NEWS OF INTEREST

December 2017 saw a new auction held to allocate the energy interruptibility service, the deadline for submitting arguments regarding the both the draft Royal Decree that will govern power plant closures and the draft Royal Decree that amends the Royal Decree governing electric charging supply services and the publication of the Annual Legislation Plan for 2018.

Conclusion of the auction called by the Ministry of Energy, Tourism and Digital Agenda to allocate the energy interruptibility service

The new auction to allocate the interruptibility service for the first five months of this new year, which was called to enable large electricity consumers to bid for the compensation payable should it be necessary to disconnect them from the grid, concluded last 20 December 2017. Two interruptible power products were auctioned in the process, one consisting of 5 MW reductions in consumption, and the other 90 MW reductions in consumption. The service is awarded to the bidder willing to provide it at the lowest cost.

Close to 150 large, electro-intensive industrial companies took part in the auction.

A deeper reform of the different capacity mechanisms (including interruptibility) is expected to take place this year, in line with EU regulations.

The Government includes the Law on Climate Change and Energy Transition in its Annual Legislation Plan for 2018

On 7 December 2017, the Council of Ministers approved the Government's Annual Legislation Plan for 2018, which sets out the regulations that are due to be approved over the coming calendar year. This is the first time that a plan of this kind has been approved in Spain.

Among other pieces of legislation, and in line with the Spain's National Reform Programme approved in April 2017, the Annual Legislation Plan for 2018 includes the approval of the Law on Climate Change and Energy Transition.

It is expected that the Committee of energy transition experts created by decision of the Council of Ministers dated 7 July 2017 will issue its report in the coming weeks and that the first draft of the Law on Climate Change and Energy Transition will be approved in this first quarter of 2018.

REGULATIONS IN PROCESS

The Spanish Government has sent to the National Markets and Competition Commission (1) a draft Royal Decree that governs the process for the closure of electrical power plants and (ii) a draft Royal Decree to amend the Royal Decree governing electric charging supply services.

On 18 December and 19 December, respectively, the term ended for submitting arguments regarding the draft Royal Decree that will govern power plant closures and the draft Royal Decree on electric charging supply services.

The draft Royal Decree that governs the process for the closure of electrical power plants elaborates on the provisions of article 53 of the Spanish Electricity Sector Law 24/2013, of 26 December, which makes the temporary or definitive closure of electrical power plants with a capacity exceeding 50 MW subject to administrative authorisation; it also establishes that a lack of response to the application for authorisation will be construed as a rejection of the application.

The draft Royal Decree will apply to all plant closures requested since the public consultation launched by the Ministry in July 2017, as well as those in respect of which an administrative decision has not yet been delivered.

The draft Royal Decree that modifies Royal Decree 647/2011, of 9 May, which governs the electric charging suppliers within the system for providing electric charging services, simplifies the requirements and conditions for charging supply companies to perform their business so as to foster the deployment of charging stations connected to activities other than electric charging, in particular the tertiary sector, to add to existing home charging points.

This provision is adopted in the context of the Spanish Government's initiatives to support energy-efficient and sustainable transportation.

Both draft Royal Decrees that govern their respective procedures were sent to the National Markets and Competition Commission (CNMC) for that body to issue its mandatory reports. Those reports have not yet been issued.

SPOTLIGHT

Electricity discounted rate

In December, the Spanish Supreme Court accepted for due process 10 contentious administrative appeals against Royal Decree 897/2017, which regulates the new discounted rate for the electricity sector, on top of the four appeals that it already accepted for processing in November. After the Supreme Court had annulled the previous mechanism for financing the discounted rate, the new legislation regulates who will finance the cost of the discount in electricity bills enjoyed by vulnerable consumers.