requested is 10 kW, while in the free market there is no limitation to the contractable power.

• Permanence: In the regulated market there is no permanence in the contracts, while in the free, companies can set some type of permanence contractual.

• Social Bonus: In the regulated market, we may choose to request the Social Bonus, while in the free market that option is not possible.

• Tariffs: In the regulated market, hourly discrimination is mandatory, while that in the free there are many options to hire.

• Operating companies: In the regulated market, only those known as reference marketers, in the free market there is a large number of companies working.

• Discounts and promotions: In the regulated market, companies cannot offer any type of offers or promotions, while in the free market if are applicable.

When deciding what type of contract interests us most, we must take into account basically two aspects:

• The possibility of adapting consumption to the time slots, using a greater amount of energy at the hours that is cheapest, which will facilitate savings economic, in this case the regulated market is presented as the most attractive.

• The possibility of requesting the Electricity Social Bonus if the requirements are met marked, since the discount that this applies will be difficult to improve due to the free market companies.

Properties that you must to check: