March 4, 2021

Red Eléctrica charges against the proposal of compensation for electric transport of Competition | Economy

The circular on remuneration for electricity transport activity proposed by the National Commission of Markets and Competition (CNMC) "introduces a high level of uncertainty regarding the remuneration of investments, incorporates a high degree of discretion over critical actions for the deployment of the energy policy and is discriminatory with the transport activity", as reported by Red Eléctrica de España (REE) .

The company that manages the transport of electricity believes, in addition, that it could hinder the energy transition and compliance with the Integrated National Energy and Climate Plan (PNIEC), since it does not establish a clear, stable or predictable regulatory environment. In his opinion, it does not recognize as an incentive factor the incorporation of new technologies and innovation in the maintenance activity. In a statement released by the company, it highlights that the proposal could violate points 1, 2 and 4 of article six of the order of April 5 of the Ministry for the Ecological Transition by which guidelines are established energy policy to the CNMC .

The Competition proposal proposes, according to a new rate, a reduction in the return on investments (both past and future) from 6.503% to 5.58% as of 2021, although by 2020 the rate would be 6.003% as a result of the Royal Decrees 1047/2013 and 1048/2013 established that "in no case, the proposed variation of the financial remuneration rate used between two consecutive years may be higher in absolute value to 50 basis points".

According to the proposal, the remuneration of the electricity companies will be reduced by an average of 7% and the gas distributors will suffer a cut of 17.8% if it is carried out. The circular also includes that the transportation of electricity and gas, carried out by Red Eléctrica de España and Enagás, will have a cut of 8.2% and 21.8%, respectively.

Worst service

According to Jordi Sevilla, president of the group, "cutting spending on investment and maintenance in the provision of an essential public service is not the right way, it has not been in health or education, nor will it be in the Spanish electricity service" . "Experience has shown us, here and in other countries, that the strategy of indiscriminate cuts in spending only leads, with certainty, to the deterioration in the quality of service provision, without having been able to demonstrate its supposed advantages. And this applies to any essential public service, regardless of whether it is financed with public resources coming from the General State Budgets or with private funds that must be obtained in the financial and capital markets, for which it must be respectful of the rules of the game that determine these markets, "adds Sevilla.

For the president of REE, the cuts are not the guarantee of greater efficiency, nor of a lower cost in the service. "The bill will be reduced, precisely, with the massive introduction of renewable energies foreseen in the National Integrated Energy and Climate Plan, whose objectives are put at risk if the investment ceilings are cut and the maintenance standards of some networks are reduced. transport that, until now, have been an international reference of quality and security of supply, "he adds.

Sevilla underlines that the current model combines the best of providing an essential public service for citizens with the best of the private, through financing in international financial markets that requires maintaining high levels of efficiency. However, it warns that this balance is called into question by a regulation such as the one proposed, "which establishes discretion when it arrogates the power to decide a posteriori and unilaterally which investments are paid and at what price". "In these conditions of legal uncertainty it will be difficult to convince private investors to build the necessary networks for the energy transition."

Government correction

The former minister appeals to the government and says he trusts that the allegations of the companies affected, together with the mandatory intervention of the Executive, will correct the proposal "so as not to jeopardize the volume of private investments in networks necessary for the energy transition or the maintenance of existing ones with the exacting current standards ".

To ensure the sustainability of the electricity system and security of supply, the new methodology should ensure that changes introduced in the methodology are accompanied by mechanisms for their gradual absorption. Likewise, with the aim of making possible the penetration of renewable energies in the electrical system and thus be able to meet the objectives in terms of energy and climate, the methodology should adequately compensate the new investment needs that derive from the 2021 Planning. -2026, both in terms of volume and in terms of its nature (assets for the intelligent management of the network).

On the other hand, it is also stated that the remuneration should encourage the extension of the operation of those facilities that have exceeded the useful life of remuneration, in order to contribute to the optimal management of national resources and maintain the assets already built and amortized under adequate conditions. of operation, avoiding its replacement with a higher replacement cost.

(tagsToTranslate) electrical network (t) load (t) proposal (t) compensation (t) transport (t) electric (t) competence (t) group (t) affirm (t) introduce (t) raise (t) level (t) uncertainty (t) incorporate (t) discretion

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