Regulatory framework

Regulatory framework

The regulatory framework of the regulated business activities carried out by Red Eléctrica is established by both European and national regulations.

At European level

The Clean Energy for all Europeans package, consisting of four regulations and four directives, is the current set of rules governing the European electricity sector. Within it, the following are particularly relevant due to their content:

  • Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity.
  • Directive (EU) 2019/944 of the European Parliament and of the Council, of 5 June 2019, on common rules for the internal market for electricity and amending Directive 2012/27/EU

It is important to note that, according to the Treaty on the Functioning of the European Union, Directives must be transposed into Member States' law via national measures, whereas Regulations are directly applicable and effective in all Member States.

In addition to this regulatory package of a crosscutting nature, the European institutions also enact specific rules that complete the European regulatory framework. Among them, noteworthy is Regulation 347/2013 (available only in Spanish), regarding the guidelines on trans-European energy infrastructure, where energy infrastructure projects of common interest are identified, or the Electricity network codes and guidelines adopted by the European Commission.

At national level

The Electricity Industry Law 24/2013 (available only in Spanish) of 26 December is the main regulation governing Red Eléctrica's activities. Said Law confers on Red Eléctrica the functions of transmission and system operator (TSO) in Spain, as well as the role of highvoltage transmission grid manager. Although Law 24/2013 repeals practically all of the previous electricity industry law, it upholds the current corporate structure for these activities since it does not repeal the twentythird additional provision. This provision makes specific reference to the Group’s holding company, Red Eléctrica Corporación, S.A., and assigns to the subsidiary Red Eléctrica de España, S.A.U. the functions of sole transmission agent, system operator and transmission grid manager, the latter activity being conducted through a specific organisational unit that is sufficiently segregated from the transmission activity for accounting and functional purposes.

The remuneration for electricity transmission and system operation activities is also subject to regulation. Royal Decree-Law 1/2019 (available only in Spanish), of 11 January, on urgent measures to bring the competencies of the Spanish National Markets and Competition Commission (CNMC) in line with the requirements of EU law in relation to Directives 2009/72/EC and 2009/73/EC, modifying Law 24/2013, assigning to the Spanish National Markets and Competition Commission among other things, the powers to approve the methodology, the remunerative parameters, the asset regulatory base and the annual remuneration of power transmission activity and system operation.

Within the scope of these competencies, the CNMC approved Circular 5/2019 (available only in Spanish), of 5 December, establishing the methodology for calculating the remuneration of the electricity transmission activity, which together with Circular 2/2019 (available only in Spanish), dated 12 November, establishing the methodology for calculating the rate of financial return for those activities related to the electricity transmission and distribution, regasification and natural gas transmission and distribution, and Circular 7/2019 (available only in Spanish), of 5 December, approving the standard facilities and the benchmark unit values for operation and maintenance per asset that are to be used in calculating the remuneration for companies that own electricity transmission facilities, establish the current regulatory remuneration framework for the electricity transmission activity in Spain.

In accordance with the aforementioned Royal Decree-Law 1/2019, the methodology for calculating the remuneration for the operation of the electricity system is also established by the CNMC. Circular 4/2019 (available only in Spanish), of 27 November, establishing the methodology for the remuneration of the electricity system operator, sets out the methodology for remunerating the electricity system operator from 2020 onwards.

Also relevant to Red Eléctrica’s business activities is Law 17/2013 (available only in Spanish), on security of supply and increased competition in the Spanish insular and non-peninsular systems, which establishes that Red Eléctrica, in its capacity as operator of these electricity systems, be the owner of all new pumpedstorage facilities, provided that it is determined that said facilities have as a main purpose the guarantee of the electricity supply, the security of the system and the integration of nonmanageable renewable energy.

Regulations of a technical nature

In addition to the general regulations governing Red Eléctrica's activities in the sector, there are also extensive technical regulations aimed at regulating the measures required for the proper technical management of the peninsular and non-peninsular electricity systems:

The Red Eléctrica Group

In recent years the Group has consolidated its position as a global operator of essential infrastructure, managing and maintaining electricity transmission grids at an international level through Red Eléctrica Internacional (REI); a subsidiary of the Group which has its own subsidiaries in Peru, Chile and Brazil. In addition, the Group operates and manages more than 50,000 km of dark fibre network through its subsidiary Red Eléctrica Infraestructuras de Telecomunicación (Reintel) and it also manages and operates communication satellites through HISPASAT; each of them having their own sectorial regulatory framework which governs the activities they carry out.

The regulatory framework of each of the subsidiaries of Red Eléctrica Internacional (REI) is outlined in the national regulations of each the countries in which these subsidiaries have their registered office:

  • Perú. (Available only in Spanish)
  • Chile. (Available only in Spanish)
  • Brazil. (Available only in Spanish)