Electricity contracts that include review clauses linked to the CPI They have been (and are) in the crosshairs of the National Commission for Markets and Competition (CNMC). In December, the Agency’s Regulatory Supervision Chamber published an agreement in which it clarified to the electricity companies that the contracts that are updated with the CPI are not exempt from financing the cost of the so-called Iberian exception, except for those that had been signed before the approval of Royal Decree Law 10/2022, of March 26, which regulated the new mechanism.
From that moment on, and whenever there is a change in the contract price, “regardless of the reason” (for example, a CPI update), they would no longer be able to benefit from such an exemption. The measure does not have great consequences by itself, since the March regulation already established that the compensation for the cap on gas (in which the Iberian exception translates) would be financed by contracts indexed to the wholesale market, that is, those of the regulated tariff (PVPC), as they are the beneficiaries of the drop in prices in said market derived from the mechanism. In addition, as of its application, on June 15, it would also be financed by the liberalized market contracts, with a fixed price and term, to be renewed or extended.
The doubts of the companies hung over the contracts that, without reaching renewal (and, therefore, fixed) included updates with the CPI along the way. The general price index closed in 2022 by 5.7%with which the clients in this situation, in addition to said increase, will find that they will also pay the compensation for the cap on natural gas, which the marketer will transfer to them by law.
On this point, the Commission requires companies to report transparently customers about the impact of this clause when contracting and “should assess the proportionality of applying them” since they affect all the components of the invoice, such as access tolls.
the problem arrives
So far, the clarification of the regulatory body that presides Cani Fernandez it only affects the pocket of the consumer, but not the income of the companies. The most difficult issue refers to the reduction of the heaven-sent benefits of inframarginal energies approved by the Government in the Royal Decree Law 17, September 2021whose interpretation regarding the contracts linked to the CPI, is also still on the council table.
Although the affected companies consider that contracts with this type of clauses are not minor, since they are fixed price contracts (in fact, they have considered this in their self-assessments before the system operator, REE), a first interpretation, the Commission considered a variable price and, therefore, that they can be cut.
The joke would mean, according to sources familiar with the process, the return of about 1,000 million of euros in the case of iberdrola and another 700 million in the Endesacorresponding to the decrease between September 2021 and October 2022, at the time the Commission agreed on its provisional criteria and requested additional information from the companies.
The discussion about what is considered a fixed contract For the purposes of the provisions of RDL 17/2021, it seems to have been settled with the clarification of the December agreement that the CNMC has made on the Iberian exception, and which was quite clear in RDL 10/2022 that regulates it.
Different legal sources assure that the CNMC “has come to define that the contracts indexed to the CPI are no longer considered at a fixed price when it is time to review the CPI and when it is reviewed they are new contracts and therefore are reduced”.
In order to avoid the reduction, sources in the sector indicate, the electric companies seem willing to not apply the CPI clauses to avoid a cut in income. However, in the companies they assure that they are applying them as usual. The vast majority of contracts are reviewed with the CPI, according to the information sent by the companies to REE.
In any case, it must be borne in mind that, since March, the reduction has been applied to all contracts with prices higher than €67/MWh, which has made it possible to contain prices in the free market. In the case of the Iberian exception, it has curbed pool prices and, incidentally, the regulated tariff.
The companies they deny the greatest and argue that the contracts “with review linked to the CPI are not considered a fixed price” and “does not serve as a hedging instrument blessed by legal services.” In addition, they insist that their contracts have prices below the aforementioned 67 euros/MWh. In other words, if the legal reduction formula were applied, they would have to return more money than they received.
The “inflammatory” letter sent by Iberdrola to the council
Pressure. As a result of the information advanced by Cinco Días on November 4 about the harsh cut of 1,000 million euros that the CNMC proposed for Iberdrola (also the rest of the electric companies, although to a lesser extent), the company chaired by Ignacio Sánchez Galán sent a letter to the board of directors, an organization that some sources describe as “inflammatory”.
News. In its heading it says that, “through journalistic news”, it had learned “of the existence of an alleged provisional criterion of that body in relation to RDL 17/2021, “not yet formalized” (quoting this newspaper), which “It is contrary to the consideration as contracts with a fixed price to all those that have a review linked to the CPI”.
Opinion. Given that it had not received official communication “of such relevant extreme”, the company conveys its opinion, in the event that the information “turns out to be accurate” and in view of the fact that “there is no record of any rectification by the CNMC.
Pool. In the letter, Iberdrola ensures that all its clients have update clauses linked to the CPI in their contracts. Which does not mean, he argues, that because such an update exists, the electricity company “is charging them the wholesale market price.” In short, they do not receive such income.
