The term for submitting allegations to the Draft Bill to reinstate the National Energy Commission, A.A.I., and to create the Fund for the Economic-Financial Management of Electricity and Gas Sector Settlements (F.C.P.J.) started on February 22 . This Draft Bill restores the Comisión Nacional de Energía [National Energy Commission] (CNE) as an independent institution, separate from the CNMC, and capable of ensuring both the proper functioning of the energy markets and the correct performance of decarbonisation policies.

The National Energy Commission existed from 1995 ¹ until 2013 ² , date of the creation of the macro-regulator, the Comisión Nacional de los Mercados y la Competencia [National Commission for Markets and Competition] (CNMC), which brings together and integrates the supervisory functions of the previous independent regulatory bodies: the National Competition Commission (CNC), the National Energy Commission (CNE), the Comisión del Mercado de las Telecomunicaciones [Telecommunications Market Commission] (CMT), the Comité de Regulación Ferroviaria [Railway Regulation Committee] (CRF) and the Comisión Nacional del Sector Postal [National Commission for the Postal Sector] (CNSP).

Currently, the fight against climate change, following the adoption of the 2015 United Nations Paris Agreement on climate change and the 2019 European Green Deal, opens the path towards climate neutrality by 2050. At the national level, Law 7/2021 on climate change incorporates these objectives into the Spanish legal system.

In addition to the CNMC’s traditional role of guaranteeing the correct functioning of the markets and safeguarding free competition, there is now a new explicit objective of decarbonising the economy. Faced with these new challenges, the existence of a multisectoral regulatory body is proving insufficient to deal with a scope of functions that are expanding and bifurcating for energy regulators. From the point of view of the governance of this process, dedicated and super-specialised organisational structures are required.

We thus return to the recovery of a regulatory body with its own legal personality, with organic, functional and budgetary autonomy, and with full independence from the Government. This configuration of a specialised energy regulatory body is echoed in the regulations in force in some of our closest European neighbours, such as Austria, Belgium, Croatia, Cyprus, Czech Republic, Finland, France, Lithuania, Poland, Portugal, Romania, Slovenia and Sweden.

Functions of the CNE

1. Adoption of Communications on energy policy as the main instrument to ensure the contribution to the achievement of decarbonisation objectives. These Communications will be subject to special monitoring by the Ministry of Ecological Transition and Demographic Challenge.
2. New fields of action: in addition to those initially included, electricity, natural gas and liquid hydrocarbons, new fields such as hydrogen and renewable gases have been added.
3. Participation in the drafting of legal or regulatory provisions, through the issuing of non-binding mandatory reports.
4. Inspection functions in the energy sector, through the creation of a specific Directorate.
5. Information, attention and processing of consumer complaints.
6. Settlement functions of electricity and gas system costs.
7. Management of the register of guarantees of origin.
8. Supervisory role in the acquisition of shareholdings in the energy sector. These cases will be handled by the Commission. However, the decision to be taken, as well as the establishment of conditions, will be the responsibility of the Ministry.
9. Resolution of disputes raised by gas and electricity operators.
10. The CNE is vested with sanctioning powers, in accordance with the legislation in force in the electricity and hydrocarbons sectors.

Organisational structure of the CNE

The functioning of the CNE is structured in two main figures: the CNE Council, and the President, who will also be the President of the Council.

The Council will be composed of seven members with the status of senior officials: chairman, with the rank of Secretary of State, vice-chairman and five councillors.

The CNE will have three directorates of instruction:

a) The Electricity Directorate,
b) The Directorate for Hydrocarbons and New Fuels,
c) The Inspection Directorate, which will be responsible for the following functions:

(i) the instruction of files relating to the control of compliance with the requirements of natural gas and electricity traders, as well as independent aggregators, renewable energy communities, citizen energy communities and direct consumers in the market.

(ii) In the hydrocarbon sector, control of the technical conditions of the facilities, compliance with the requirements established in the authorisations, the economic conditions and actions of the parties insofar as they may affect the application of tolls, fees, charges, tariffs, prices and remuneration criteria for hydrocarbon activities, the effective availability of gas facilities, invoicing and conditions of sale to consumers by distribution companies, as regards access to networks, and traders, continuity of natural gas supply, quality of service, compliance with annual targets for renewable fuels in the transport sector, as well as the effective separation of these activities when required.

(iii) In the electricity sector, to inform, attend to and process, in coordination with the competent administrations, by means of action protocols, the complaints raised by electricity consumers and to make available to them all the necessary information regarding their rights, the legislation in force and the dispute resolution channels available to them in the event of disputes.

