At the moment, lowering the electricity bill by tens of euros involves switching to a supplier that offers indexed tariffs. Know more.
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Have you ever imagined lowering your electricity bill by half or more – from one month to the next? It’s simple: just change your electricity company.
I know this can be very confusing for you, but right now (in the first few months of 2023) the biggest savings are in the cheapest companies in the market that have indexed tariffs.
The typical Portuguese flees 7 feet from any change. This also happens with regard to electricity. It seems that they are married to the electricity companies, banks, insurance companies, etc. Those who have this attitude usually lose because they miss the opportunities that the competition offers. There is always someone willing to offer you what you want at the best price. But you have to look and change.
Just to give you an idea, the difference between the cheapest tariff and the regulated market price (SU Electricity) in some of the last few months has been much more than double. Yes, 50% cheaper! There are people who were paying 100 euros or more per month and now pay 20 or 30 euros, with the same consumption.
Download the electricity bill: look at the indexed tariffs
At this time, indexed electricity tariffs are again the best in the market. For those who don’t know, indexed electricity tariffs are those in which you pay for electricity at “factory price” (in the origin – it’s called OMIE – where all suppliers buy it to sell it to you) and pay a small margin of profit to that supplier.
What is the risk you run? Is that if electricity suddenly rises in price at source, that month you will pay a lot; but if the electricity goes down a lot you will also save a lot. This is what is happening as I write this article. Electricity is almost free. In March, the price per kWh was 2 cents. In the regulated market it is around 16 cents. see the difference?
The MIBEL adjustment mechanism (which adds to this price) has also been at zero for several months. Therefore, the risk of these rises at this time is reduced.
The kilowatt hour, for those who don’t know, is each set of 1,000 watts you consume. For example, if you use a vacuum cleaner that has a power of 1,000 W, if you vacuum for an hour, you will use 1 kWh. Aspire anyway, but if you are a customer of one company you will pay 4 or 5 cents, if you are a customer of another you will pay – for the same consumption – more than double or triple. That’s why it’s so important to move around and be aware of electricity prices on the market and change whenever you find cheaper.
You might think that 14 or 16 cents is not a relevant value, but if you multiply it by 300 kWh (this is a normal consumption of a family with children) we are talking about 48 euros, plus 23% VAT, it goes to 59 euros (not including all fees and other taxes).
Being informed is the key to saving
Most Portuguese like to know what they have and hate surprises, so they usually prefer to pay more but have the guarantee of knowing what will happen. But what I want to draw your attention to in this chronicle is that information is the key to good financial management of your personal finances.
The important thing, in this phase of very high inflation, is not to waste even one euro. If you can pay 30, why would you prefer to pay 80? Just because yes?! It is not loyal. As soon as the price goes up, leave and go back to the best ones at that time.
How to track the price of electricity?
How can you monitor the price of electricity? Just go www.omie.es and from time to time see if the price of electricity in that OMIE starts to exceed 180 €/MWh (the equivalent of 18 cents per kWh). If the monthly average reaches this value, just go back to your old company. until that happens you will be saving tens and tens of euros per month.
If you save 60 euros a month for 10 months, 600 euros are left in your pocket that can help you pay, for example, an increase of 100 euros in your mortgage payment for half a year.
How to find companies that have indexed electricity tariffs?
To find companies that have indexed tariffs use the ERSE simulator or google “indexed electricity tariffs”, contact the companies and compare the kWh price you are paying with the prices they offer you.
Those who do nothing will pay the same as they are paying now and will complain that the money is not enough for what they need.
Often, part of the blame lies with us because of our unfounded fears and inertia. Obviously, if you subscribe to one of these tariffs you have to be constantly on your toes to get out before the prices stop compensating. If you are willing to do this “job” you can save hundreds of euros this year.