The main novelties of the Royal Decree Law 15/2018, 5 October, on urgent measures for the energy transition and the protection of consumers.

On the 7 October 2018, the Royal Decree Law 15/2018, 5 October, of urgent measures for energy transition and the protection of consumers (the "RD-Law"), came into force. It modifies and repeals certain precepts of Law 24/2013, December 26 of the Electricity Sector ("LSE"), of Royal Decree 1955/2000, December 1, which regulates the activities of transportation, distribution, marketing, supply and procedures of authorization of electric power installations ("RD 1955/2000"), of Royal Decree 900/2015, of October 9, which regulates the administrative, technical and economic conditions of the supply of electric power with self-consumption and of production with self-consumption (the "RD 900/2015"), of Law 15/2012, December 27, of fiscal measures for energy sustainability ("Law 15/2012"), as well as of Law 38/1992, December 28, of Special Taxes (the "Law 38/1992").

This note will present the most relevant modifications in terms of self-consumption of electricity, bilateral contracts, access and connection, remuneration regime and fiscal measures. Finally, this note indicates the most significant legislative changes in the fight against energy poverty and sustainable mobility.

A) Self-consumption of electricity.

In relation to self-consumption, the RD-Law modifies the LSE by introducing three fundamental principles that will regulate self-consumption activity: (i) it recognises the right to self-consume electric energy without charge; (ii) it recognises the right to self-consumption shared by one or various consumers to take advantage of economies of scale; and (iii) it introduces the principle of administrative and technical simplification, especially for the lower power facilities.

It regulates shared self-consumption and the establishment of a new definition of self-consumption methods: (i) the supply with self-consumption without surpluses, when the devices prevent the injection of surpluses that have not been consumed into the network; and (ii) the supply with self-consumption with surpluses, when surplus energy is injected. In any of them, it permits collective use, with shared self-consumption, now permitting the production facility to be close to the supply point, without it being in the same building. One of the most relevant points is the fact that self-consumed energy from renewable sources, cogeneration or waste will be exempt from all types of charges and tolls.

On the other hand, it simplifies the administrative process of the facilities of up to 100 kW included in the method of self-consumption without surpluses, being forced to comply, exclusively with the requisites of the corresponding technical regulations and, in particular with the Electrical Low Voltage Regulation. Likewise, the net billing of surpluses in small installations is contemplated, so that once the regulations have been developed, a valuation at the wholesale market price of the surplus energy injected may be subtracted directly from the electricity bill, without being considered an economic activity.

On the other hand, the need to process access permits and connection for the facilities of less than 15kW included in the modality of self-consumption without surpluses is eliminated.

Likewise, the facilities under the self-consumption modality, with power lower than 100 kW, will be exempt from being obliged to register in the Administrative Register of Facilities of Production of Electric Energy.

Finally, it is worth mentioning that, for the monitoring of self-consumption activity and its impact on the fulfilment of renewable energy objectives, the Register of Administration of Self-consumption (article 9.4 of the LSE) has been created, which will be operational within three months after the approval of the regulators that regulate its operation.

B) Bilateral contracts between producers and consumers.

The RD-Law modifies article 44.1 of the LSE allowing any consumer – whether or not a direct consumer of the market -, to acquire energy through bilateral contracting with a producer, which entails an advance in development of the energy sale agreements or (PPA), by eliminating the requirement that said consumers be considered as subjects of the system, with the burdens and requirements that this entails.

In this respect, the exposure of the motives of the RD-Law signals that these methods are heading towards eliminating the barriers that prevents agents from making necessary decision so that the transitions towards a decentralised economy is carried out as quickly as possible, in turn giving investors' confidence, in such a way that they can mobilise the investments required for the energy transition on the horizon of 2030.

C) Access and connection: expiration of access rights, amount of endorsements, project commission contract and transitory regime.

Article 20, Third Additional Provision and Third Transitory Provision of the RD-Law are responsible for implementing the following modifications in terms of access and connection permissions:

• Firstly, the Eighth Transitory Provision of the LSE is modified and the validity of the rights of access and connection granted prior to the entry into force of the LSE is extended. In that sense, the referred permissions will expire if they have not obtained the operating license, by the end of the following periods: (i) before the 31 March 2020, or (ii) five years after the obtainment of the access and connection rights.
• Regarding the amount of the guarantee, Articles 59 bis. 1 and 66 bis. 1 of the RD 1955/2000 are modified, and increased to 40€/kW.
• On the other hand, in connection points up to 36 kW, for the actions carried out in the transport or distribution networks by the holders of the access and connection permits that must be developed by the carrier or distributor, the promoter must advance 10% of the total investment value to undertake within a period not exceeding 12 months. Once the aforementioned amount has been paid and the administrative authorization of the production facility has been obtained, the holder, within four months, must sign a project contract ("CTE") with the owner of the network. If this amount is not paid within the established period, the expiration of access and connection permits will be declared.
• Finally, in regards to the transitory regimen, the RD-law enables a window period for the facilities that, have access and connection permits before the RD-law comes into force (7 October 2018) they will not have to comply with the time periods established in the previous paragraph, they can waive their right to access and connection in a time period of three months (until 7 January 2019), with the return of the granted guarantee.
• On the other hand, the facilities that opt to continue with the processing of their projects, should, within a two month period from when the rule comes into force, proceed to pay 10% of the total investment value of the reinforcements, extensions, etc. that corresponds to paying the developer.

