New Royal Decree-Law approved to contain tariff deficit

The biggest changes are the elimination of the premium set out in the electricity industry legislation for facilities under the special regime (using cogeneration, renewable energy sources and waste) that sell the energy they generate on the market (those that have elected option b) under article 24.1 of Royal Decree 661/2007, of May 25, 2007). Thus, following the entry into force of this new legislation, there are now two options for the sale of energy generated by facilities under the special regime: (i) deliver the electricity to the system in exchange for a regulated tariff; or (ii) sell the electricity on the electricity generation market, in which case the price of the electricity will be exclusively that obtained on pool or that freely negotiated by the owner or the representative of the facility, with no additional premium.

The new decree also provides that after it comes into force the facilities under the special regime that elect to sell the electricity they generate on the electricity generation market cannot later elect to take the change of option allowed by article 24.4 of Royal Decree 661/2007.

There are also a new set of new measures applying from January 1, 2013, which are described below.

The first measure is the replacement of the inflation adjustment index for the costs of the electricity industry, with the result that, starting on January 1, 2013, the remuneration, tariffs and premiums will be adjusted by reference to the Spanish Consumer Price Index (“CPI”) at constant taxes not including non-elaborated food products or energy products (underlying CPI), which replaces the reference to the CPI made in the electricity industry legislation. It must be noted in this respect that, on February 1, 2013, the Energy Secretary of State forwarded to the National Energy Commission the “Draft Order establishing the access tolls from January 1, 2013 and the tariffs and premiums for facilities under the special regime” for the Commission to issue its compulsory report. The draft order sets out the applicable tariffs and premiums for facilities under the special regime which have been adjusted for 2013 using the underlying CPI.

The new decree also provides that the premium in respect of the energy sold by facilities that have elected the option to sell to the market from January 1, 2013 until the date on which it came into force will be settled by the National Energy Commission by reference to the applicable regulated tariff values, in other words, as if they had elected option a) under article 24.1 of Royal Decree 661/2007.

Finally, the new decree provides that those facilities which on the date of its entry into force are selling the electricity they generate to the market will automatically be treated as having elected, effective from January 1, 2013, the option to sell at the regulated tariff. However, the owners of those facilities can notify the Directorate-General of Energy Policy and Mines of their decision to remain under option b) (to sell at market prices without a premium) before February 15, 2013, although once they have made that notification they will not be able to elect the change of option set out in article 24.4 of Royal Decree 661/2007. Moreover, the new decree renders invalid any notifications of a change of option for the sale of energy from the option to sell at the regulated tariff to the option to sell at market prices which have not taken place on the date of its entry into force.

There are also new provisions on the economic regime applicable to the successful bidders in the competitive bidding process for facilities using innovative thermoelectric solar technology.