European Court of Justice “Vent De Colère!”

Dec 22 2013 Published by under European and German energy law

The European Court of Justice has published the decision in the “Vent De Colère!” case a couple of days ago. The result is that the French feed-in tariff system is based on state aid. That in turn means that the EU Commission gets the right to decide on French renewable energy policy.

At first sight, one might think that this decision departs from the 2001 PreussenElektra case, where the German feed-in tariff system was ruled to be not based on state aid, since the feed-in tariffs were not financed by “state resources”.

One would be wrong.

The Court writes in the present ruling:

34 All those factors taken together serve to distinguish the present case from that which gave rise to the judgment inPreussenElektra, in which the Court held that an obligation imposed on private electricity supply undertakings to purchase electricity produced from renewable sources at fixed minimum prices could not be regarded as an intervention through State resources where it does not lead to any direct or indirect transfer of State resources to the undertakings producing that type of electricity (see, to that effect, PreussenElektra, paragraph 59).

35 As the Court has already had occasion to point out – in paragraph 74 of the judgment in Essent Netwerk Noord and Others – in the case which gave rise to the judgment in PreussenElektra, the private undertakings had not been appointed by the Member State concerned to manage a State resource, but were bound by an obligation to purchase by means of their own financial resources.

36 Consequently, the funds at issue [in PreussenElektra] could not be considered a State resource since they were not at any time under public control and there was no mechanism, such as the one at issue in the main proceedings in the present case, established and regulated by the Member State, for offsetting the additional costs arising from that obligation to purchase and through which the State offered those private operators the certain prospect that the additional costs would be covered in full.

If it comes to a fight between the EU Commission and the German Federal Government over this power grab at the European Court of Justice, the decisive question would be how exactly the German system is working.

In contrast to the French feed-in tariff, there is no public body involved in managing the funds. Also in contrast to the French system, there is no obligation for the final consumer of electricity to pay these surcharges. Utilities are free to either pass these surcharges on to the consumer or not.

Anyway, it is quite clear from the new decision that the PreussenElektra standard still stands. And if the present German system in some way or other leaves the area of “purchase by means of their own financial resources”, there are two possible answers to solving that problem.

One would be to accept this fact, and from that point on give the EU Commission the power to unilaterally  decide on German feed-in tariff policy. That option would be not compatible with basic values of democracy. It would mean that the EU Commission power grab was successful.

The other, much preferable option would be to eliminate whatever elements of the system are used to base the assumption of the feed-in tariff being paid from “state resources” on. And tell the EU Commission in no uncertain terms to kindly mind its own business.

For example, the decision in the French case was based on the fact that in the French system the “Caisses des dépôts et consignations” – a public body – plays an important role in their system. The surcharges are collected from final consumers, under threat of an administrative penalty if a consumer fails to pay. And the French State actually guarantees that if the surcharges should not be sufficient to cover feed-in tariff costs, it will pay the difference from tax funds.

All those elements could easily be replaced with other solutions (like in Germany), which would of course turn the result of this case around.

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