What do you know about unbundling?


A while ago, we told you all about electricity distributor companies like UFD, our activities, and the differences between a distributor and a supply company.

Now we want to explain the separation of activities performed by distributors and supply companies, also known as unbundling. The law requires electricity distribution companies to exclusively focus ondistribution, and therefore they cannot produce or supply electricity themselves.

If a group of companies – such as the Naturgy Group – were to work in all these activities, they would have to do so as completely separate companies and meet certain criteria for independence, such as not sharing commercially sensitive information, which could give them an unfair advantage over their competitors.

For this reason, as an electricity distributor, UFD cannot share commercially sensitive information with the supply companies in the Naturgy Group, even though we are part of the same business group.

However, as an electricity distributor, we do need mechanisms for communicating with all the electricity supply companies operating in the territories where we have distribution networks, so we can manage the connection, contract and invoicing processes.

An example by way of illustration…

To make it easier to understand, think of your online shopping. The company that sells you a product brings it to your house, using roads and perhaps motorways, but it doesn’t build, maintain, or make money from roads and motorways.

In the case of electricity, the distributor would be in charge of the motorway, and by law, cannot do anything other than build and maintain roads and run them as a business; in our example the roads are the networks and other electrical installations which electricity travels through to reach your home.

Meanwhile, the supply company sells you the electricity (the product which runs through the networks), and is not allowed to take part in the business of building, maintaining and running the electrical grid.

At UFD we like helping you understand the complex world of energy!