The electricity companies believe that the Ministry and CNMC advisors endorse that the rate for the networks is insufficient

The electricity sector considers that both the report of the Ministry for the Ecological Transition and the Demographic Challenge and the individual votes of councilors of the National Markets and Competition Commission (CNMC) on the proposals for circulars on the remuneration of electricity networks confirm that “the proposed rate is not sufficient to face the high levels of investment required for the energy transition” and, furthermore, “discriminates against the activity of electrical distribution with respect to that of transportation.”

As indicated by sources from the Association of Electrical Energy Companies (aelec), to which Iberdrola, Endesa and EDP Spain belong, both the cabinet led by Sara Aagesen as the regulator’s advisors warn that “the abrupt change in model, together with the remuneration being linked to variables not controllable by distributors (such as demand), significantly increases regulatory risk.”

Likewise, they highlighted that in both cases they agree that the proposed efficiency adjustments “are not balanced”, producing concatenated Opex cuts, “that result in excessive efficiency captures.

In this sense, they pointed out that this succession of such demanding adjustments “can discourage the distributor from seeking efficiencies in Opex, which is why it cannot be considered an adequate signal for the remuneration model”.

The CNMC has proposed a financial remuneration rate (TRF) for electricity distribution and transportation networks for the period 2026-2031 of 6.58%—improving a previous proposal of 6.46% and raising the current 5.58% in this regulatory period—although it is very far from the sector’s expectations of a rate above 7%.

The regulator’s circular proposals have been sent to the Council of State for its opinion, since they must be approved before the end of the year for their entry into force, although the agents involved have the possibility of presenting their allegations.

Regarding the rate of financial remuneration for distributors, the electricity employers’ association believes that it should “be higher than that of transportation”, since, as the Ministry and the individual votes of CNMC councilors agree, “it is not coherent” to apply it to the activity of transportation and distribution. “because they are activities with different remuneration models and different risk profiles.”

In this way, aelec estimates that maintaining the same rate in both activities “represents penalize the activity most exposed to riskwhich is the distribution under the new model, generating a situation of regulatory discrimination.”

Likewise, it asks to update the parameters of the financial remuneration rate, since, in their opinion, the beta must increase to recognize the greater regulatory risk” and the market risk premium must be calculated with the European methodology.

“Balance, predictability and legal certainty”

Likewise, the employers’ association of large electricity companies warns that the remuneration model needs “balance, predictability and legal certainty.”

Finally, it warns that the proposed remuneration framework for the electricity distribution activity “does not address the need to guarantee the right of access to electrical networks, an essential and fundamental service for the economic development of the country”.