Regulatory Adjustments in Gas Distribution Revenue Incentives for 2027-2032
The National Markets and Competition Commission CNMC has initiated a public consultation on the proposed circular that will govern the methodology for setting the revenue of gas distribution companies for the period 2027-2032. The initiative aims to adapt the current regulatory framework to ensure sufficient remuneration for an efficient and well-managed company, aligned with energy policy goals towards sustainable economic management of the gas system.
This revised regulatory scheme promotes infrastructure maintenance to ensure supply security while supporting sector decarbonisation. It considers changes in gas demand, preserving competitive tariffs, and addresses sector stakeholders requests to maintain stability and reduce demand-related risks. The methodology also takes into account inflation, biogas injections, digitalisation, cybersecurity, and emission controls, reflecting a comprehensive approach to sector regulation.
Key updates proposed include extending the base remuneration from the 2021-2026 regulatory period into the new cycle, removing incentives for recently gasified municipalities, and updating market parameters to mirror current price trends. The retribution s parametric variation is limited to plus or minus ten percent of the base remuneration, ensuring stability. New components incentivise biogas injection and fund efforts related to digitalisation, cybersecurity, and methane emission reductions.
Temporary elements introduced in the 2020 circular, such as transitional remuneration and other provisional measures, are set to disappear. The proposal also enhances corporate reporting obligations, promoting transparency within the sector.
The economic forecasts suggest that the distribution activity could generate approximately 1.192 billion euros annually during 2027-2032, representing a modest increase of 2.3 percent compared to the previous period. Major distribution companies including Nedgia Naturgy Redexis Nortegas and Madrilena Red de Gas have until 27 April to submit their comments on the proposal.
Industry sources highlight that distribution companies are analysing the proposal comprehensively, identifying areas for potential improvement. Concerns include the lack of compensation for increased costs due to inflation and the significant retributions cuts during 2020-2026, as well as the impact of public policies on biogas connections. The sector is hopeful for a dialogue with the regulator to address these issues and clarify aspects of the proposed methodology.
Throughout its development, the proposal has undergone a lengthy participative consultation process involving industry players, institutions, renewable gases promoters, consumer associations, and environmental organisations. Since December 2024, multiple consultation phases have taken place, culminating in a public hearing within the CNMC s broader regulatory review cycle. The revised methodology will be further refined following stakeholder feedback and will ultimately be submitted for approval by relevant authorities.