The government approved a payment of 259 million euros in compensation. Endesa, after nearly fifteen years of a prolonged legal battle stemming from a 2007 ministerial order that was partly overturned by the Supreme Court and later shaped by the Government of José Luis Rodríguez Zapatero, faced sizable cuts intended to balance electricity costs for large power companies. The aim was to address how the electricity system allocated and priced CO2 emission rights and the overall impact on consumer bills. [Source: Ministry of Ecological Transition, General State Administration]
Over the final phase of this extensive, more-than-a-decade process, Endesa sought compensation related to the effects of the rule on its finances. The company argued that deductions applied to its wages should be treated as a cost offset for CO2 emission rights that had been allocated free of charge by the system’s administrator. The result was a claim that tied financial liability to the policy, shaping Endesa’s accounting and reporting in subsequent years. [Source: Endesa management report]
On April 22, the current Energy Ministry, operating within the Ministry of Ecological Transition led by Vice President Teresa Ribera, confirmed the 259 million euro payment to Endesa and its subsidiary Endesa Generación. The quarterly management report from the electricity group details that 186 million euros represent the government’s patrimonial liability for damages caused by the repealed rule, while 73 million euros cover interest. This decision marked a culmination of years of negotiations and judicial proceedings. [Source: Endesa quarterly management report]
The initially requested compensation by Endesa was higher. In 2016, Endesa submitted a patrimonial liability claim against the General State Administration seeking 285 million euros. The National Court ultimately upheld only part of the claim, excluding some elements the company believed were impacted. It accepted 188 million euros for the impact on physical contracts rather than the 97 million euros claimed for assimilated physical contracts, and it allowed compensation for impact on energy sales contracts but not for all associated aspects. [Source: Court ruling summaries]
Cuts since 2006
The matter dates back to an era before recent reforms. The Zapatero administration approved a cut in power sector remuneration in 2007, designed to offset the value of CO2 emission rights that gas-fired generators received free of charge from the system manager. While the policy targeted generators, the way it shaped electricity pricing meant that the companies ultimately absorbed much of the cost, passing some of it through to consumers. [Source: historical policy overview]
Under the rule’s effect, major electricity companies were required to return substantial sums to the market. The refunds included 1,100 million euros in 2006, 50.6 million euros in 2007, 1,074 million euros in 2008, and about 436 million euros in the first half of 2009. These adjustments were meant to close a large tariff deficit that the system had built up, a deficit that contributed to a debt carrying over to customers and the broader energy market for years. [Source: governmental fiscal reports]
Following a series of appeals and counterclaims, the Supreme Court in 2014 annulled certain provisions of the 2007 ministerial decision. The Ministry of Energy sought to regulate the refunds as extraordinary income rather than normal revenue. Government sources indicate that compensation has largely gone to Endesa, with Iberdrola and other utilities having received similar payments in earlier years. [Source: court decisions and ministry statements]
After another volley of arguments over several years, a national court eventually ruled in 2020 to accept the compensation and issued two writs in January and February of the following year. The Ministry of Ecological Transition agreed to enforce that ruling and to arrange the compensation and the accumulated interest. [Source: national court ruling and ministry follow-up]
Impact of results
Endesa has already incorporated the compensation into its first-quarter 2021 figures, recording an extra 188 million euros as revenue, assuming the government would not appeal the final court decision on compensation. The accounting treatment reflected the expectation that the payment would be recognized in the wholesale electricity market, with the associated interest accruing alongside it. [Source: Endesa 2021 quarterly report]
As a result, Endesa posted a noticeable shift in its first-quarter results for the current year, with a profit decline of about 31 percent despite ongoing positive operating momentum. The extraordinary revenue recognized from last year’s collections contributed to this effect, alongside the expected cash inflow from the final judgment the company had pursued. The manager proceeded to enact the payment plan, acknowledging that the company would receive the funds and reflect them in financial statements. [Source: Endesa earnings press release]
For readers in North America, the Endesa case illustrates how fiscal and regulatory decisions in a heavily regulated energy market can reverberate through corporate accounting, investor sentiment, and household electricity bills. It underscores the long arc of policy impact—from ministerial decrees to court rulings to executive actions—and how compensation mechanisms can shape the financial landscape for both producers and consumers. [Source: comparative energy policy analysis]