March 6, 2021

The Government believes that mediation is necessary for the CNMC's cut to the gas sector


The Ministry for Ecological Transition considers it necessary to call the Cooperation Commission to resolve its discrepancies with the National Commission for Markets and Competition (CNMC) regarding the regulator cut proposal for the gas sector.

In its report on the draft circular of the CNMC establishing the methodology for the remuneration of natural gas transportation facilities and liquefied natural gas plants, the cabinet headed by Teresa Ribera states that the proposal “no has taken into account the energy policy orientation, concerning the introduction in the methodology of remuneration of a principle of financial prudence for the holders of transport and regasification assets ».

"This is despite the fact that the CNMC itself in various economic-financial reports of regulated activities has expressed concern about the high degree of leverage of regulated activities and deemed it appropriate to establish regulatory leverage limits appropriate for them," he adds.

Also, under the proposed remuneration framework, to ensure that the orientation of encouraging the extension of the operation of the facilities is met, it is necessary to analyze whether the remuneration for the extension of useful life that is established sufficiently compensates the holder of an asset versus the alternative of investing in a new facility that replaces them.

In this case, it considers that this analysis can only be carried out once the unit values ​​are known for investment and for operation and maintenance costs that the CNMC itself plans to approve soon.

Despite these discrepancies, the Executive "positively" values ​​the CNMC proposal, in which it raises for the following regulatory periods a reduction of 17.8% in the remuneration of the distribution of gas and 7% in that of electricity, as well as a cut of 21.8% for the transport activity of gas and regasification and 8.2% for electric transport, and shares "the general approach" of the proposal.

However, the Ministry for Ecological Transition sees it necessary to convene the Cooperation Commission, the body provided for in the law by which its powers in the field of energy were returned to the CNMC and which would consist of three members of the regulator and three others of the Secretariat of the State of Energy, with the objective of reaching a consensual solution to the discrepancies and adapting it to its energy policy orientations.

With regard to the proposal for the remuneration of the electric energy transport activity, the Government also values ​​the CNMC circular “positively” and believes that the new methodology is “continuous”.

However, in this case you also see discrepancies to convene the Cooperation Commission due to different aspects. Thus, it considers that the need to encourage the extension of the operation of the facilities beyond its remunerative useful life is adapted “in a partial way”.

In addition, it notes that it addresses aspects that correspond to the Government, through Royal Decree, thus invading its powers, such as the establishment of a maximum annual investment limit and the approval of investment plans.

The cabinet headed by Teresa Ribera also affirms that, since the remuneration concept in which the necessary investments in assets aimed at the modernization and digitalization of the network are not clearly identified, “a clear, predictable and adequate compensation framework is not being offered so that these investments can be made ».

In the case of the CNMC circulars proposal for the remuneration methodology of the technical manager of the gas system and the operator of the electrical system, the Government sees no reason to raise the call of the Cooperation Commission.

With regard to the operator of the electricity system, he points out that the proposal can be considered to be fully adapted to the energy policy guidelines, while in the case of the gas system manager, he believes that it is "partially" adapted.

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