Wednesday, January 19

The Supreme buries the previous regulation of the electricity social bond

The Supreme Court has certified that the regulation of the social bonus introduced in 2013 was also irregular. The Spanish judges have applied for the first time the ruling of the Court of Justice of the European Union that declared “discriminatory” the system that decided which companies had to contribute money for this social bonus. The regulation, which was in force for 3 years, charged this obligation on companies that were simultaneously engaged in the production, distribution and commercialization of electrical energy and this system is not equal for all companies in the sector. The Supreme Court, in any case, warns that this ruling does not imply a carte blanche for all companies: each one will have to take their own legal actions.

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It is a relevant piece of information. The numbers of the National Commission of Markets and Competition (CNMC) reveal that between September 2013 and August 2014, for example, the settled cost of this first social bond was 184 million of euros. The data from the same regulator reveal that, between 2009 and 2014, a total of a total of 883 million euros to assume the cost of this social bonus.

The social bond was launched in the second legislature of the socialist government of José Luis Rodríguez Zapatero and suffered a first setback of the Supreme Court in 2012 after granting an appeal from Iberdrola. Even then, the contentious-administrative judges understood that the mechanism, which forced the large electricity companies to take over the bond, was a discriminatory measure. “It must be classified as discriminatory and non-transparent, in addition to not being controllable before the jurisdiction in its essential parameters,” the high court said at the time. One year after that ruling, which recognized Iberdrola’s right to be compensated, the regulation changed again.

That time it did so under the Government of Mariano Rajoy and with José Manuel Soria as Minister of Industry, Energy and Tourism. And the new financing system for the electricity social bond once again ran aground in the courts. Soria and the then Secretary of State for Energy, Alberto Nadal, affirmed that the new changes removed legal obstacles for the electricity companies to continue paying, this time distributing the payment among 18 more companies. The distribution, in any case, remained practically the same and the large electricity companies financed 96% of the bond with an approximate cost of 200 million: Endesa (41%), Iberdrola (38%), Gas Natural (14.7%), EDP ​​(3.2%), Viesgo (2.2%) and the rest for other companies.

It was Viesgo, previously called E.On España as a subsidiary of the German energy company, that brought the case again before the third chamber of the Supreme Court. And this time the road to the final judgment was a little more tortuous. The high court struck down the regulation in a 2016 ruling that was overturned a few years later, in 2019, by the Constitutional Court. This time the Supreme Court decided to go to the Court of Justice of the European Union, which ruled in October 2021: the social bond regulated in 2013 was also discriminatory when it came to differentiating which companies put money in and which did not.

Now the Supreme Court applies this ruling and certifies the inability of two consecutive governments to effectively regulate this social bonus, which allows several million people to see their electricity bill reduced. The 2013 regulation established that the social bond had to be assumed by companies that “simultaneously develop the activities of production, distribution and commercialization of electrical energy” and the Supreme Court replies that the law does not justify, for example, that the activity is exonerated of transport. “The brief indication that, since it is a regulated activity, developed under a legal monopoly and exclusivity regime, it would not be possible for the sole carrier to recover from the market the possible cost that it would have to assume in this concept” does not seem sufficient justification, “he says. the Supreme.

It is also discriminatory, according to the Supreme Court, that the financing of the social bonus then falls only on business groups that simultaneously develop the three activities of generating, distributing and marketing energy. That, according to the judges, was something “lacking in clarity and transparency as well as discriminatory, without justification.” The result is that Viesgo has the right to be compensated with all the money that it has paid for the social bonus in application of that Royal Decree of the Executive of Mariano Rajoy. The amount, together with the interest generated in these years, will be determined in the execution phase of the sentence.

This will come to imply a significant outlay for the public coffers but for now it does not imply a cascade of compensation for the electricity companies. The Supreme Court explains: “This decision is not extended to other companies, other than the appellant, who did not file an appeal against the controversial provisions, without prejudice to the initiatives that they may undertake to obtain from the Administration compensation for the amounts that they paid as financing for the social bond “. The ball is, therefore, in the roof of the big electric companies.

From Nadal to Nadal

The legislation of the electricity social bond has changed several times since then. At the end of 2016, the Government of Rajoy, this time with Álvaro Nadal as Minister of Energy, launched a new reform and established that the social bonus would be paid by all electricity companies. The Supreme Court had just overturned the previous regulation and the price of electricity had come to the forefront of public debate after an old woman from the Catalan town of Reus died in the fire caused by the candles with which it was lit. I had the electricity cut for non-payment.

In October 2017, another new regulation came into force, this time establishing discounts of up to 40% on the electricity bill for the most vulnerable and depending on the income of those who wanted to request it. That Royal Decree was also appealed before the third chamber of the Supreme Court with more than a dozen pending legal actions. Other recurring members include Viesgo, in addition to Iberdrola, Gas Natural or Endesa.

In recent months, the drastic rise in electricity prices has resulted in further modifications to this social bonus. The Royal Decree approved last October increases the transparency requirements for electricity companies and reinforces the social bonus for the most vulnerable. The discounts, until the end of March and on behalf of the electricity companies, will go from the current 25% to 60%, and from 40% to 70% if they are severe vulnerable consumers.

It remains to be seen, therefore, if this foreseeable decision of the Supreme Court on the regulation of the social bond of 2013 translates into a barrage of claims by the electricity companies requesting the return of hundreds of millions of euros together with the interests that have been generated since then.

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