Tarifa de Último Recurso (The Tariff of Last Resort)

Thu Jan 31 15:24:00 EST 2008
By Dr. Fabrizio Hernández and Ismael Bahillo

In July 2007, Spain's Hydrocarbons Law was modified to make it compatible with Directive 2003/55/EC of the European Parliament and of the Council common rules for the internal market in natural gas. The law foresees the removal of the current end-user tariff system for natural gas in Spain and the creation of a Tariff of Last Resort, applicable to certain types of consumers. On 29 December 2007, Order ITC/3861/2007 -- which describes the general methodological approach for calculating these new tariffs -- was approved.  This article from Gas Actual reviews the content of the approved methodological guidelines. The authors focus on the objectives of the new tariffs, and the tariff design criteria required to provide a degree of protection of vulnerable consumers commensurate with the need to preserve the incentives to look for and choose the best available offer in the market. The authors note that the approved methodological guidelines are insufficient to clarify fully how the tariff will be calculated and updated, therefore requiring further normative developments.