In a year that was penalizing for most companies and families, one of the few good news was the drop in electricity prices. 2020 was the cheapest year since there is a comparable market (2007). However, it is not enough that prices are low for companies and families to benefit directly, only those that renegotiated their contract or changed supplier took advantage.
For many, changing the electricity supplier is still a terrible monster. They fear cuts, power outages or assistance failures. In fact, as the electricity supply system is set up, little more changes than who issues the bill and charges it.
So how does the system work? Electricity is a commodity quoted on the open market (OMIE for day-ahead prices and OMIP for futures). Its production and distribution is concentrated in a few, but its marketing is dispersed by many, who do so in a competitive market. There are 38 suppliers accredited by ERSE (Energy Services Regulatory Authority, the sector regulator) to operate in Portugal. Although not all of them supply all segments, you will surely have more than 20 to choose from, whether family, large or small company.
This abundance of competitors makes the prices offered at any given time quickly adjust to market conditions, whether going up or down.
As we have seen, 2020 was a year of low prices, so those who went to the market could benefit. If you haven’t updated prices during 2020, I suggest you do so now. Although prices spent the second half of the year rising, they remain at historically interesting values.
For those who already have the good practice of consulting the market every year, the price level remains interesting, when compared to recent years. What will happen in the coming months will depend a lot not only on the usual production factors that affect prices (wind, rain, gas, oil, operation of nuclear plants, CO2 licenses), but above all on the behavior of the economy, the major influencer of energy demand.
How will the economy behave in 2021? This is the big question that only a finely tuned crystal ball could reveal. Comedian George Carlin said “Tonight’s weather forecast: dark”. This forecast time horizon seems quite adequate to the times we live in. In the absence of magical methods, optimizing all costs – including energy – is a safe bet.