Last stretch for the National Market and Competition Commission (CNMC) to approve circulars on network remuneration, a key concept for the economic accounts of electricity companies which will be charged on the bills of all consumers in the next six years (2026-2031). The process for the preparation of the methodological and tariff circulars for the financial remuneration of the lines that bring electricity from generation plants to homes and consumption points is currently before the Council of State, which will have to decide on the matter.
Previously, the Ministry for Ecological Transition had to prepare a report expressing its opinion. And in the document sent by the CNMC to the same Council of State, the department led by the third vice president and minister for ecological transition, Sara Aagesen, included two key comments in which it supports a possible improvement in wages, as confirmed by sources close to him.
The Government first asks that energy policy directions be taken into account and decarbonisation and electrification be promoted. In this sense, he underlines that the regulator has not introduced what the remuneration for the gas networks is to see more clearly how much the desired electrification is encouraged. On the other hand, it is also requested that the circulars are sensitive to the fact that they are now linked to consumer demand, which implies a higher level of risk than in previous periods that must be recognized in the remuneration.
Despite these reflections, the Ministry for Ecological Transition did not convene the Cooperation Commission with the CNMC. This is a prerogative that the Executive has recognized by law in the event that the Competition prepares circulars that do not comply with the energy policy guidelines set out by the Government. Sources from the Ministry for Ecological Transition simply underline that “it has issued energy policy guidelines which aim to protect consumers and, at the same time, encourage investments in electricity networks”. “The Ministry believes that the CNMC has made an effort in this sense,” add government sources.
So far in the last year, network remuneration has been one of the main topics of dispute between regulators and electricity companies. Companies believe that the CNMC proposals do not sufficiently encourage investment. The regulator, for its part, believes that they are adequate and must ensure that they entail the lowest possible cost for consumers. Meanwhile, the Government also seeks to avoid additional costs that limit the country’s competitiveness and weigh on the pockets of Spaniards, but is also aware that a certain improvement can allow for greater electrification and attract investments in the face of the current collapse of the network in Spain.
Without consensus within the CNMC
The CNMC proposed to increase the financial remuneration rate (TRF) from 5.58% to 6.46%. That first proposal was then raised to 6.58%, a figure that remains low for power companies. From the sources consulted, it emerges that several city councilors voted against the latest proposal approved at the end of October. There are councilors who ask to increase the remuneration of distribution networks to the level of that of transport (Red Eléctrica), which is a little higher (close to 7%), and others who are more in line with the Government’s theses according to which electrification should be addressed. The issue is not entirely unanimous, since there is also a councilor who has asked to lower the salary even further than the current proposal so that consumers pay less.
Now, business sources are confident that the Council of State’s ruling can provide a boost, albeit limited, before being sent back to the CNMC for final approval, which must arrive by December 31st of this year. Furthermore, the Government’s report arrived at the regulator later than expected and could not be considered before its latest proposal, which could also dilute its effectiveness.
In the sector, they point out that disputes not related to the remuneration of the networks between the Government and the electricity companies have been able to affect the Ministry of Ecological Transition, which has finally given up on raising its wrist and convening the CNMC to give more space to electrification, key to attracting industrial projects, data centers or even to covering new applications for housing, a market that is representing one of the main problems for the Spanish economy due to high rental and purchase prices.
In recent months, electricity companies have denounced the Government’s complaint about the blackout and Iberdrola is even thinking of denouncing the president of Red Eléctrica, Beatriz Corredor, according to what was published The world. Furthermore, they sued the executive over the compensation that nuclear companies pay to Enresa for waste management. They also lobbied for the expansion of nuclear plants, a thorny issue for the government due to its political implications. With this panorama, there are those who believe that Transition has been able to give up on giving the pulse of the network.
Indeed, there are even executives of power companies who breathed a sigh of relief last Thursday after the fall of the PP amendment aimed at changing the rules affecting the current nuclear shutdown program. They believe, add sources close to the conversations, to thus avoid punishing the government further when the most urgent debate they have on the table is that of the remuneration of the networks.
For some companies the circulars do not have the same impact as for other network owners, so the negotiations have unequal effects. Iberdrola and EDP are already very internationalized companies and the base of their assets in Spain, and in particular of their networks, weighs much less than for Endesa, whose scope of action is limited to Spain and Portugal. For Naturgy the issue is even more complicated, since it owns the vast majority of gas networks in Spain, the remuneration of which is also being negotiated by the CNMC and will come into force a year later.
