The Government invites the companies affected by the cut in hydroelectric power to renounce their concessions if they believe that their activity will not be profitable when the cut of the so-called “benefits fallen from the sky” that they receive, together with the power plants, materializes nuclear.
Jorge Fabra, economist: “There are still many benefits that have fallen from the sky to take away from the price of electricity”
The Executive has introduced this possibility in the bill that acts on the remuneration of CO2 not emitted from the electricity market. The text aims to avoid the over-remuneration that these plants receive due to the increase in the cost of the CO2 market, which they do not face, but it benefits them.
The text that the Executive has finally sent to Congress, after receiving the observations on the draft of the sector, the National Commission of Markets and Competition (CNMC) and the Council of State, includes a new additional provision, the sixth, relative to ” hydroelectric uses affected by this Law “.
“Within six months from the entry of this Law, the concessionaires of private rights to the use of water for hydroelectric production affected by this law may renounce it and request the extinction of such right,” says the text.
Sources from the Ministry for the Ecological Transition indicate that this is a provision provided for in the Water Law, “but it has been considered appropriate to expressly collect it, in case any facility considers that, with the reduction, it is not profitable for them to continue with the concession” .
The Ministry has introduced this forecast after in August, with the wholesale market chaining one record after another, the third vice president, Teresa Ribera, opened the door for a public company to assume the expired hydroelectric concessions. This Thursday, Podemos has registered in Congress a bill to create it, increasing the pressure for the Executive to adopt measures in this regard, although this public company would initially have a very limited portfolio of facilities.
The cut of the so-called CO2 dividend is one of the “structural” reforms that Ribera has proposed to put an end to the so-called benefits fallen from the sky of hydroelectric and nuclear plants. The other is the future fund to remove premiums for older renewables from the receipt. The President of the Government, Pedro Sánchez, asked the groups on Wednesday to process both initiatives “quickly”. According to the Government, they would lower the bill by 15% once in force.
Return to the Administration “free of charge and free of charge”
This new provision, which was not included in the draft initially approved in June, refers to article 53.1 d) of the Water Law, which provides for the extinction of the right to private use of a concession by express resignation of the concessionaire. This article indicates that upon termination of the concession right of these facilities, many of them built during the Franco dictatorship, “will revert to the competent Administration free of charge and free of charge all the works that have been built within the public hydraulic domain for the exploitation of the exploitation, without prejudice to the fulfillment of the conditions stipulated in the concession document ”.
It is not the only novelty of the bill with respect to the initial text. The one sent to Congress also foresees allocating the revenues collected from nuclear and hydroelectric plants to cover capacity mechanisms for certain facilities as they are available. In the initial drafting, it was proposed to allocate these revenues “to finance the costs of the electricity system provided for in Law 24/2013, of December 26, of the Electricity Sector, referring to the promotion of renewable energies and to cover, where appropriate, imbalances time between income and system costs ”.
Finally, it is proposed that they go “to finance the costs of the electrical system associated with capacity mechanisms.” This will mean a greater effort for the future renewable fund that plans to charge that cost to the entire energy sector, including gas and oil companies.
The text finally sent to Congress establishes a minimum threshold of 20 euros in the price of CO2 (which now exceeds 60 euros) from which the reduction is activated for the extra income received for carbon that hydroelectric and nuclear plants do not have to pay . It also modifies the reference date for the plants it will affect: it will be activated for start-ups before the publication of the Directive that established the European regime for the trading of greenhouse gas emission rights, on October 25. 2003, and not 2005, as indicated by the initial project. This will mean exempting wind installations that were affected.
600 million less
Thus, if with the first text a cut to the sector of about 1,000 million was foreseen, with the bill this has been reduced to about 600 million.
The reduction in income to the affected plants, as explained by the Government in August, will be 200 million with the ton of carbon at 30 euros and 1.7 billion with the ton at 100 euros. With the current situation, about 625 million would be obtained, which represents around 16% of the average billing of the facilities. The project plans to allocate 10% of the collection to vulnerable consumers at risk of social exclusion.
The text, which could be in force before the end of the year if the parliamentary groups give it their approval, was very badly received by the electricity companies after the approval of the draft, on the eve of this summer’s price rally. The nuclear lobby assured that it can lead to the anticipated blackout of the reactors and the president of Iberdrola, Ignacio Sánchez Galán, charged in June against the “unexpected charges” to the sector based on the “false” argument that these plants receive profits from the sky and they are already amortized.
This energy source, which uses a good in the public domain, has been at the center of controversy for months in parallel with the escalation of the bill. In recent months, hydroelectric plants have taken advantage of the high prices to present the most expensive offers and squeeze the conjuncture of the wholesale electricity market (in August, it has been the source that has dominated the matching of prices), with images of emptied reservoirs at full speed that have led the Government to announce several information files and a regulatory reform to strengthen control of the dams.
One of the vectors that have triggered prices is the price of carbon, which has doubled this year and this week has exceeded 61 euros for the first time. The other is natural gas, at record highs in Europe in a context of strong demand from Asia, supply problems from Russia and low storage levels heading into winter.