Exempting large electricity users from network charges illegal, EU rules

Exempting large electricity users from network charges illegal, EU rules
European Commissioner Margrethe Vestager © Friends of Europe

Following an investigation, the European Commission has concluded that a German scheme to exempt large electricity users from network charges breached state aid rules.

Germany operated its scheme, which exempted some large electricity users from network charges, from 2012-2013. Following complaints being sent to the EU on behalf of a number of consumer associations, energy companies and citizens, the commission launched an investigation to determine whether the exemption constitutes state aid, and whether it could be justified under state aid rules.

Having now concluded the investigation, the EU has found that there were no grounds to offer this large scale exemption to certain network operators for the energy they use, and that the scheme ultimately distorted competition in the country’s energy market.

How can the problem be addressed?

The commission has demanded that Germany recover the illegal aid generated by exempting large electricity users from network charges from the companies that benefited from the scheme. German authorities will need to calculate the amount of illegal aid each company received using the EU’s methodology, detailed under the commission’s decision.

In its statement announcing the decision, the commission insisted that network charges are a typical part of electricity costs that users have to pay, and that there was no justification to provide exemptions for some users. This breached state aid rules, as the exemptions constituted state aid because the government financed the exemption by paying network operators itself.

What has the commission said about the decision?

European Commissioner for Competition, Margrethe Vestager, emphasised that by ruling against Germany, the commission was reinforcing fairness in the German energy sector, and redressing the balance by mandating that the country recover the money.

She said: “All electricity users have to pay network operators for the services they use – fully exempting certain large users from these charges is an unfair advantage and increases the financial burden on other electricity users. That is why Germany must now recover the unpaid network charges from these users.”

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