The latest news indicates that significant progress has been made in recent months regarding new rate categories and new tariffs. Although the proposed changes have not been officially published, NUS believes these changes are likely to be approved and finalized soon.
The Spanish electricity market has been expected some substantial regulatory changes of the transmission and distribution rates as well as other regulated charges associated with the supply of electricity for many years. These changes were supposed to be approved in 2019 and to enter into effect in January 2020. However, the Spanish legislators fell into successive delays in developing and passing related legislation over the past two years. The latest news indicates that significant progress has been made in recent months regarding new rate categories and new tariffs. Although the proposed changes have not been officially published, NUS believes these changes are likely to be approved and finalized soon.
1. Electricity Access Rates
1.1 Redefinition of Access Rates
The number of access rates available in both low and medium/high voltage will be reduced. In particular, in low voltage, a differentiation will only be made between supplies equal to or below 15kW contracted power (tariff 2.0TD) and supplies above 15kW contracted power (tariff 3.0TD) - the current 2.1x tariffs will be eliminated and integrated into the new (2.0TD tariff). Likewise, in medium/high voltage, the current 3.1A rate (voltage below 36kV and contracted power not exceeding 450kW) will be eliminated – supplies that currently have this rate will automatically be moved to one of the 6.xTD rates (6.1TD or 6.2TD depending on their voltage level).
1.2 Redefinition of Energy Usage Schedule and Energy Billing Periods
The energy usage schedule used to determine the type of access rates will be completely redefined. New schedules will significantly change the energy profile of all consumers, regardless of their access tariff.
All low voltage supplies equal to or below 15kW contracted power will be billed based on an energy usage schedule with three periods (Peak, Plain and Valley), while all other supplies will be billed based on an energy usage schedule with six periods of energy usage (P1, P2, P3, P4, P5 and P6).
1.3 Redefinition of Contracted Power Levels in Each Access Tariff
All low voltage supplies equal to or below 15kW contracted power will have to be contracted at two power levels (Peak Power and Off-Peak Power). Differently, all other supplies (including low voltage supplies above15kW contracted power) will have to be contracted at six power levels (P1, P2, P3, P4, P5 and P6 Power), which is the existing standard.
1.4 Breakdown of Electric System Charges
At the time of defining the rates for each access tariff, the regulator will separate charges for transportation and distribution from charges for other costs of operating the electricity system (including premiums for renewable energies, high-efficiency cogeneration, 50% of the extra costs for extra-peninsular generation, debt from the past due to the “tariff deficit,” etc.). These two sets of costs will also be itemized separately in the final electricity invoices to the electricity consumers.
As a result, consumers will be able to identify in their energy bills how much they will be paying for the transmission and distribution rates, and how much they will be paying for other charges of the electricity system. Both set of costs will have two different components – a power term (applicable to the contracted/demanded power) and an energy term (applicable to the energy consumed).
1.5 Capacitive Energy Penalties
On the surface, the legislative language seems to indicate the system will penalize those consumers with significant excesses of capacitive energy in period P6. A method of calculating these penalties was included in the previous regulatory drafts but with some ambiguity and confusion. NUS Consulting Group has submitted inquiries to the “Comisión Nacional de Mercados y Competencia” – National Commission of Markets and Competition (CNMC) to clarify the issue. Based on the response we received from the CNMC and the most recent legislative draft available, we reasonably believe that no penalties will be applied to consumers with excessive capacitive energy in P6. However, CNMC will continue to evaluate the necessity to impose penalties and may revise the existing rules.
1.6 Penalties for Excess Power
The penalty for exceeding the contracted power will be increased for all consumers with contracted power above 15kW, both in low voltage (3.0TD) and medium/high voltage (6.xTD).
1.7 Variable Term Weight Increase
With regard to the transmission and distribution rates, as well as the charges of the electricity system, it is expected that the variable terms (associated with the energy consumed) will increase their weight in the total amount of the bill with respect to the fixed terms (associated with the contracted/demanded power). The objective of this measure is to promote energy efficiency at a global level, rewarding those consumers who can reduce their demand for electricity.
According to the Ministry for Ecological Transition, the changes are currently scheduled to become effective on 1 June 2022. Due to the past delays, it is unclear whether the legislators will postpone the new rates and tariffs again.
NUS Consulting Group will continue to monitor regulatory and industry developments in the Spanish market closely and publish additional reports on this topic. Over the past several years, regulated/non-commodity costs, including transmission, distribution, renewable obligations, capacity, balancing and climate charges have expanded progressively across the world. NUS’s rate analysis service helps clients boost their operation and financial performance by providing critical insights into these charges, driving down the annual energy costs, and improve overall budget visibility. Please contact us for more information.