Law 34/1998 of 7 October 1998 on the Hydrocarbons Sector (LSH), which transposes the provisions of Directive 98/30/EC into Spanish legislation, establishes the bases for the organisation of the Spanish Gas System and determines its activity regime.
Since 1998, the regulation of the Spanish gas sector has focused on the objective of achieving the full liberalisation of the natural gas market so that this energy can be supplied at a minimum cost to citizens and companies. This has required a stable regulatory framework that allows the development of the gas infrastructure necessary to meet demand and promote the diversification of gas supply sources to guarantee supply in the face of scarce domestic production.
The basic pillars of the regulatory framework of the Spanish Gas System are: i) Market liberalisation, ii) The separation of regulated activities (regasification, storage, transmission and distribution) and activities in free competition, iii) Free access by third parties to gas infrastructure under objective, transparent and non-discriminatory conditions, iv) The establishment of an integrated economic framework with regulated access tariffs that must be sufficient to recover the costs incurred, v) A remuneration for regulated gas activities that allows the return on capital employed with a reasonable profitability according to a low-risk activity, vi) The assurance of minimum safety and strategic stocks, vii) The protection of consumers, especially the most vulnerable consumers.
With the publication of Royal Decree-Law 1/2019, and in accordance with European regulations, the National Commission on Markets and Competition (CNMC) is conferred with the power, among others, to approve the methodology, remuneration parameters, the regulatory asset base and the annual remuneration of liquefied natural gas transmission, distribution and plants. For its part, the Ministry for the Ecological Transition and the Demographic Challenge is responsible for energy policy, security of supply, gas quality, and the establishment of the remuneration and access framework for underground storage facilities.
The LSH, which has been supplemented and adjusted by subsequent legislative developments, is the main legal regulation governing Enagás’ activities. Thus, through Royal Decree-Law 6/2000 and Law 12/2011, provisions are included in the LSH which, on the one hand, entrust Enagás with the functions of Technical Manager of the System and, on the other, designate it as the main Spanish Transmission System Operator, while determining the corporate structure for the exercise of these regulated activities, which are to be carried out by the subsidiaries Enagás Transporte S.A.U. as regards the functions of transmission system operator, and by Enagás GTS S.A.U. as regards the performance of system management activities. Furthermore, this activity must be carried out through a specific organic unit with adequate accounting and functional separation from the transmission activity.
Access to gas infrastructure is carried out through transparent market procedures. Requests for access to reserve capacity at the facilities are assessed by the Technical Manager of the System in coordination with the facility operators and may be denied in the event of lack of available capacity. The signing of access contracts is a firm commitment to the Gas System and entails the payment of tolls and royalties, which are approved by the CNMC in the case of transmission, regasification and distribution facilities, and by the Ministry for the Ecological Transition and the Demographic Challenge for access to underground storage facilities. In addition, the Ministry approves the amounts of the charges corresponding to regulated costs of the Gas System that are not associated with the use of gas facilities, such as the CNMC fee, the annuities of the deficit existing in 2014, the remuneration of the operator of the organised natural gas market and the cost differential of supply in island territories
The most important regulatory instruments developing the framework for access to the facilities are:
The LSH establishes the right of the owners of regasification, transmission and storage facilities to receive remuneration for the performance of their activities within the Gas System. In addition, Law 18/2014 provides that regulated activities in the natural gas sector will be subject to the principle of economic and financial sustainability, and that their remuneration is covered by the regulated prices charged for the use of infrastructure (tolls, royalties and charges).
The remuneration parameters for natural gas transmission, regasification, storage and distribution are valid for six years and are set taking into account the cyclical situation of the economy, gas demand, cost trends, efficiency improvements, the economic and financial balance of the system and the appropriate profitability of these activities.
The remuneration methodology is based on the principles of i) recovery of the investments made; ii) allowing a reasonable and adequate return for a low-risk activity; iii) consideration of the operating costs incurred by an efficient and well-managed company that are necessary for the performance of the activity and iv) the introduction of incentives for productivity, efficiency and financial adequacy.
The second regulatory period (2021-2026) is currently being applied, in which, for each gas year (1 October n-1 to 30 September n) the CNMC, in the case of transmission, regasification and distribution facilities, and the Ministry for the Ecological Transition and the Demographic Challenge, for underground storage facilities, annually approve the remuneration determined by the remuneration methodology in force.
The regulatory instruments that determine the methodology and remuneration parameters are as follows: