Royal Decree Law 1/2019, of 11 January, of urgent measures to bring the competencies of the Spanish National Markets and Competition Commission ("CNMC") in line with the requirements of EU law in relation to Directives 2009/72/EC and 2009/73/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in electricity and natural gas ("RDL 1/2019"), entered into force on 13 January.
RDL 1/2019 was ultimately enacted as a result of the incorrect transposition of both directives into Spanish legislation, according to the European Commission's reasoned opinion issued in September 2016.
4. Key changes brought in by RDL 1/2019
1. Reason for the reform
The European Commission's investigation into the transposition of the directives concluded in September 2016. In its reasoned opinion that brought an end to the investigation, the Commission concluded that the directives had been transposed incorrectly and urged Spain to take legislative steps to remedy the situation.
At the same time, the incorrect transposition of the directives triggered a significant volume of litigation before the Spanish Tribunal Supreme between the Spanish regulator (the CNMC) and the Spanish Government.
It is for this reason that the Government has approved RDL 1/2019, the extraordinary and urgent need for which is justified given the delay in remedying the errors highlighted in the European Commission's reasoned opinion and the risk of legal action for infringement being brought against the Kingdom of Spain.
2. Aims of the reform
The primary aim of RDL 1/2019 is to apportion competencies between the Government and the CNMC in a manner that respects both the transposed directives and the manner in which the State exercises authority on the basis of energy legislation as provided by the Spanish Constitution, and safeguards the independence of the CNMC.
3. Legislative changes
RDL 1/2019 modifies the following provisions:
- Law 3/2013, of 4 June, on the creation of the CNMC;
- Law 34/1998, of 7 October, of the Hydrocarbons Sector;
- Law 24/2013, of 26 December, of the Electricity Sector; and
- Law 18/2014, of 15 October, which approves urgent measures to foster growth, competitiveness and efficiency.
4. Key changes brought in by RDL 1/2019
These are the key changes brought in by RDL 1/2019:
- It includes a number of different rules that, while safeguarding the independence of the CNMC when approving regulatory circulars, aim to ensure that they adhere to the strategic priorities established by the Government, materialising in the form of energy policy guidelines to be approved by Order issued by the Ministry for the Ecological Transition, with the prior approval of the Government's Delegated Commission for Economic Affairs. For that purpose, before those circulars are approved, the Ministry shall be able to issue a report assessing their adherence to previously adopted energy policy guidelines. Furthermore, even when guidelines have not been adopted previously, the Ministry may request that the circulars be sent to it previously for its approval, for the purpose of issuing its report. RDL 1/2019 also sets up a Cooperation Commission (composed of six members with the ranking of deputy director general: three representing the CNMC and three representing the Secretariat of State for Energy), which shall be assembled to try to reach an agreement if the Ministry's report finds that the circular in question is inconsistent with the guidelines.
- If the regulatory circulars are passed without inconsistencies having been raised or if an agreement has been reached by the Cooperation Commission, they shall indicate that they have been passed "in accordance with the Ministry for the Ecological Transition's guidelines on energy policy"; otherwise, they shall indicate that they are passed "after having been submitted to the consideration of the Ministry for the Ecological Transition".
- The following authorities are given to the CNMC:
- In relation to the remuneration of the transmission and distribution of electricity, as well as the transmission, distribution and regasification of natural gas, approval of (1) the methodology used; (2) the remunerative parameters; (3) the asset regulatory basis; and (4) the activity's annual remuneration (including the determination of the financial rate of return, which, however, cannot exceed the maximum limit that may be established by law at the beginning of each regulatory period; if a maximum limit is not established, the maximum limit applicable for the previous regulatory period applicable or, otherwise, the maximum rate of return for that period, shall apply).
- In relation to the regulation of access tariffs to the electricity and natural gas networks, approval of the structure, methodology and value of those access tariffs.
- The approval of the methodology and the conditions for access and connection to the electricity and natural gas transmission and distribution networks, which will entail economic criteria and criteria for assessing capacity, reasons for denial, the content of applications, permits and contracts, as well as obligations regarding the publication and disclosure of relevant information for network access and connection.
- Regulating the rules of operation of the organised markets, where approval falls to the national regulator, in accordance with the provisions of EU law; and
- Establishing the remuneration of the electricity system operator and technical manager of the gas system.
- It clarifies the controlling role played by transmission network managers' investment plans, in particular regarding its adherence to the network development plan within the EU, and it restates the allocation of disciplinary authority and the authority to conduct inspections, in line with the functional modifications made.
- Finally, it establishes a transitional regime for the modifications made in order to ensure an orderly transfer of functional responsibilities. In general terms, the new functions and authorities allocated to the CNMC will not become effective until 1 January 2020 or until the first regulatory period has ended, depending on each case.