With these measures, according to the statement of the motives of the RD-law, the Government intends to avoid speculation and ensure the completion of projects with access rights to the network granted, which will result in lower costs for the electric system, as well as a reduction in the electricity retail market

D) Tax novelties

From a fiscal point of view, the RD-law object of the current analysis, incorporates important modification with the principal objective, indicates the policy, of moderating the evolution of prices in the wholesale electricity market. The modifications in the tax field unfold, fundamentally, in the Tax on the Value of the Production of Electric Power (IVPEE), the Special Tax on Electricity (IEE) and the Special Tax on Hydrocarbons (IEH):

a) In regards to the IVPEE, the electricity produced and incorporated into the electricity system is exonerated from said tax for a period of six months (the last quarter of 2018 and the first quarter of 2019) coinciding, according to the RD-law, with the months of greatest demand and highest prices in the wholesale electricity market.

For the tax, instead of establishing a type zero, the calculation of the tax base is modified, temporarily, so that it will be made up of the total amount to be received by the taxpayer that corresponds to the production and incorporation into the electric power system, measured in plant bars, for each installation in the tax period, reducing said amount, in the remunerations corresponding to the electricity incorporated to the system during the last natural quarter, for the year 2018 and in the remunerations corresponding to the electricity incorporated into the system during the first quarter for the 2019 fiscal year.
This calculation formula will be the one taken into account both to determine the tax base of the instalment payment to be made in the last quarter of 2018 and the first of 2019, and for the calculation of the Tax Base for the year.

Note that the concepts that include the remuneration corresponding to the electricity incorporated in the system include the system adjustment services necessary to guarantee an adequate supply to the consumer, the payment for capacity according to the capacity needs of the system and the specific remuneration regime.

b) In the IEH, the principle changes introduced are the following:

• It is established that the manufacture and import of products included in the objective scope of the tax that are destined to the production of electricity in power plants or to the production of electricity or to the cogeneration of electricity and heat in combined power plants will be exempt. For the implementation of the exemption, the redefinition of "Central Electricity" and "Combined Electricity" carried out by the RD-Law must be taken into account. It should be noted that the exemption should be requested.
• In natural gas supplies carried out by the terms of article 50.4 of the Law 38/1992, the taxpayers who have passed on the amount of the installments accrued based on a provisional percentage reported by the final consumer, (until now the provisional percentage reported by the owners of cogeneration plants for electricity and useful thermal energy), must regularize the amount of the fees charged according to the final destination percentage of natural gas, once it is known, by the procedure established by regulation.
• Finally, in relation to the IEE the taxable event of this tax is modified by eliminating from the consumer concept "the managers of system charges" and incorporating "the natural or legal persons who acquire the energy for the provision of energy recharge services vehicular". This is because the electric recharge activity is liberalized, eliminating the figure of the charges manager envisaged in the Electricity Sector Law.

E) Specific remuneration regime

In that which concerns the principal novelties in the remuneration regimen, article 20 and Additional Provision Eight undertake the following modifications:

• Limitation in the calculation of the equivalent hours of operation, by excluding the power generated in central bars in certain time slots and reduction of the remuneration regime based on the public subsidies received. In this regard, articles 21.2 and 24.1 of Royal Decree 413/2014, June 6, which regulates the activity of electricity production from renewable energy sources, cogeneration and waste are modified.
• Derived from the tax modification that we have previously mentioned, the retributive parameters of the standard installations applicable to installations for the production of electrical energy from renewable energy sources, cogeneration and waste, will be approved within a period of three months, by ministerial order, reviewed taking into account the amendments of Law 15/2012, and Law 38/1992.

F) Liberalisation of electric recharge activity.

We must also highlight that the RD-Law liberalizes the activity of electric recharging, eliminating the figure of the manager of charges envisaged in the LSE, because as indicated in the Statement of Motives of the rule, this activity has been revealed as excessively rigid and discouraging.

In this way, any electric energy consumer can resell the energy acquired for the provision of energy vehicle recharging services.

Other novelties in the electricity sector.

Finally, although it is not the subject of this note, we must emphasize that the standard includes as a main novelty a series of measures aimed at combating energy poverty, as well as others aimed at increasing information, protection and rationalization of contracting mechanisms with the objective of guaranteeing the protection of all electricity consumers.

The methods established in the RD-Law came into force last October 7 and must be validated by the Congress of Deputies within 30 days under the terms and procedures provided in Article 86 of the Spanish Constitution and the Regulations of the Congress of Deputies.