May 29, 2020

Naturgy and Red Eléctrica attack against the cuts proposed by the CNMC

Naturgy and Red Eléctrica have lashed out this Wednesday against the cuts proposed by the National Commission of Markets and Competition (CNMC) in seven circulars that came out for consultation on Friday and that propose important cuts in the regulated remuneration of the sector, which has led to strong falls in the prices of companies in the stock market.

According to Europa Press reports, Naturgy has confirmed that it has temporarily paralyzed the investments of its gas distribution subsidiary, Nedgia, until analyzing the effect of the circulars, in which a reduction in gas distribution of 17.8 is considered. % in the period 2021-2026.

For his part, the president of Red Eléctrica (REE), the former socialist minister, Jordi Sevilla, has trusted that the cuts contained in the proposal, which includes reducing the income of transporting electricity more than 8%, "corrected" so as not to put "at risk" the private investments necessary for the energy transition.

Naturgy has communicated this Wednesday to the representatives of the workers his decision, adopted by criteria of "prudence", to stop all investments and activities associated with growth and investment.

In his opinion, this new scenario involves retroactively changing the tax base of the remuneration model, by including the regulated assets of the past in the equation, which implies a "penalty" for their income. Nedgia will paralyze its investments while analyzing in depth the impact of the circulars presented by the agency, currently in consultation period until August 9.

For his part, Jordi Sevilla, in statements published on the website of REE, has said that cutting spending on investment and maintenance in the provision of an essential public service is not the right way and that "indiscriminate cuts" only lead to deterioration in the quality of the service.

The former minister has called for respect to "the rules of the game" that determine the financial markets and has stressed that the electricity bill will be lowered, precisely, with the massive introduction of renewable energies provided for in the Integrated National Energy and Climate Plan (PNIEC), whose objectives in his opinion are "at risk" if the investment ceilings are cut and the maintenance standards of the transport networks are reduced.

The president of REE believes that the company combines the best of providing an essential public service "with the best of the private" through financing in international financial markets that requires maintaining high levels of efficiency. And without legal security "it will be difficult to convince private investors to build the necessary networks for the energy transition".

"We are committed to the Energy Transition and the energy policy guidelines of the Ministry and we trust that the allegations of the affected companies, together with the mandatory intervention of the Government of Spain in defense of these Guidelines, will correct the proposal so as not to put at risk the volume of private investments in networks necessary for the energy transition or the maintenance of existing ones with the demanding current standards ".

. (tagsToTranslate) Naturgy (t) Network (t) Electric (t) proposed (t) CNMC

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