As part of an overall reform of the electricity sector, the Spanish Parliament has passed a new act, effective from 28 December 2013.

The main goal of the act is to set forth the basic legal framework of the sector, with the aims of guaranteeing the quality of supply at minimum cost, the economic and financial sustainability of the electricity system, and effective competition in the power market.

In summary, the act

  • introduces certain mechanisms designed to avoid new tariff deficits;
  • distinguishes between tariffs and charges to ensure alignment with EU Directives;
  • clarifies the distribution of powers and competencies as between the public administration, in line with recent rulings of the courts;
  • presents a new economic regime for network activities (transmission and distribution), generation from renewable sources, cogeneration and waste, and generation in the non-peninsular systems;
  • introduces the concept of a regulated period for the abovementioned activities, determined as being six years, with the aim of revising the parameters of operation and profitability of each activity within this period; there are also mechanisms for the amendment of the remuneration regime within each six-year period;
  • regulates, for the first time, proprietary power installations;
  • introduces other measures aimed at achieving a level of effective competition in the wholesale electricity market, among them the obligation for all renewable energy plants to submit offers within the wholesale electricity market;
  • establishes the rights and obligations of consumers, distribution companies, and marketing companies with regard to the supply of electricity;
  • replaces the tariff of ultimate recourse with a voluntary price for the small consumer;
  • defines "vulnerable consumers", who have a right to the supply of electricity as a public good; and
  • determines the basic regulations for the collection and settlement of tariffs, charges, and other concepts of the electricity system.

The act completes the reform initiated last July by Royal Decree-law 9/2013, however, it is expected that during the course of this year the government will pass several regulations and ministerial orders to further develop the detailed regulatory implementation of the reform.