March 6, 2021

Hacking of the CNMC of more than one billion a year to electricity and gas


The National Commission of Markets and Competition (CNMC) has published seven circulars today on the methodology for fixing energy tolls after 2020, which would mean a cut of more than one billion euros per year until 2026 of the compensation received by electricity and gas companies. These circulars will be subject to public consultation until next August 9 and would take effect in December of this year.

The impact has been immediate and Enagás has dropped almost 9% on the stock market, Red Eléctrica 4% and Naturgy 4.5%.

The circulars suggest that in the electrical distribution the remuneration drops 7%, from 5,455 million to 5,073, which means a cut of 381 million.

For its part, in transport of electricity, the cut is 8.2%, of 136 million. Thus, the remuneration will go from 1,656 current million to 1,520 million.

In gas, the distribution cut proposed by the CNMC is 17.8%, of about 253 million. In his case, the remuneration goes from 1,420 million annually to about 1,167 million.

To these 253 million are added another 259 million cut in payment for gas transport and regasification, 21.8%. Retribution would fall to 930 million, compared to the current 1,186.

On the other hand, the remuneration for the technical manager of the gas system (Enagás) would increase by 7.9%, from 24 to almost 26 million per year. For the electricity system operator (REE), it would rise by 21.6%, from 58 to 70.5 million.

The Proposed methodology by the CNMC is based on the WACC (Weighted Average Cost of Capital or Weighted Average Cost of Capital). It is a consistent, reproducible and widely used methodology among European regulators for the calculation of the remuneration rate of regulated activities in the electricity and gas sector, according to the body chaired by José María Marín.

In addition, the CNMC emphasizes that this methodology minimizes regulatory uncertainty, since, being easily replicable, it facilitates the predictability of future rates of remuneration and contributes to generating a more stable and investment-friendly environment.

On the other hand, other circulars published by the CNMC establish the remuneration methodologies for Red Eléctrica and Enagás for periods of three years. For the electric operator, it proposes a compensation of 70.5 million, a 21.6% increase; and for the gas company about 25.9 million, 7.9% more.

Companies announce a legal battle

The companies affected by these cuts have reacted quickly and have announced that they will present allegations to these CNMC circulars and some are already considering recourse to the Supreme Court.

Enagás has sent a communication to the CNMV in which it states that "it is studying in depth the content of the circular proposals issued for public information on this day and will make use of the right that the law confers on it to make the allegations and proposals of improvement that better represent their interests, those of their shareholders and those of the gas system. The company will pay special attention to those elements that may not comply with the appropriate methodological parameters and profitability ".

REE it will also make the necessary allegations in order to guarantee a sufficient overall remuneration that will allow it to execute the projects necessary for the energy transition.

Sedigas, the association that brings together companies in the Spanish gas sector, has expressed its "" disappointment "to consider that the proposed compensation methodology" discourages "the sector in its goal of promoting the ecological transition through the Integrated National Energy and Climate Plan (PNIEC)

For the bosses, the proposed measures are "totally out of line" with European regulation, as it would prevent gas from contributing to the three challenges of the green transition: decarbonization of the economy, improvement of air quality and momentum. to the circular economy.

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