The strength of a battalion of new independent electricity companies and the emergence of weight rivals With a desire to grow, it is costing the large electricity companies a drain on their client portfolio. The large energy groups suffer net losses from supply contracts in a market in Spanish that is also increasing in size.
Iberdrola, Endesa Y Naturgy, the three main electricity companies, have lost almost two million electricity customers in the last five years. The joint portfolio of clients of the three giants of the sector has gone from 25.64 million users at the end of 2016 to 23.68 million at the end of the third quarter of this year, according to data from the records of the National Commission of Markets and Competition (CNMC) and the figures provided by the companies in their latest quarterly results.
This is a specific decrease of 1.96 million customers between the three companies in five years. Despite the continuous loss of consumers in recent years, Iberdrola, Endesa and Naturgy continue to control 80% of all electrical consumers Spaniards, adding both households that have contracted the regulated rate (the so-called PVPC) and customers with free market rates.
In this period, Endesa is the one that suffers a greater drop in its client portfolio, with 1.1 million fewer clients (with decreases both among households with PVPC and in the free market), and in September it had 9.73 million users. Iberdrola has left more than 300,000 clients in five years, offsetting the drop in the regulated rate with an increase in the client portfolio with free rates, to a total of 9.95 million consumers in September. Naturgy, meanwhile, loses 590,000 contracts with decreases in both segments, and remains at 4 million users.
Rivals that grow
The entry of new players has shaken the Spanish electricity market in recent years. The disembarkation of oil companies converted into multi-energy groups is helping power companies whose expansion seemed stagnant. Repsol announced the purchase of Viesgo assets in June 2018. At that time, the Cantabrian electricity company had less than 660,000 electricity customers, but at the end of last year it exceeded 916,000 electricity contracts, according to data from the CNMC.
The French oil company Total It also entered the Spanish electricity market at the end of 2020 with the purchase of EDP’s assets. Electricity, with some ups and downs in some years, has managed to remain stable around 1.1 million electricity customers in the last five years. Total aims to boost the growth of the group.
In addition to the large ones, there is another battalion of small energy companies in the light market. At the end of 2020, there were a total of 314 electricity marketers in Spain, according to the official registry of the CNMC. Some of these companies are barely active, but a handful of independent power companies (not part of the large vertical energy groups) have managed to gain strength. As much as to add between all of them to exceed 3 million clients.
The electricity commercialization business among domestic customers was liberalized in 2003. Since then and for a decade -until the end of 2013- the small retailers had managed to wrest barely 760,000 customers from the large electricity companies. Since then and until now, the client portfolio of independent marketers has multiplied by four. Companies like Feníe, CIDE, Audax, Holaluz or Aldro They have shown their strength and accumulate between 200,000 and 400,000 electricity customers each.
Change company, not group
Small electricity consumers, usually households and some SMEs, can choose between contracting regulated electricity rates – which large electricity companies are obliged to offer and whose amount is set in part by the evolution of the electricity market – and market offers free – the amount of which is freely fixed by the companies and which usually have stable prices. The regulated rate is contracted by some 10.5 million households, while there are 16.2 million domestic consumers who have already switched to the free market.
Traditionally, the regulated tariff for electricity, called the Voluntary Price for the Small Consumer (PVPC), is cheaper than those of the free market. But this year, with the price of the electricity market runaway and setting all-time highs, it will not be like that and the customers of the regulated tariff will pay more than the majority of those on the free market.
Free market rates are more profitable for electricity companies than regulated rates, in which they have a predetermined marketing margin. For this reason, large companies try to transfer customers from one to another. As highlighted by the CNMC in its latest report on marketing change, during 2020 a total of 660,000 consumers They abandoned the regulated rate and almost 60% of them did so to contract a free rate from a subsidiary of the same business group with which they had a PVPC contract.