Large electricity users will be confronted with recovery claims worth millions

The European Commission (“Commission”) has concluded that the exemption from network charges in the years 2012 and 2013 for certain large electricity users in Germany was against EU State aid rules: there were no grounds to fully relieve those users from the payment. As a result, Germany shall recover the allegedly illegal State aid.

The Commission decision

Section 19 (2) sentence 2 of the German Network Charges Ordinance (Stromnetzentgeltverordnung; “StromNEV”), in its old version, stated that large electricity users with particularly stable electricity consumption could apply for exemption from network charges.

Commissioner Margrethe Vestager, in charge of competition policy, 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.”

This applies to electricity users in Germany between 2011 and 2013 which had an annual particularly stable electricity consumption of more than 10 gigawatt-hours and which received a permit for exemption from network tariffs from the competent regulatory authority. As a result hereof, so the Commission, large electricity users avoided paying an estimated amount of EUR 300 million in network charges in the year 2012, which must be now reclaimed by Germany.

Aid granted by a Member State or through State resources?

With regard to the central criterion “aid granted by a Member State or through State resources” within the meaning of Art. 107 (1) TFEU, the interesting question arises as to whether the measure actually constituted State aid.

The distinction between aid granted by a Member State and one granted trough State resources shall display that financial advantage, which qualifies as State aid, may be granted both directly by public authorities and indirectly through the use of State resources. Nonetheless, the grant must always go hand in hand with a burden on the State budget.

The qualification as such is unproblematic in cases where State resources are used directly to grant financial advantage (State aid). However, under certain circumstances, it may be sufficient therefore, if the State is able to access or exert control over funds that do not belong to its assets (aid granted through State resources). The latter has been assumed by the Commission in this case.

Having said that, the main question is whether the allocation mechanism, which was used to finance the exemption of large electricity users by all network users, was subject to such tight State control that granting the exemption falls under illegal aid granted through State resources, as assumed by the Commission.

Outlook

According to the Commission’s decision, Germany shall recover the State aid that, in the Commission’s opinion, was unduly granted to the large electricity users exempted from the network charges in the years 2012 to 2013. However, especially with regard to the size of the sums to be recovered and to the question whether the exemption actually constituted State aid, companies should consider whether they wish to challenge the Commission’s decision. The alleged State aid recipients have the possibility to bring an action for annulment under Article 263 (4) TFEU against the Commission’s negative decision.