While the Supreme Court calls into question the cuts to renewable energies, the Constitutional Court supports the reform introduced by the Government

Written on 28 Dec 2015

Within the contentious administrative appeals filed by producers of renewable energy against the modification of the remuneration system, on Monday 21 December 2015 the Third Chamber of the Supreme Court issued a ruling in which the legality of the legislative changes introduced by the Ministry of Industry, Energy and Tourism is questioned.

On the same day the Constitutional Court ratified the principles of the new remuneration system for renewable energies in setting aside the constitutional challenge brought by the Government of the Region of Murcia.

Among the measures taken by the Government in 2013 aimed at reducing the deficit rate, a modification of the remuneration system of renewable energy, cogeneration and waste production facilities was approved, meaning a cut of 1,700 million euros. Therefore, the renewables stopped the operation of a bonus scheme in order to be governed by an investment incentive scheme with a reasonable return for the useful regulated lifetime of each facility. The retroactive application of these cuts, along with the failure to compensate these sources, prompted a flurry of appeals by renewable energy producers against the energy reform implemented.

Accordingly, in 30 of the 400 appeals filed, in a ruling issued on 21 December 2015, the Supreme Court challenges the constitutionality of the second final provision of the Royal Decree Law 9/2013 and the third final provision of Law 24/2013 of the Electrical Sector (from hereinafter “LSE”), relating to the new framework of the specific remuneration system, on the basis that these provisions may violate Article 9.3 of the Constitution.

In this regard, the Supreme Court considers that such provisions could infringe the principles of legal certainty and legitimate expectations, as well as the retroactivity of legislation.

Secondly, the possible unconstitutionality of the second final provision and the third transitory provision of Royal Decree Law 9/2013 was also raised, as well as the sixth transitory provision of the LSE, to the extent that the new regime entered into force without a transitional period, generating a period of uncertainty during which the producers had to continue their operations without being aware of both the legal and remuneration systems that would apply to them until the enactment of the implementing provisions. Said implementing provisions are namely Royal Decree 413/2014, of 6 June, by which the activity of electrical energy production from renewable energy sources, cogeneration and waste is regulated, and Order IET/1045/2014 of 16 June, by which the retributive parameters for certain production facilities of electricity from renewable energy sources, cogeneration and waste are established.

In view of the above, and notwithstanding the question of unconstitutionality, the Supreme Court leaves open the possibility that a preliminary ruling can be agreed before the European Court of Justice.

Meanwhile, the same day on which the sector echoed the Supreme Court decision, it has been announced that the Constitutional Court has rejected the constitutional challenge brought by the Government of the Region of Murcia against several provisions of the Royal Decree Law 9/2013, therefore endorsing the electricity reform undertaken by the Government. This dictum of the Constitutional Court could set a precedent for the resolution not only of the various appeals of unconstitutionality drafted in this field, but also of the hypothetical question of unconstitutionality which could be raised by the Constitutional Court.