Spain's National Markets and Competition Commission launches a public consultation process in relation to the proposals to calculate the rate of return for (1) electricity production from renewable sources, co-generation and waste, and (2) electricity transmission and distribution, both for the second regulatory period 2020-2025

With regard to the first proposal, the CNMC has proposed a methodology that, with the parameters and samples used, results in a rate of return of 7.04% for the second regulatory period running from 2020 to 2025.

Regarding the second one, the consultation analyses the applicability of the methodology for calculating the rate of financial return for network activities in the gas sector, also applicable to the production of electricity in the NonPeninsular Electricity Systems.

In both cases, the deadline for submitting observations is 15 September 2018.

Communication from the European Commission indicating that investor-state arbitration between a Member State and an investor from another Member State is incompatible with EU law

The European Commission has indicated that European investors cannot turn to courts set up under the Energy Charter in the event of disputes between EU Member States.

As a result, according to the Commission, national courts have an obligation to annul any arbitral awards rendered on that basis and not to apply them, as EU law already offers EU investors that invest in another Member State a general and effective legal framework that includes a number of avenues for appeal.

In practice, in the case of Spain, this will mean annulling the awards rendered by such courts against Spain due to the reduction of renewable energy subsidies.

The EU Commission's Communication, published on 19 July and which aims to provide guidance to EU investors when invoking their rights before administrations and national courts while at the same time helping EU Member States to protect the public interest in accordance with EU legislation, has been issued on the back of the ECJ's judgment in the Achmea case in March of this year, which confirmed that investor-State arbitration in intra-EU bilateral investment treaties is illegal under EU law.

The Minister for Ecological Transition, Teresa Ribera, appeared before the Congressional Committee for Ecological Transition and announced that the upcoming Law on Climate Change and Energy Transition will include a Fair Transition Plan

On 11 July, the Minister for Ecological Transition, Teresa Ribera, appeared before the Congressional Committee for Ecological Transition to explain her department's primary action plans.

During her appearance, the Minister made a commitment to send the draft Law on Climate Change and Energy Transition to Spanish Congress before the end of the year.

She also announced that the Law on Climate Change and Energy Transition will include a Fair Transition Plan to offer support to territories and workers in industries that will be particularly affected by the transition to a low-carbon economy or that will suffer the impacts of climate change most severely.

The Minister pointed out that the ecological transition, and a low-carbon economy, depends on replacing the current centralised supply-based energy model with a decentralised model based on energy demand management; and emphasised the need (1) for a commitment to use renewable energy, energy efficiency and sustainable mobility through the use of public transport and electrical vehicles; (2) to reform self-consumption legislation; and (3) to make real changes to ensure the sustainability of the current production and energy model.

The Constitutional Court declares that the tax on the value of production of electricity is constitutional

In its Ruling 69/2018, dated 20 June, the Spanish Constitutional Court dismissed constitutional challenge 5032018 lodged in relation to a number of articles of Law 15/2012, of 27 December, on tax measures to ensure energy sustainability, which regulate the tax on the value of production of electricity due to it lacking legal merit.

In its Ruling, the Constitutional Court found that (1) the similarity between the tax on the value of production of electricity and the taxable event of the tax on business activities does not make it unconstitutional, as taxing the same expression of economic capacity twice is not contrary to the Spanish Constitution; and (2) the tax on the value of production of electricity is not confiscatory in nature, as neither Iberdrola Generacin nor the Supreme Court have provided information or arguments to support this claim.