Some operators are already charging the adjustment cost of the Iberian mechanism on electricity bills – the so-called Mibel Rate. the new installment is not fixed and depends on: consumption; invoice date; and counting period. as contracts are renewed or when a new one is due, some suppliers are already reflecting this cost in their invoices. If this is not your case, prepare yourself and know what to do in this situation.
What is the Mibel Rate?
The Mibel Rate is a adjustment in electricity bills that was created to pay for the gas used in electricity production.In reality, electricity prices have been rising in 2022 for most consumers. Thus, it is inevitable not to feel the impact of charging this new additional installment on the electricity bills that we all have to pay. this rate results from the application of the iberian price adjustment mechanism, within the scope of the agreement signed between portugal and spain to stop escalating electricity pricesRead more: Electricity more expensive in January: increases from 0.35 to 2.15 euros
What is the context in which it operates?
In fact, the electricity supply companies themselves are paying more to their suppliers. The reasons are many, from the Russia-Ukraine war to the drought that is increasingly evident on our planet. In other words, war and drought significantly negatively affect electricity production, leading to higher prices. That is: On the one hand, there is less water in the dams due to the drought that is increasingly a reality due to climate change; On the other hand, the conflict between Russia and Ukraine increased the cost of natural gas. As a result, it becomes impossible for companies to maintain the electricity sales prices that were previously practiced. Even so, without the creation of the Mibel Tax, the situation would be much worse for consumers. This is because this mechanism created by the Government came to define a ceiling for the price of natural gas that is used for electricity production.That is, this mechanism prevents the exponential increase in electricity, keeping this increase more or less stable. In practice, it acts as a brake, that is: it does not prevent price rises, but makes them not very significant. The objective of the Mibel adjustment is, thus, to partially absorb the additional costs that companies have to buy electricity and to sell it to you. In other words, this adjustment aims to prevent high gas prices from “contaminating” the price of other sources used for energy production, slowing down the rise in the cost of electricity in the wholesale market – MIBEL
Who can charge the Mibel Fee?
Firstly, all electricity retailers can charge the new installment of the electricity adjustment mechanism in the contracts entered into or renewed after April 26 of this year.Note, this charge can be made in all invoices until May 2023. But as already mentioned, not all operators have done so. In other words, some retailers opted instead for not charging this cost and adjusting the final tariff they make available to customers. There are still others that are not exposed to daily market prices. In this sense, you may encounter one of the following situations: some contracts may have an additional portion itemized on the invoice with the designation “MIBE adjustmentL” (or a similar one); other contracts may not include this specific portion, opting instead for raise the prices of your final customer tariff.In reality, this additional cost has to be paid to thermoelectric plants that produce energy through natural gas, traders can choose to pass it on to the consumer or assume this cost internally. In short, all consumers who are about to sign a new contract with an electricity supplier must pay attention to the decision taken by each supplier.
How am I sure I am paying the correct price?
It is not easy to see with 100% certainty on your bill whether this mechanism is being applied correctly. Even so, the Energy Services Regulatory Entity (ERSE) has already created a formula for calculating the adjustment mechanism as well as the respective regulations. This way, at least, you are sure that there is a single formula applied to all operators. In any case, in case of doubt, you can and should always request clarification from the regulator. It should also not be forgotten that this additional portion is subject to maximum VAT rate (23%), which increases the final amount of the invoice to be paid. Thus, this is yet another valid argument on the part of consumers to demand a reduction of VAT on electricity to 6% by the Government.
What is the impact of the Mibel Rate on your bills?
Trade companies that applied the Mibel Rate to electricity bills saw a considerable increase in electricity prices. In other words, the rise is evident and highly visible on each invoice. Now, this can translate into several tens of euros more in the family budget.According to some estimates, consumer spending can increase by between €15 and €20 for every 100 kWh of electricity. This means that, for some families, the expense may double. But each case is different! As already mentioned, not all companies apply this adjustment, they only do it if they so wish or in case of need. For example, can absorb this cost to:keep customers;overcome the competition;or for marketing purposes.For this reason, it is important to confirm which suppliers are applying the Mibel Tax.
Which retailers charge the Mibel Fee?
As already mentioned, not all operators are charging this fee directly. Therefore, The retailers that already apply this adjustment are:EDP (from January 2023);endesa (from January 2023);Galp;Iberdrola;For a while, Goldenergy still does not apply this mechanism.However, some traders that applied the Mibel Rate will reduce prices so that, after all, the final tariff values remain unchanged.Thus, taking into account the instability of the market, if you want to save on your electricity bill, the best thing you can do is:Put appropriate and sustainable measures into practice on a daily basis, with a view to reducing energy consumption;and compare current tariffs of electricity to see which is the best operator on the market.
How can you circumvent the effects of the Mibel Tax?
well first you must check on your invoice whether the Mibel Fee is being applied, is sometimes referred to as “Iberian Adjustment” on customer invoices. If your supplier is one of those that started to apply this rate, consider changing to a cheaper company or one that commits not to charge the Mibel Fee.It’s not all bad news! You can always compare rates and see which option is best for you. Furthermore, you can switch operators at any time and without additional costs. But before changing, make sure you choose a really advantageous option, both in terms of the tariff and in terms of the contracted power. In short, now you know what the Mibel Rate is and that it is provided for by law , and it is up to the electricity trading companies to decide whether to reflect it to the customer or not. It is up to you to analyze the market, compare the different options and make the best possible decision.In addition, with or without the Mibel Fee, there is a part that depends only on you – consumption habits. Therefore, you should always keep in mind that saving on electricity and gas on a daily basis is the main measure you should take to reduce energy costs and thus protect your family budget. my invoice?
A professional writer by day, a tech-nerd by night, with a love for all things money.