Changes to the methodology for calculating transport and distribution fees

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Changes to the methodology for calculating transport and distribution fees

Last Friday the 24th of January the new methodology for the calculation of distribution fees was published in the BOE, after being already communicated in the CNMC circular of last 15th January. With this publication we enter the next phase of the change in methodology that was initiated, debated and contested last year, and about which we have already wrote the blog “Proposal for change in energy rates What changes could we see in our bill in January?

Which part do the distribution fees represent on the electricity invoice?

In the current methodology, the relative weight of distribution fees on the bill amount to between 15 and 42% of the energy bill depending on the tariff group.

Source: Own elaboration

What specifically changes with the new methodology?

The Royal Decree establishes the methodology for the calculation of distribution fees and serves as a basis for determining the compensation for transport and distribution activities. The fees will be updated annually based on the information provided by the system operator and the distributors.

When will the new regulation come into effect?

The methodology for the calculation of transport and distribution fees came into force on January 25, but since the 2019 fees have already been extended into 2020 last December (Order TEC/1258/2019 of December 20) it is not expected that the new methodology will be used until next year, although it is possible that the current distribution fees for 2020 will be revised.

What are the main modifications to the methodology?

The main modifications are:

  1. Acording with European regulations, hourly discrimination is introduced for all fees.
    This means that the six-period time discriminating will be applied to all tariff groups, with the exception of the 2.0 TD tariff. Therefore, all the tariffs except 2.X will have 6 periods, both in terms of energy consumed and maximum power contracted.
    The current 2.X tariffs will have three periods for energy consumption, but 2 in terms of contracted power.
  2. Hourly periods are reviewed and simplified, with the aim of facilitating the transmission of prices to consumers and inducing efficient behavior.
    Reviewing the peaks and dips in demand during the different seasons, days of the week and hours, the CNMC aims to give the consumer a clear signal of the real costs and to encourage efficient use of the networks.
    For customers in the 3.X and 6.X tariff groups (in the Iberian Peninsular), the periods would be defined as follows:

    Source: CNMC

    Bearing in mind that the day rates are defined in the BOE as follows:
    – Type A: from Monday to Friday not a public holiday in the high season (January, February, July and December)
    – Type B: from Monday to Friday, not holidays in the mid-high season (March and November).
    – Type B1: from Monday to Friday not public holidays in the medium season (June, August and September).
    – Type C: from Monday to Friday not public holidays in the low season (April, May and October)
    – Type D: Saturdays, Sundays, holidays and January 6.

    This extends the hours in P1 in months such as: January, February, July and December. The month of August is no longer P6, so it would also tend to be more expensive ceteris paribus.

  1. The fee structure for low voltage connected consumers with a contracted power of less than 15 kW (households and SMEs) is simplified.
    All low voltage tariffs are unified in the 2.TD with 2 power periods and 3 energy periods.
  1. A fee is introduced for supply points dedicated exclusively to the recharging of public access electric vehicles.

In order to facilitate the increase of electric vehicles, specific fees are introduced for this type of vehicle. These supply points will have 6 periods.

What is the goal of the new legislation?

Under its criteria of sufficiency, efficiency, additivity, transparency and objectivity, non-discrimination among users and uniqueness, the CNMC has modified the methodology to optimize transmission and distribution fees. The fees will be calculated according to the characteristics of each voltage level, and the factors that influence the cost of the transmission and distribution of electricity.

In general terms, the proposal will lead to a reduction of existing distribution fees.

Source: CNMC

For low voltage tariff groups, it is foreseen that the decrease in distribution fees will be compensated by the increase of energy costs caused by the introduction of three periods: peak, valley and flat period. The fee structure is simplified for low voltage connected consumers with a contracted power of less than 15 kW. Specifically, a single fee is established for this group of consumers, which includes domestic consumers. Three consumption periods are differentiated (peak, flat and valley) in order to encourage the use of the networks during off-peak hours. This is due to the fact that European regulations establishes that network tariffs must take into account savings derived from demand management measures and distributed generation, as well as price signals for the purpose of shifting demand from peak to off-peak hours.

For medium and high voltage customers lower distribution fees will be compensated through the contracted power term. This will be achieved through the revision and simplification of hourly periods, to induce efficient behavior.

The question that arises is:

Now that the methodology has changed, will the government approve new electricity access fees by 2020?

Marta Serrano | Energy Consultant

 

By | 2020-01-29T12:07:55+00:00 January 29th, 2020|Categories: Electricity Markets, Energy Policies, Featured, M·Blog, Spain|Tags: , , |0 Comments

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