Royal Decree-Law 2/2013 of 1 February on Urgent Measures in the Electricity System and the Financial Sector

OFFICIAL STATE BULLETIN No. 29 Saturday, February 2, 2013 Sec. I. Page 9072 I. GENERAL PROVISIONS HEAD OF STATE 1117 Royal Decree-Law 2/2013, of February 1, on Urgent Measures in the Electricity System and the Financial Sector.

The main source of income for the electricity system, which is used to finance the different cost items, is the access charges applied to final electricity consumers.

In recent years, the expansive evolution of the electricity system's cost items has led to mismatches between these costs and the revenues obtained from regulated prices. In order to correct these mismatches, a series of urgent measures affecting both items were adopted during 2012.

Among the measures adopted, Law 15/2012, of December 27, on Fiscal Measures for Energy Sustainability, modifies Law 54/1997, of November 27, on the Electricity Sector, and determines that system costs will be financed both by revenues from access charges and other regulated prices, and by corresponding items from the General State Budgets.

The data communicated by the National Energy Commission in its report 35/2012, of December 20, regarding the proposal for an order establishing access charges from January 1, 2013, and the tariffs and premiums for special regime installations, has highlighted the emergence of new deviations in cost and revenue estimates motivated by various factors, both for the closing of 2012 and for 2013, which, in the current economic context, would make it almost unviable to cover them through electricity charges and the items foreseen from the General State Budgets.

These deviations are largely due to greater growth in the cost of the special regime due to an increase in operating hours exceeding forecasts and an increase in remuneration values due to their indexation to the Brent quote, and a reduction in access charge revenues due to a sharp drop in demand that is consolidating for this fiscal year.

The alternative proposed would be a new increase in the access charges paid by electricity consumers. This measure would directly affect household economies and the competitiveness of companies, both in a delicate situation given the current economic climate.

In this scenario, the Government has considered it necessary to adopt certain urgent cost reduction measures to avoid imposing a new burden on consumers, contributing to their ability to collaborate in economic recovery through consumption and investment.

In the regulations of this sector, certain methodologies for updating the remuneration of the different activities of the electricity sector are linked to the evolution of the Consumer Price Index (CPI), which could be influenced by tax variations, especially relevant in the past year. It is not appropriate that an increase in a tax causes simultaneous increases in the regulated remuneration of the electricity sector, whose costs are not directly related to direct taxation on consumption.

Therefore, in order to use a more stable index that is not affected by the volatility of prices of unprocessed foods or household energy fuels, it is established that all methodologies for updating remuneration linked to the CPI shall replace it with the Consumer Price Index at constant taxes excluding unprocessed foods and energy products. cve: BOE-A-2013-1117

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On the other hand, taking into account the volatility of the production market price, the option to remunerate energy generated under the special regime via a premium complementing that price makes it difficult to meet the dual objective of guaranteeing a reasonable profitability for these installations while simultaneously avoiding over-remuneration, which would fall on other electricity subjects. Therefore, it is necessary that the privileged economic regime be based solely on the regulated tariff option, without prejudice to the fact that installation owners may sell their energy freely in the production market without receiving a premium.

Taking into account that both the modification affecting remuneration methodologies for activities linked to the CPI and that relating to special regime installations have an economic impact on the costs that must be financed with electricity system revenues, it is necessary that these measures be adopted on an urgent basis, as it is essential for the preparation of the annual budgetary scenario that will include the order of the Minister of Industry, Energy and Tourism approving the access charges to the networks, which must be approved immediately for this fiscal year.

Likewise, these measures must be adopted as soon as possible to avoid modifications in the cost scenarios throughout 2013, which would produce distortions on the hypotheses taken into account in the aforementioned order.

For all the reasons expressed above, the adoption of the set of measures approved below meets the requirements of extraordinary and urgent necessity required by Article 86 of the Spanish Constitution of December 27, 1978. Extraordinary and urgent necessity derived from the already mentioned reasons of consumer protection in a context of economic crisis, and guarantee of the economic sustainability of the electricity system, whose immediate validity is essential for the regulatory modification to have the intended efficacy.

On the other hand, regarding the formulation before March 31 of this year of the annual accounts for the 2012 fiscal year of insurance entities that have participated in the Asset Management Society from Bank Restructuring (SAREB), the regulation of the investment of insurance entities in securities or financial rights issued by SAREB is addressed.

Specifically, from the point of view of covering technical provisions, these assets issued by SAREB are included among the assets suitable for covering the technical provisions of insurance entities, and rules are established for their valuation and limits for their calculation, providing that, in no case, the amount to be calculated will exceed 3% of the technical provisions to be covered.

In turn, from the point of view of the treatment of these investments in the solvency margin of insurance entities, the treatment of capital gains and losses derived from assets issued by SAREB in the solvency margin is addressed, providing that unrealized capital gains, whether accounted for or not, derived from assets issued by SAREB will not be counted with a positive sign, and unrealized capital losses, whether accounted for or not, derived from assets issued by SAREB will not be deducted with a negative sign.

In virtue thereof, making use of the authorization contained in Article 86 of the Spanish Constitution, upon proposal of the Ministers of Industry, Energy and Tourism and of Economy and Competitiveness, and after deliberation by the Council of Ministers in its meeting on February 1, 2013, cve: BOE-A-2013-1117

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I ORDER: CHAPTER I Adjustments in certain costs of the electricity sector Article 1. Updates of remuneration of electricity system activities linked to the Consumer Price Index (CPI). With effect from January 1, 2013, in all methodologies that, being linked to the Consumer Price Index, govern the update of remuneration, tariffs, and premiums received by electricity system subjects by application of sectoral regulations, said index shall be replaced by the Consumer Price Index at constant taxes excluding unprocessed foods and energy products.

Article 2. Modification of Royal Decree 661/2007, of May 25, regulating the activity of electricity production under the special regime. Royal Decree 661/2007, of May 25, regulating the activity of electricity production under the special regime, is modified as follows:

One. In tables 1 and 2 of Article 35, the value of the reference premium for all subgroups is modified, which shall have a value of 0 c€/kWh.

Two. In table 3 of Article 36, the value of the reference premium for all subgroups is modified, which shall have a value of 0 c€/kWh, and the values of the upper and lower limits are suppressed.

Three. The title and paragraph 1 of Article 38 are modified, which shall read as follows:

«Article 38. Tariffs for installations of category b), group b.2: wind energy.

1. For installations of subgroup b.2.2, a maximum reference tariff is established for the purposes of the competitive procedure regulated for the granting of zone reservation for wind installations in territorial waters with a value of 14.8557 c€/kWh.»

Four. Article 39 shall read as follows:

«Article 39. Tariffs for installations of category b), group b.3: geothermal, wave, tidal, hot and dry rock, oceanographic, and marine current. Without prejudice to what is established in Article 36, for installations of group b.3, the right to receive a specific tariff for each installation may be determined during the first fifteen years from their commissioning. The calculation of this tariff for each installation will be carried out through the data obtained in the application model of Annex VIII.»

Five. In table 4 of Article 42, the value of the reference premium for all groups is modified, which shall have a value of 0 c€/kWh.

Six. Paragraph 1 of Article 46 is modified, which shall read as follows.

«1. Without prejudice to what is established in transitional provision eighth, ordinary regime thermal installations may use biomass and/or biogas considered for groups b.6 and b.7 as additional fuel under the terms set forth in Annex II.

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By agreement of the Council of Ministers, after consultation with the Autonomous Communities, the right to receive a specific tariff for each installation may be determined during the first fifteen years from their commissioning. The calculation of this tariff for each installation will be carried out through the data obtained in the application model of Annex VI. The tariff will only apply to the proportional part of electricity produced attributable to biomass and/or biogas relative to the total energy produced by the installation, based on primary energy.»

Seven. Article 47 is modified, which shall read as follows.

«Article 47. Installations subject to the regime provided for in Royal Decree 1538/1987, of December 11, determining the electricity tariff for Service Management Companies. The Minister of Industry, Energy and Tourism may determine the right to receive a tariff for those installations with power equal to or less than 10 MW, which at the entry into force of the aforementioned Electricity Sector Law were subject to the regime provided for in Royal Decree 1538/1987, of December 11, determining the electricity tariff for Service Management Companies, when they make a sufficient investment in the same to increase electricity production capacity. To this end, the owner of the installation must address a request to the General Directorate of Energy and Mining Policy of the Ministry of Industry, Energy and Tourism, attaching a technical-economic project justifying the improvements to be executed and its viability. Said General Directorate will formulate a resolution proposal, prior to a report from the National Energy Commission granting, if applicable, the right to receive a tariff, and fixing its amount.»

Eight. Paragraph 3 of transitional provision seventh is suppressed.

Nine. The second paragraph of transitional provision tenth is modified, which shall read as follows:

«These installations will be registered in subgroup a.1.3 of Article 2, with a tariff value of 14.6773 cent€/kWh, instead of that contemplated in Article 35 for these installations, to be received for a maximum period of 15 years from their commissioning.»

Ten. The first paragraph of Annex VIII is modified, which shall read as follows:

«For the application for the specific tariff per kWh referred to in Article 39, a draft project describing the installation exhaustively shall be presented, where at least the sections listed below are developed.»

Article 3. Choice of energy sale option to the market. Special regime installations that, from the entry into force of this royal decree-law, opt to sell their energy in accordance with option b) of Article 24.1 of Royal Decree 661/2007, of May 25, regulating the activity of electricity production under the special regime, may not subsequently avail themselves of the change of option provided for in paragraph 4 of Article 24 of said royal decree.

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Article 4. Installations awarded the tender for innovative solar thermoelectric technology installations. Installations of solar thermoelectric technology awarded under the regime provided for in additional provision third of Royal Decree 1565/2010, of November 19, regulating and modifying certain aspects relating to the activity of electricity production under the special regime, shall be subject to the remuneration fixed in the corresponding resolution of the State Secretariat of Energy resolving the competitive procedure. The values of the premium and the applicable upper and lower limits will be calculated from the values for 50 MW solar thermoelectric installations published in Order IET/3586/2011, of December 30, establishing access charges from January 1, 2012, and the tariffs and premiums for special regime installations, reduced by the percentage indicated in the aforementioned resolution, which will be updated as established in Article 44 of Royal Decree 661/2007 of May 25, regulating the activity of electricity production under the special regime. Likewise, the rest of the requirements and considerations generally provided for solar thermoelectric technology installations shall apply to these installations.

CHAPTER II Modifications in financial matters Article 5. Application of the Regulation on the Organization and Supervision of Private Insurance, approved by Royal Decree 2486/1998, of November 20, in relation to the regime for covering technical provisions and solvency margin of ordinary shares and subordinated debt issued by the Asset Management Society from Bank Restructuring (SAREB). For the purposes of the Regulation on the Organization and Supervision of Private Insurance, approved by Royal Decree 2486/1998, of November 20, securities or financial rights issued by the Asset Management Society from Bank Restructuring shall be valued at their cost or amortized cost as defined in the Accounting Plan for Insurance Entities. These assets shall be considered suitable for covering technical provisions, not exceeding the limit to be calculated at 3% of the technical provisions to be covered. For the purposes of the solvency margin, unrealized capital gains or losses, whether accounted for or not, derived from these assets shall not be counted.

Sole Additional Provision. Special regime installations availing themselves of the market sale option.

1. For special regime installations that between January 1, 2013, and the date of entry into force of this royal decree-law had sold their energy during some period in accordance with option b) of Article 24.1 of Royal Decree 661/2007, of May 25, the premium shall be liquidated by the National Energy Commission, taking into account the energy produced in that period as if they had been availing themselves of the sale option of paragraph a) of said article.
2. Special regime installations that on the date of entry into force of this royal decree-law were selling their energy in accordance with option b) of Article 24.1 of Royal Decree 661/2007, of May 25, shall automatically become availing themselves of the sale option of paragraph a) of said article, with effect from January 1, 2013, unless prior to February 15, 2013, they expressly communicate to the General Directorate of Energy and Mining Policy their cve: BOE-A-2013-1117

OFFICIAL STATE BULLETIN No. 29 Saturday, February 2, 2013 Sec. I. Page 9077 desire to remain in the aforementioned option b). If they do so, they shall in the future be availing themselves of said option under the conditions regulated in this royal decree-law and, therefore, may in no case subsequently make use of the faculty provided for in paragraph 4 of Article 24 of the aforementioned royal decree. The provisions of this paragraph shall not apply to solar thermoelectric technology installations awarded under the regime provided for in additional provision third of Royal Decree 1565/2010, of November 19. 3. Communications of change of energy sale option, from option a) to option b) of Article 24.1, which had not occurred by the entry into force of this royal decree-law, shall be without effect.

Sole Repealing Provision. Regulatory Repeal. All provisions of equal or lower rank that oppose what is provided for in this royal decree-law are repealed.

First Final Provision. Competence Title.

1. What is provided for in Articles 1 to 4 of this royal decree-law has a basic character as it is issued under the auspices of the competences corresponding to the State in Article 149.1.13th and 25th of the Spanish Constitution, which attributes to the State exclusive competence to determine the bases and coordination of the general planning of economic activity and the bases of the mining and energy regime, respectively.
2. What is provided for in Article 5 has a basic character under the auspices of the competences attributed to the State by Article 149.1.11th, relating to the bases of the organization of credit, banking, and insurance.

Second Final Provision. Regulatory Authorization and Regulatory Development. The Government and the holders of the Ministries of Industry, Energy and Tourism, and of Economy and Competitiveness are authorized to issue, within the scope of their respective competences, all provisions necessary for the development and execution of what is established in this royal decree-law.

Third Final Provision. Modification of Regulatory Provisions. The modifications that, from the entry into force of this royal decree-law, may be made regarding the regulatory norms that are the object of modification by this royal decree-law, may be carried out by norms of the regulatory rank corresponding to the norm in which they appear.

Fourth Final Provision. Entry into Force. This royal decree-law shall enter into force on the same day of its publication in the "Official State Bulletin".

Given in Madrid, February 1, 2013. JUAN CARLOS R. The President of the Government, MARIANO RAJOY BREY cve: BOE-A-2013-1117 http://www.boe.es OFFICIAL STATE BULLETIN D. L.: M-1/1958 - ISSN: 0212-033X