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Friday, December 9, 2022
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HomeOpinionLatest Legal developments in the Energy sector, by Ashurst

Latest Legal developments in the Energy sector, by Ashurst

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Ashurst team
Authors: partner Andrés Alfonso (left) and senior associates Soledad Adell (top right) and Ricardo García-Borregón (bottom right)

DEVELOPMENTS IN THE ELECTRICITY SECTOR


Procedure to preserve the capacity released in the fair transition nodes

On 27 February 2022, the National Commission for Markets and Competition (CNMC) issued its response to the consultation raised by Red Eléctrica de España (REE) regarding how to preserve the released access capacity in the just transition nodes in the event of access requests in downstream distribution grids that require the issuance of an acceptability report by REE.

In this regard, the CNMC has clarified that REE should suspend the issuance of such reports until the corresponding tender has been resolved, in order not to consume access capacity released in the just transition node.

Once the tender has been resolved, REE will unblock the issuance of the reports in chronological order and will distribute the access capacity that may remain free of allocation after the holding of the tender.

The full text of the response to the consultation can be accessed here.

Proposed Order for new remuneration parameters

On 2 March 2022, the Ministry for Ecological Transition and the Demographic Challenge opened the public information period on the proposed Order implementing various Supreme Court rulings that annulled Order TED/668/2020, of 17 July, which established the remuneration parameters for the period from 1 October 2018 to 30 June 2019 (Order TED/668/2020).

This proposed Order arose as a result of various Supreme Court rulings that annulled Order TED/668/2020 on the grounds that it did not take into account (i) the targeting coefficient by technology when deducting the tax on the value of electricity production from the remuneration for operation or (ii) the actual production attributable to the IT-00835, IT-00859, IT-00866 and IT-00842 type facilities.

Consequently, the proposed Order aims to comply with the mandate to update the remuneration parameters established in article 20.3 of Royal Decree 413/2014, of 6 June.

The deadline for submitting allegations is 23 March 2022 and the content of the public consultation can be accessed here.

DEVELOPMENTS IN THE GAS SECTOR


Reduction of minimum security stocks of petroleum products

On 5 March 2022, Order PCM/153/2022 of 4 March was published in the Official State Gazette (BOE), publishing the Agreement of the Council of Ministers to release minimum security stocks of oil products within the framework of coordinated action by the International Energy Agency, in response to the disruption of the oil market caused by Russia’s invasion of Ukraine.

Among other measures, the obligation to maintain minimum security stocks of petroleum products is reduced, on a transitional basis, from 92 to 89.4 days and the minimum stocks released will be placed on the market for a period of 30 days.

The content of the Order can be accessed here.

NEW DEVELOPMENTS COMMON TO BOTH SECTORS


Calendar of CNMC Notices of a regulatory nature whose processing is expected to begin in 2022

On 1 March 2022, the CNMC published the calendar of regulatory Notices (circulars) that are expected to be processed in 2022:

  • Notice 1/2020, which establishes the remuneration methodology for the technical manager of the gas system, will be amended to establish the gas year as the time period instead of the calendar year for the purposes of calculating the GTS’s remuneration, as is the case with other regulated activity remuneration. On the other hand, the calculation of the remuneration base will be updated and the criteria for settling the incentives for the first regulatory period will be established. The expected date for adoption of this proposed amendment to the Notice is 31 October 2022.
  • Notice 4/2019, which establishes the remuneration methodology of the electricity system operator, will be amended to update the calculations of the remuneration base and the variables considered in the calculation of the incentives provided for therein. The expected date of adoption of this proposed amendment to the Circular is 31 October 2022.
  • Notice 3/2020, of 15 January, which establishes the methodology for the calculation of transmission and distribution tolls, will be amended, among other issues, to introduce a new toll structure and a series of rules that allow for an objective, transparent and efficient allocation of the remuneration of transmission and distribution activities. The date foreseen for the adoption of this proposed amendment to the Notice is 31 December 2022.
  • Finally, the regulation of the methodology and conditions for access and connection to the transmission and distribution networks of electricity consumption facilities will be completed by means of a new Notice. The expected date of adoption of this proposed Notice is 30 June 2022.

The calendar of CNMC Notices scheduled to be issued in 2022 can be accessed here.

Guide to strengthen consumer protection in electricity and gas contracts

On 2 March 2022, the CNMC published a guide to strengthen consumer protection in electricity and gas contracts. With this guide, the CNMC aims to respond to the numerous doubts raised by companies, marketers and consumers in relation to the application of the measures to promote market transparency in electricity and gas supply contracts established in articles 4 and 5 of 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 consumers can carry out homogeneous and simple comparisons.
  • Addresses how to make price comparisons in the case of revised supply contracts.
  • Provides indications for those contracts with short-term periodic revisions, such as those subject to an index or deriving from modifications of the regulated components, given that, in relation to such contracts, it is not always possible to comply with the one-month prior notice period indicated in Royal Decree-Law 23/2021.
  • 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 RENEWABLE ENERGY REGULATORY DEVELOPMENTS


Price of emission rights

On 4 March 2022, the Resolution of 23 February 2022 of the DGPEM was published in the Official State Gazette (BOE), approving the price of emission rights for settlement for the year 2021 in the electricity systems of the non-peninsular territories.

In accordance with the sole article of the Resolution, the single price for settlement emission allowances for 2021 will amount to a total of 54.657 €/tonne.

The content of the Resolution can be accessed here.

NEW DEVELOPMENTS IN EUROPEAN MATTERS


Cross-border renewable energy projects

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

The Regulation lays down the specific selection criteria and details of the selection process for cross-border renewable energy projects. Specifically, eligible projects will include, inter alia, (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 improving the predictability of renewable energy production; (iv) conversion of renewable electricity into renewable liquid and gaseous fuels of non-biological origin.

The content of the Delegated Regulation can be accessed here.

THE TAX CORNER


The Waste Bill foresees to recover the Hydroelectric Canon

The Draft Law on Waste and Contaminated Soils for a Circular Economy, currently in parliamentary procedure in the Senate, includes an amendment to the revised text of the Water Law to recover the Canon for the use of inland waters for the production of electricity, commonly known as the “Hydroelectric Canon”.

This figure, which was first regulated in 2012 and annulled in 2021 by the Supreme Court, is now intended to be regulated as a tax that will be levied on the use and exploitation of public water assets (belonging to the hydrographic basins of state competence) for the production of electricity at power plant bars, and will go towards 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 (with the initial granting and annual maintenance of the hydroelectric concession) on the total remuneration obtained for the energy produced that is incorporated into the electricity system during each year at a rate of 25.5%.

However, a reduction (92% for hydroelectric installations with a capacity equal to or less than 50 MW and 90% for mixed pumping installations with a capacity greater than 50 MW) is provided for, on the part of the tax base made up of the value of the energy from pumping, for those productions or installations that are to be incentivised for reasons of general energy policy. However, the reduction will not be applicable to the part of the tax base made up of the value of the energy coming from direct turbining from the reservoir.

The article can be accessed here.

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