Annual Report 2010 - Enel.com

lished on January 26, 2011, the Ministry established the
total amount at December 31, 2010 of receivables in respect
of financing the rate deficit that can be securitized
at €16,694 million, €8,467 million of which assigned to
Endesa.
Incentives to use domestic coal
Royal Decree 134/2010 was published on February 27,
2010, creating an incentive to consume domestic coal.
It introduces a new organized market phase, called the
Resolución de restrictiones por garantía de suministro, for
ensuring priority dispatching for power plants that burn
domestic coal. The plants affected by the measure (Endesa
is involved with four of these) will be compensated for a
maximum annual production amount at a fixed price corresponding
to the unit cost of generation. That generation
cost is defined as the cost of domestic coal, the financial
cost incurred for storing that coal, variable operating
costs, fixed costs and the cost of covering CO charges in
2
respect of the output produced.
The priority dispatching for the coal plants excludes plants
originally accepted into the program. Priority will be assigned
on the basis of a ranking in descending order of
levels of CO emissions or – solely for natural gas plants
2
– an economic merit ranking established on the basis of
competitive bidding. For each MWh not produced, plants
excluded receive compensation equal to the difference
between the marginal hourly price and the variable generation
cost, plus any unit commercial margin if they are
signatories to take-or-pay contracts.
These rules are transitional and shall only remain in effect
until 2014 at the latest.
Although already published in Spain’s official journal
(Boletín Oficial del Estado), the decree was submitted for
approval to the European Commission, as it represents
potential state aid. The Commission required the Spanish
government to draft a new decree modifying the previous
measure (the most controversial part of the decree appears
to be the provisions concerning the compensation
for the lost earnings of excluded generation plants).
The main amendments introduced with the new decree
include:
> the elimination of the compensation of lost earnings;
> the plants using domestic coal specified in the measure
will initially be remunerated at the regulated estimated
cost calculated by the Comisión Nacional de Energía
(CNE). Any remuneration excess/deficit will then be
settled on the basis of the audited actual costs;
> the value of the emissions allowances granted free of
charge to the plants using domestic coal will be deducted
from their remuneration.
On September 29, 2010 the European Commission approved
the compensation to be paid to producers that
generate electricity using Spanish coal. The Commission
limited the amount of energy that can be generated under
the Spanish Royal Decree for the 2011-2014 period to
23.4 TWh per year. The limit for the remainder of 2010 was
set at 9.6 TWh from the date of application of the decree.
Royal Decree 1221/2010 amending Royal Decree
134/2010 was published on October 2, 2010, creating an
incentive to consume domestic coal to bring it in line with
the European treaty.
On October 26, the Resolution of the State Secretariat for
Energy (SSE) of October 22, 2010 was published, setting
volumes and prices for 2010. The maximum output from
domestic coal was set at about 9 TWh for the last Quarter
of 2010.
Following appeals and petitions for precautionary measures
submitted by Endesa and other national and European
sector operators, on October 29, 2010, the Audiencia
Nacional suspended the SSE Resolution of October 22,
2010 (adopting urgent precautionary measures – cautelarisimas)
and on November 3, 2010, it decided to keep
the suspension in force until the decision of the Tribunal
Supremo on the adoption of ordinary precautionary measures.
Again on November 3, 2010, the European Court of
Justice suspended the Decision of the Commission of September
29, 2010, until a decision is made on the adoption
of precautionary measures.
On December 22, 2010, the Tribunal Supremo rejected the
request for precautionary measures against the decree.
On December 30, 2010, Ministerial Order ITC 3366/10 set
out the methodology for calculating the cost of CO emis-
2
sions allowances assigned to plants using domestic coal
that are required to participate in the Resolución de restrictiones
por garantía de suministro process in 2011 and
2012. Under the measure, part of the allowances assigned
free of charge to the plants (equal to the number of hours
of mandatory dispatching for the Resolución de restrictiones
por garantía de suministro divided by 7,000 hours)
will be valued at zero. However, the entire opportunity
cost of the emissions rights will be taken into consideration
in calculating the variable cost at which the plants are
required to make their offers to the market.
On January 10, 2011, the Audiencia Nacional decided to
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