Royal Decree 1307/2011 of 26 September modifying Royal Decree 437/2010 on the securitization of the Spanish electricity system deficit

OFFICIAL STATE BULLETIN
No. 245 Tuesday, October 11, 2011 Sec. I. Page 106805

I. GENERAL PROVISIONS
MINISTRY OF THE PRESIDENCY

15941 Royal Decree 1307/2011, of September 26, modifying Royal Decree 437/2010, of April 9, which develops the regulation of the process for the securitization of the deficit of the electricity system.

The twenty-first additional provision of Law 54/1997, of November 27, on the Electricity Sector, as amended by Royal Decree-Law 14/2010, of December 23, establishing urgent measures for the correction of the tariff deficit of the electricity sector, establishes that temporary imbalances in the settlements of the electricity system occurring in 2010, up to a maximum amount of 2,500 million euros, shall be considered as revenue deficit of the electricity settlement system for 2010, which will generate collection rights that may be assigned by their holders to the Deficit Securitization Fund of the Electricity System. Similarly, it is determined in the aforementioned Twenty-first Additional Provision of Law 54/1997, of November 27, that the price and conditions for the assignment of the collection rights eligible for assignment to the Deficit Securitization Fund of the Electricity System shall be established by royal decree, upon joint proposal by the holders of the Ministries of Industry, Tourism and Trade and of Economy and Finance.

Royal Decree 437/2010, of April 9, which develops the regulation of the process for the securitization of the deficit of the electricity system, had as its object to develop paragraphs 4 and 5 of the Twenty-first Additional Provision of Law 54/1997, of November 27, on the Electricity Sector, regarding the assets and liabilities of the Deficit Securitization Fund of the Electricity System.

The modification of Royal Decree 437/2010, of April 9, which develops the regulation of the process for the securitization of the deficit of the electricity system is therefore necessary to determine the price and conditions for the assignment of the temporary imbalance of settlements of the electricity system that occurs in 2010.

On the other hand, through the present modification of Royal Decree 437/2010, the procedure for carrying out the issuance of financial instruments in a competitive manner is relaxed. In this sense, the possibility of simple sale of securities is introduced, which will allow the Deficit Securitization Fund of the Electricity System to take advantage of this form of financing and facilitate the achievement of the general objective of minimizing the cost of financing over the life of the Fund. To guarantee the double objective of price minimization and competitive issuance, it is established that in simple sale operations, one or more subscribing entities will be selected individually through a competitive procedure based on criteria, such as term, price, and volume to be subscribed.

Finally, the Interministerial Commission, whose purpose is to ensure the correct compliance with the conditions under which the tasks assigned to the Managing Society of the Deficit Securitization Fund of the Electricity System must be executed, is enabled to approve the price of the simple sale operations of financial instruments and to select the subscribing entities for said operations.

This royal decree has been subject to Report 10/2011 of the National Energy Commission, approved by its Board of Directors in its meeting on April 28, 2011, for whose preparation the objections formulated in the hearing process have been taken into account.

The Government Delegate Commission for Economic Affairs has informed on the present royal decree in its meeting of September 15, 2011.

The present royal decree is issued under the authority of Articles 149.1.13th and 25th of the Constitution, which attribute to the State exclusive competence in matters of bases and coordination of the general planning of economic activity and bases of the energy and mining regime, respectively.

In virtue thereof, upon proposal of the Minister of Industry, Tourism and Trade and of the Minister of Economy and Finance, with the prior approval of the Minister of Territorial Policy and Public Administration, in accordance with the Council of State, and after deliberation of the Council of Ministers in its meeting on September 23, 2011,

I HEREBY ORDER:

Sole Article. Modification of Royal Decree 437/2010, of April 9, which develops the regulation of the process for the securitization of the deficit of the electricity system.

Royal Decree 437/2010, of April 9, which develops the regulation of the process for the securitization of the deficit of the electricity system, is modified as follows:

One. Paragraph iii of paragraph 1 of Article 2 is drafted as follows:

"iii. '2010 Deficit Collection Rights', '2011 Deficit Collection Rights' and '2012 Deficit Collection Rights': Collection rights are recognized for the financing of the peninsular and extra-peninsular deficits generated for each of the three fiscal years comprised between January 1, 2010, and December 31, 2012, which will be recovered within a maximum period of 15 years counted from January 1 of the fiscal year following that of their recognition. The pending amount to be collected for each of the rights shall be equal to the amount of the revenue deficits that, if any, are estimated to occur in the settlements of the regulated activities of the electricity sector by the provisions by which the access tariffs are approved until January 1, 2013, without prejudice to what is established in Royal Decree-Law 14/2010, of December 23, establishing urgent measures for the correction of the tariff deficit of the electricity sector. These amounts shall be recognized each year in the ministerial order by which the access tariffs of the following year are fixed, from which moment the rights may be assigned to the aforementioned Fund. The amount of the '2010 Deficit Collection Rights' shall be increased by the temporary imbalance of the electricity system settlements that occurs in 2010, which shall be the one resulting from the report of the National Energy Commission on the results of settlement 14 of 2010, up to a maximum amount of 2,500 million euros.

Any positive difference that might arise between the amount of the deficit recognized in said ministerial orders and the result of the fourteen settlements corresponding to each of the periods in question, shall be taken into account when establishing the ex ante deficit of the following period, which must be reduced by said amount.

The positive difference that might arise between the amount recognized for the 2012 deficit and the result of the 14 settlements corresponding to said period, shall be considered a settlement income of the system.

Any difference that may arise between the amount of the 14 settlements of each fiscal year and the result of the definitive settlements corresponding, shall be considered settlement income or cost of the current fiscal year."

Two. Paragraph 3 of Article 7 is drafted in the following terms:

"3. The assignment price of the Collection Rights defined in paragraph iii of paragraph 1 of Article 2 shall be the amount of the revenue deficit that is estimated to occur in the settlements of the regulated activities in the electricity sector, in the provisions by which the access tariffs are approved, in accordance with what is established in Article 1 of Royal Decree-Law 6/2009, of April 30, without prejudice to what is established in Royal Decree-Law 14/2010, of December 23, establishing urgent measures for the correction of the tariff deficit of the electricity sector. The price of the '2010 Deficit Collection Rights' shall be increased by the temporary imbalance of the electricity system settlements that occurs in 2010, which shall be the one resulting from the report of the National Energy Commission on the results of settlement 14 of 2010, up to a maximum amount of 2,500 million euros."

Three. Paragraph 2 of Article 11 is drafted as follows:

"2. The issuance of said financial instruments shall be carried out either at an agreed or estimated price with the financial entities that direct the placement, which will take into account the market conditions at the time of the issuance, or through simple sale operations of securities, or through an auction procedure. The auctions shall be convened by the Interministerial Commission, which shall determine the deadlines and conditions thereof."

Four. Article 12 is drafted in the following terms:

"Article 12. Procedure for the selection of placing and subscribing entities.

1. In the first of the cases mentioned in paragraph 2 of Article 11, the entities shall be selected individually through a competitive procedure based on the following criteria:

a) Technical criteria, which shall take into consideration their capacity to distribute similar financial instruments both in national and foreign markets, their experience in this type of operations, and their advisory capacity.

b) Economic criteria regarding the amount of commissions that said entities will charge for their services provided and indicative price indications at which they consider the placement viable.

These criteria shall be specified by the Interministerial Commission and published, with due advance notice, on the website of the Managing Society of the Deficit Securitization Fund of the Electricity System. Likewise, additional commitments that the financial entities are willing to assume with the Deficit Securitization Fund may also be taken into account, including the commitment to partial acquisition of the issuance under market conditions or acquisition of the unplaced amount.

In successive issuances of the Deficit Securitization Fund, the selected entities shall be reviewed in accordance with the criteria established in paragraph 1 of this article, and the performance of said entities in previous issuances of the aforementioned Fund shall be taken into account.

The Managing Society shall be responsible for receiving the offers from the interested entities. The final selection of placing entities shall correspond to the Interministerial Commission once the Managing Society has forwarded the offers from said entities to it.

2. In simple sale operations, one or more subscribing entities shall be selected individually through a competitive procedure based on criteria, such as term, price, and volume to be subscribed. To select the subscribing entities, at least three offers shall be requested.

The Managing Society shall be responsible for receiving the offers from the entities.
The process for the selection of subscribing entities shall correspond to the Interministerial Commission. The Interministerial Commission may delegate this function to the Monitoring Committee."

Five. Paragraph 3 of Article 18 is drafted as follows:

"3. Approve the price of the financial instruments in simple sale operations, as well as the agreed or negotiated price with the credit entities in accordance with what is established in the first of the cases of paragraph 2 of Article 11 of this royal decree;"

Sole Final Provision. Entry into force.

This royal decree shall enter into force on the day following its publication in the "Official State Bulletin".

Given in Madrid, September 26, 2011.

JUAN CARLOS R.

The Minister of the Presidency,
RAMÓN JÁUREGUI ATONDO