The National Fund for the Sustainability of the Electric System (FNSSE) was created with the objective of reducing the electricity bill by 13% in five years and everything indicates that it will not come into operation before the current legislature expires. Its creation was approved by the Council of Ministers in December 2020 and, in September 2021, it saved its first vote in the Congress of Deputies. However, the energy crisis has left it stranded in the Lower House and no news is expected until the reform of the European electricity market is closed.
Parliamentary sources consulted by La Información recall that the process was planned for before the crisis broke out in the international energy markets and that the subsequent urgent measures undertaken by the Executive, such as the tax reduction on electricity and the start-up of the ‘Iberian exception’, among others, meant that it was not “prudent” to make such far-reaching changes. “Right now we are in the middle of the reform of the electricity market that has to come from Europe, so it is best to wait. It will be resumed based on the reform and what is necessary then will be assessed,” the same sources underline.
The Government hopes that the reform of the electricity ‘pool’ will be closed during the Spanish presidency of the Council of the European Union, but a long debate is expected. However, even if approved before the end of the year, he would have little room for maneuver to end the legislature with the fund approved before the general elections to be held in December. Specifically, the FNSSE intends to assume the costs associated with the specific remuneration regime for renewables, cogeneration and waste (Recore) -between 6,500 and 7,000 million euros per year- and remove them from the electricity bill. The Ministry for the Ecological Transition must implement it with a triple objective: avoid increases in the price of electricity, give clear signs of electrification of the economy and provide certainty, sustainability and balance to the system that allows the mobilization of the necessary investments. in the next years.
Remove renewables from the receipt
According to the Government, the fund would reduce the electricity bill by up to 13% in five years after removing the cost of the premiums for renewable energies from the bill, which would mean a new income for the electricity system that would gradually replace the fixed charges. of the electrical system of the recore, currently included in the access tolls of the electricity bill. The goal was for the transfer to be 20% the first year, to reach 40% in the second and 60% in the third, until reaching 100% in the fifth year. Settlement 14/2022 of the electricity sector, prepared by the National Commission for Markets and Competition (CNMC), states that the FNSSE would have contributed 213.6 million euros just by having applied in the second half of 2022.
Under the current system, it is the consumers, whether individuals or companies, who currently bear the costs associated with the recore, and what the Executive intends is that the parties obliged to finance said mechanism are the traders of all energy sectors: natural gas and electricity trading companies, wholesale petroleum product operators, wholesale liquefied petroleum gas operators and direct consumers of the aforementioned products. Contributions from the energy sectors would be made through payments proportional to their sales.
In this way, the total collection objective and the distribution among the different obligated subjects would be calculated each year based on the sales estimates communicated by the agents, after discounting the income from other sources of financing such as taxes or income from CO2 auctions. According to current sales volumes, the sector that should contribute the most to this fund would be oil, followed by electricity and gas. Companies like Repsol, Cepsa or BP are the ones that would suffer the most from the consequences. At the time, in order to guarantee equity and redistribution, exemptions and compensations were introduced for those sectors with less capacity to adapt and respond to the system.
If the FNSSE finally goes ahead as it will perform in its day, the consumption of electricity for storage, agricultural diesel, natural gas for cogeneration and electricity generation, diesel and natural gas for navigation and fishing (except for recreational boats), as well as the percentage of mixtures of bios in fuels and renewable gases in natural gas. Likewise, there will be bonuses for possible indirect costs for diesel for professional uses, and the electro-intensive industry and natural gas consumer. Rental vehicles with driver (VTC) were also added among the sectors with exceptions.
On the other hand, the mechanism by which action will be taken on the compensation of C02 not emitted from the electricity market, which would have contributed 484 million euros to the electricity system last year, according to settlement 14 of the CNMC, also continues in Congress. The portfolio headed by Teresa Ribera considers that the generation of energy through non-CO2-emitting power plants (hydraulic and nuclear) receives overremuneration in the wholesale market and wants to use it to cover part of the electricity bill of severely vulnerable consumers at risk of social exclusion, with 10% of the total, while the remaining 90% would be used to finance the costs associated with the recore.
With this draft law, the elimination of the so-called windfall profits for these energy mix technologies was opened. According to the Executive, the measure would mean an annual cut of 1,000 million in the remuneration received by the electric companies. The proposal would not harm any plant after 2005 or those that have a regulated remuneration framework, as well as those that will be charged at auctions or any present or future investment initiative. Installations of less than 10 MW were also excluded.
‘cheap’ energy auction
Nor does it seem that the Government is finally going to force the large electric companies to auction energy between independent marketers and large industrial consumers, as stated in Royal Decree-Law 17/2021, of September 14. The idea was to force Iberdrola, Endesa, Naturgy and EDP to offer part of their electricity from inframarginal technologies in proportion to their quota through forward contracts with a settlement period of one year or more. The first bid will have to be held before the end of 2021.