Banco Sabadell | According to press reports, the Ministry of Energy Transition, in its report on the CNMC’s proposal for the financial remuneration rate (TRF in its Spanish initials) for electricity networks, considers that the TRF should rise to just over 7% (against the announced 6.58%) due to the introduction of risk in investments. This consideration would be in line with the sector’s demands (7/7.5%), while also pointing out errors in the risk calculation formula applied by the CNMC, especially in the financial beta. On the other hand, it questions whether the remuneration should be similar to that of transport, which does not assume risks. The final ruling of the Council of State is expected on 24 November.
Assessment: News with little impact. Although the government report suggests a financial remuneration rate of around 7%, in line with the sector’s requests, this report is not binding and the final say on modifying the network circulars rests with the National Commission for Markets and Competition (CNMC). Therefore, any improvement in the financial remuneration rate circular that the CNMC may make (from the current 6.58%) should be limited. We would point out that the Cooperation Commission has not been convened to try to reconcile the positions of the government and the CNMC and that the Council of State does not have the power to impose substantive changes to the circular, but it does have the power to impose legal or procedural changes.
