In response to the energy crisis affecting the European Union and, particularly, the Spanish State, the Spanish Government urgently approved Royal Decree-Law 23/2021, of October 26, on urgent energy measures for the protection of consumers and the introduction of transparency in the wholesale and retail electricity and natural gas markets.

The following is a summary of the measures of the aforementioned Royal Decree-Law 23/2021:

1. Increase of discounts in the Bono Social Eléctrico ( power discount) until March 31, 2022

Exceptionally and with effect from the entry into force of this Royal Decree-Law and valid until March 31, 2022, the discounts applicable to vulnerable domestic consumers (Bono Social Eléctrico) will be applied to the entire billing period and with the following percentages:

a) Vulnerable consumers: 60 %.
b) Severely vulnerable consumers: 70 %.

2. Improvement of the protection of the beneficiaries of the Bono Social Térmico (thermal discount) for the year 2021

Exceptionally, the minimum aid per beneficiary of the Bono Social Térmico will be 35 euros for the year 2021 (beneficiaries of the Bono Social as of December 31, 2020).

The aid corresponding to a severely vulnerable consumer or at risk of social exclusion will be 60% higher than that assigned in its climatic zone to a vulnerable consumer.

The budget credit of the General State Budget for the year 2021 is increased by 100 million Euros to cover the program for the direct granting of aid aimed at alleviating energy poverty in vulnerable consumers for the year 2021 with regard to energy used for heating, domestic hot water or cooking, called Bono Social Térmico.

3. Amendment of Law 24/2013, of December 26, of the Electricity Sector, for the promotion of transparency and supervision in the wholesale and retail electricity markets. Information obligations PPAs.

In order to increase transparency, improve the supervision capacity and strengthen the information and protection of consumers, Law 24/2013 is amended so that:

• Energy producers must send to the National Commission of Markets and Competition, with the periodicity and formats that this body establishes, the information corresponding to the electricity term contract instruments, both physical and financial, that it has subscribed.
• When the company constituted as an electricity producer is also a trading company, or when it belongs to a business group in which any of the companies belonging to the group is a trading company, or the group itself is a trader, it must send, under the terms and conditions established by the National Commission of Markets and Competition, the information corresponding to the electricity term contract instruments, both physical and financial, as well as any sale transaction subscribed within the group as well as with third parties. Furthermore, information must be sent on the contracts entered into between the electricity producer and companies of the group, and between said companies and the trading companies within the group.
• The information referred to in the preceding paragraphs shall be sent monthly and with the formats and criteria established by the National Commission of Markets and Competition and shall contain at least the date of conclusion of the hedging instrument, the date of delivery or settlement of the energy, the volume of energy affected, the counterparty of the contract, the price and profile and the type of product negotiated.
• Communications of price revisions of electricity and/or gas consumers by traders shall include a comparison of the prices applied before and after the revision, as well as an estimate of the annual cost of supply for such consumer and its comparison with the previous annual cost.

4. Clarification and amendment to the application of the reduction mechanism to energy subject to forward contracting instruments of Royal Decree-Law 17/2021.

This Royal Decree-Law 23/2021 clarifies the scope of application of the mechanism for the reduction of the excess remuneration of the electricity market caused by the high price of natural gas on international markets, regulated in Title III of Royal Decree-Law 17/2021, of September 14.

This reduction is calculated in proportion to the energy produced by the facilities affected by the reduction mechanism (regardless of the type of contracting), and in an amount equally proportional to the higher income obtained by these facilities as a result of the incorporation of the value of the price of natural gas by marginal CO2 emissions technologies into the electricity prices on the wholesale market, as seen in article 4 of the aforementioned Royal Decree-Law 17/2021.

Thus, it is indicated that the reduction mechanism will not be applicable to that energy produced by electricity generation facilities that is covered by any term contract instrument when the hedging price is fixed, and provided that the term contract instrument was entered into prior to the entry into force of Royal Decree-Law 17/2021 or when, having been entered into after the entry into force of said Royal Decree-Law, its hedging period exceeds one year.

Furthermore, the new regulation incorporates a responsible declaration to prove the existence of term contracts, so that the potential exclusion of this reduction mechanism can be assessed.

Ignacio Puig
Energy Area