Energy Spain Newsflash 3102022 42958 PM

NATIONAL MEASURES RELATING TO THE ELECTRIC SECTOR

Preservation the capacity released in the fair transition nodes

On 27 February 2022, the National Commission on Markets and Competition (CNMC) resolved the consultation raised by Red Eléctrica de España, S.A. (REE) regarding the preservation of the released access capacity in the fair transition nodes (nudos de transición justa) in the event of access requests filed in relation to downstream distribution grids where the issuance of acceptability reports by REE is required.

In this regard, the CNMC has clarified that REE should suspend the issuance of such acceptability reports until the relevant node competition has been resolved to avoid the granting of the access capacity released in the fair transition node.

Once the node competition has been resolved, REE will resume the issuance of the acceptability reports in chronological order and will distribute the access capacity that may remain free of allocation.

The response to the consultation can be accessed here.

Proposed Order on new remuneration parameters

On 2 March 2022, the Ministry for Ecological Transition and the Demographic Challenge (MITERD) opened the public information period on the proposal of Order implementing various Supreme Court's (Tribunal Supremo) rulings that annulled Order TED/668/2020, which set out the remuneration parameters for the period from 1 October 2018 to 30 June 2019 (Order TED/668/2020).

This proposed Order arises as a result of several rulings rendered by the Supreme Court that annulled Order TED/668/2020 for not taking into consideration (i) the targeting coefficient of technologies when carrying out the deduction of the Tax on the value of electricity production from the remuneration to the operation nor (ii) the actual production attributable to the facilities type IT-00835, IT-00859, IT-00866 and IT-00842.

As a consequence of the above, the proposal of Order aims to comply with the mandate to update the remuneration parameters established in section 20.3 of Royal Decree 413/2014.

Allegations can be submitted until 23 March 2022 and the content of the proposed Order can be accessed here.

NATIONAL MEASURES ON THE GAS SECTOR

Reduction of minimum security stocks of oil products

On 5 March 2022, Order PCM/153/2022, publishing the decision of the Spanish Council of Ministers whereby minimum security stocks of oil products were partially released was published in the BOE within the framework of a coordinated action of the International Energy Agency, in response to the disruption of the oil and gas market caused by the invasion of Ukraine carried out by Russia.

Among other measures, the obligation to maintain minimum security stocks of petroleum products is reduced, on a transitory basis, from 92 to 89.4 days and the introduction on the market of the such released stocks will be carried out within a 30-day period.

The content of the Order can be accessed here.

NATIONAL MEASURES ON BOTH SECTORS

Timetable for the processing of CNMC's Circulars in 2022

On 1 March 2022, the CNMC published the calendar of its regulatory Circulars whose processing is expected to be initiated during 2022:

• Modification of Circular 1/2020, which establishes the remuneration methodology for the technical manager of the gas system (GTS), to establish gas years as the time period to calculate the GTS remuneration instead of calendar years, in the same manner as other regulated activities. Furthermore, the calculations for the remuneration base will be updated and the criteria for settling the incentives of the first regulatory period will be set out. The expected date for the entry into force of this amendment is 31 October 2022.
• Modification of the Circular 4/2019, which establishes the remuneration methodology of the electricity system operator, to update the calculations of the remuneration base and the variables taken into account in the calculation of the incentives provided therein. The expected date for the entry into force of this amendment is 31 October 2022.
• Modification of the Circular 3/2020, which establishes the methodology for the calculation of transmission and distribution tolls, to introduce a new structure of tolls as well as new rules to allow an objective, transparent and efficient allocation of transmission and distribution activities' remuneration. The expected date for the entry into force of this amendment is 31 December 2022.
• Finally, the regulation of the methodology and conditions for access and connection to the transmission and distribution grids of electricity consumption facilities will be completed with the issuance of a new Circular. The expected date for the entry into force of this Circular is 30 June 2022.

The calendar of the CNMC's Circulars can be accessed here.

Guidance to reinforce consumer protection in electricity and gas contracts

On 2 March 2022, the CNMC published a guide to reinforce consumer protection under electricity and gas supply contracts. This guide aims to respond to the numerous queries raised by market companies and consumers in relation to the application of the measures to promote market transparency in electricity and gas supply contracts set out Royal Decree-Law 23/2021.

Among other practical criteria, the CNMC:

• establishes the price units to be considered for the purposes of publishing transparent, comparable, adequate and updated information on the prices applicable to all available offers so that the consumer can carry out homogeneous and simple comparisons;
• addresses how to carry out price comparisons in the event of a revision of the supply contract;
• provides indications for those contracts with short term periodic revisions, subject to an index or derived from modifications of the regulated components, to the extent that in such contracts it is not always possible to comply with the prior notice period indicated in the regulations;
• establishes that, in those cases where the supplier decides to terminate a contract, it should compensate the consumer with at least the same penalty criterion agreed for the opposite case (if the consumer had been the one to terminate the contract).

The content of the Guide can be accessed here.

OTHER REGULATORY DEVELOPMENTS REGARDING RENEWABLE ENERGIES

Price of emission allowances

On 4 March 2022, the Resolution of the DGPEM approving the price of emission rights for settlement for the year 2021 in the electricity systems of the non-peninsular territories was published in BOE.

According to the Resolution, the price for the settlement emission rights for the year 2021 will amount to a total of 54.657 €/ton.

The content of the Resolution can be accessed here.

EUROPEAN MEASURES

Renewable energies cross-border projects

On 1 March 2022, the European Commission Delegated Regulation (EU) 2022/342 of 21 December 2021, supplementing Regulation (EU) 2021/1153 as regards to specific selection criteria and details of the selection process for renewable energies cross-border projects was published in the Official Journal of the European Union.

This Delegated Regulation sets out the specific selection criteria and details of the selection process for renewable energy cross-border projects. Among others: (i) production technologies based on renewable sources covered by Directive (EU) 2018/2001; (ii) storage facilities, provided that they form an integral part of the project; (iii) any system or component integrating information and communication technologies, including the improvement of the predictability of renewable energy production; (iv) conversion of renewable electricity into renewable liquid and gaseous fuels of non-biological origin shall be eligible.

The content of the Delegated Regulation can be accessed here.

THE TAX CORNER

The Draft Bill on Waste foresees to recover the hydroelectric fee

The Draft Bill on Waste and Contaminated Soils for a Circular Economy, which is currently under parliamentary approval process, provides for the amendment of the revised text of the Water Law (Ley de Aguas) to recover the fee for the use of inland waters for the production of electricity, commonly known as the hydroelectric fee (canon hidroeléctrico).

This figure, which was regulated for the first time in 2012 and annulled in 2021 by the Supreme Court, is now intended to be implemented as a fee that will tax the use and exploitation public water domain's assets for the production of electric energy and will be destined to the protection and improvement of the public water domain.

The taxpayer will be the holder of the hydroelectric exploitation and the tax will accrue annually (after the initial granting and annual maintenance of the hydroelectric administrative concession) on the total remuneration obtained for the energy produced which is incorporated into the electricity system during each year at the rate of 25.5%.

However, the Draft Bill provides for a reduction (of 92% for hydroelectric installations with a capacity equal to or less than 50 MW and of 90% for mixed pumping installations whose capacity exceeds 50 MW) on the portion the taxable base composed of the value of the energy obtained from pumping, for those installations that must be incentivized for reasons of national energy policies. Nonetheless, such reduction will not be applicable to the portion of the taxable base composed of the value of the energy directly produced from the reservoir by means of turbines.