Creation of the Fund for the Management of Settlements in the Electricity and Gas Sectors (FGLSEG) (FCPJ)

An important new development is the creation of the Fondo para la Gestión de las Liquidaciones del Sector Eléctrico y del Sector del Gas [Fund for the Economic and Financial Management of Electricity and Gas Sector Settlements] (F.C.P.J.). (FGLSEG), the purpose of which will be to manage the revenues and payments corresponding to the settlements of tolls, charges, prices and regulated remuneration included in article 18 of Law 24/2013, of 26 December, on the Electricity Sector, and the tolls and fees relating to the use of the Basic Grid facilities, secondary transport and distribution of natural gas referred to in article 96 of Law 34/1998, of 7 October, as well as the funds allocated to the Electricity Sector and the Gas Sector in the General State Budget.

The Fund shall have the accounts necessary to locate the funds essential for its management, establishing an accounting separation between the revenues and payments of the electricity sector and those of the gas sector for the purposes of guaranteeing independent reporting and accountability for each sector. It shall be governed by the provisions of Law 40/2015, of 1 October, on the Legal Regime of the Public Sector, in this Law and in the rest of the rules of general and special administrative law applicable to it.

The financial provision of the fund will be the revenues provided for in the Electricity Sector Act and in the Hydrocarbons Act, articles 13 and 96 respectively, and in Act 18/2014, of 15 October, approving urgent measures for growth, competitiveness and efficiency, in its article 59 relating to the economic and financial sustainability of natural gas. Furthermore, it will also be funded by the allocations established in the General State Budget for its management and administration.

Report of the CNMC on the Preliminary Draft Law

On 6 March, the Secretary of State for Energy of the Ministry for Ecological Transition and Demographic Challenge sent the draft bill to the National Commission for Markets and Competition (CNMC) so that, in accordance with article 5.2 of Law 3/2013, creating the CNMC, regarding its consultative role in the drafting of regulations, it could issue the corresponding report.

This communication made clear that the Council of Ministers, on 24 February, authorised the urgent administrative processing of the Preliminary Draft Bill provided for in article 27.1.b) of Law 50/1997, of the Government, and therefore the request for a report was made as a matter of urgency.

The CNMC approved the aforementioned report on 20 March which, after a fairly exhaustive analysis of its contents, adopts the following conclusions:

1. The Preliminary Draft is an improvement, as it contemplates the approval by the CNE of its own public employment offer and its list of jobs. Although the model reinstated in the preliminary draft is based on the institutional model of the CNMC, it is considered that this design should be adapted to take into account the particularities of the energy regulator.
2. One of the aspects that could be improved is the organisational structure of the regulator. The detailed structure of the regulator’s structure set out in a regulation with the status of law prevents it from evolving and adapting to the changing context of the energy markets.
3. The Preliminary Draft provides for two development instruments: the Organic Statute and the Internal Operating Regulations. This model contrasts with that envisaged for the CNMV, which does not provide for an Organic Statute.
4. It is considered necessary to provide the CNE with an estimative budgetary regime, and it is proposed to recover the system of financing through fees, as was established for the former CNE.
5. In relation to the potential attribution of new functions to the CNE, and in order to avoid a situation similar to that at the CNMC, which has been obliged to assume new and complex functions in energy matters by means of emergency measures (through Royal Decree-Laws), it is proposed that the attribution of new functions should require, in all cases, the issuing of a mandatory, non-binding report by the regulatory authority.
6. As for the future CNE’s relations with the CNMC, although it will be governed by Law 40/2015 on the Legal Regime of the Public Sector, the provisions contained in the Sustainable Economy Law and article 17 of the Law on the Defence of Competition having been repealed, the Preliminary Draft should establish this aspect in more detail.
7. Improvements are proposed in order to guarantee the rights of the staff and civil servants joining the CNE.
8. With regard to the function of initiating and investigating sanctioning proceedings to be resolved by the General State Administration, it is proposed to replace it with the issuing of a mandatory report.
9. The Preliminary Draft’s re-establishment of a regime of continuous supervision of the CNE could compromise the independence of the energy regulator.
10. Regarding the creation of the Fund for the Management of Electricity and Gas Sector Settlements, according to the CNMC, the control system to be applied to this fund should not interfere with the settlement proceedings. Doubts are also raised as to the need for this fund for the gas sector, insofar as in the settlement process in this sector, transactions between agents do not involve payments and receipts passing through the regulatory body’s operational accounts.

It is also worth noting the existence of an individual vote issued by a current CNMC Director highlighting the need for the Draft Bill to include transitional provisions to guarantee the independence of the current Regulatory Authority (CNMC), while at the same time preparing for its restructuring. The lack of this transitional regime would allow for a change in the membership of the regulatory body, and would deprive the current members of exercising the functions attributed to it for the entirety of its mandate (6 years).

MAY 2024

SONSOLES GARCIA
Senior associate

¹ Created by Law 40/1994, of 30 December 1994, on the organisation of the National Electricity System.

² Law 3/2013 of 4 June 2013 on the creation of the National Commission for Markets and Competition.