New rules for island electricity and gas systems in Spain

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1. New power plants in island and non-peninsular territories will only receive the additional payment if the Government confirms they are compatible with technical and economic criteria. Companies holding more than 40% of a system's generation capacity cannot receive that payment or the primed regime for new plants.
2. Electricity companies in these territories must hand the Ministry their fuel supply contracts and invoices for 2009 to 2012, so fuel costs can be set through a mechanism based on competition, transparency and non-discrimination.
3. If a plant substantially reduces availability or supply quality, the Administration may proportionally reduce its additional payment, without prejudice to any penalties.
4. New pumped storage facilities meant to guarantee supply, secure the system or integrate renewables will belong to the system operator. In other cases they will be awarded through a competitive process, with a construction schedule and a guarantee bond; missing the schedule triggers the bond and loss of the economic regime.
5. The regasification plants of the Canary Islands become the exclusive property of the corporate group that includes the Natural Gas System Technical Manager. Current owners have six months to transfer them at market price; if there is no agreement, an independent arbitrator sets the price.
6. Powers against supply risks are strengthened: the system operator will issue start-up orders to little-used plants, and failing to comply means losing the capacity payment. The electricity law is also amended to allow exceptional Government measures and state penalties for very serious breaches. And it is made clear that hydraulic fracturing falls under the hydrocarbons law and requires a favorable environmental impact statement.

Who it affects

• Electricity companies generating power in the islands and non-peninsular territories: New conditions to receive payments, limits if they exceed 40% of capacity, duty to hand over fuel contracts, and possible payment cuts or penalties.
• The electricity system operator: It will own the new pumped storage facilities and can issue start-up orders to plants.
• Gas companies owning regasification plants in the Canary Islands: They must transfer those plants to the Technical Manager's group within six months.
• Companies seeking to explore for or extract hydrocarbons using hydraulic fracturing: Their projects will need a prior favorable environmental impact statement.
• Consumers and administrations of the island territories: The law aims to guarantee supply and cut costs, and regional governments will be consulted in the procedures.

Words worth knowing

Sistemas insulares y extrapeninsulares

The electricity networks of the islands (Balearic Islands, Canary Islands) and other territories not connected to the mainland in the same way.

Instalaciones de bombeo (pumped storage)

Hydro plants that pump water uphill to a reservoir so electricity can be generated later, quickly, when needed.

Planta de regasificación (regasification plant)

A facility that turns liquefied natural gas back into gas so it can be piped to consumers.

Fracturación hidráulica (hydraulic fracturing)

A technique that injects fluid underground at high pressure to extract gas or oil from rock.

Retribución por garantía de potencia (capacity payment)

A payment plants receive for being available to produce electricity when the system needs it.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries