The Court of Justice issues a reminder that not all aid granted by States is State aid within the meaning of the Treaty. The current rules in the electricity market do not preclude German legislation which imposes an obligation to purchase electricity produced from renewable energy sources.
PreussenElektra is an electricity supplier which operates more than 25 conventional and nuclear power stations in Germany as well as a maximum-voltage and high-voltage electricity distribution network.
A German statute dating from 1990 and amended in 1994 and 1998 (the Stromeinspeisungsgesetz) requires public electricity supply undertakings (which may be either public sector or private sector) to purchase electricity produced within their area of supply from renewable sources, including wind energy, at minimum prices which are higher than the real economic value of that type of electricity.
When the German Government notified the initial draft law to the Commission in 1990, the latter authorised it, holding it to be in accordance with the energy policy aims of the Communities.
That system was amended in 1998: a mechanism for allocating extra costs due to that purchase obligation between electricity supply undertakings and upstream electricity network operators was established.
Schleswag, which is a regional electricity supply undertaking in the Land Schleswig-Holstein, is required to purchase electricity produced within its area of supply from renewable energy sources. That purchase obligation involved an additional cost which rose from DEM 5.8 million in 1991 to about DEM 111.5 million in 1998.
Pursuant to the allocation mechanism laid down by the German statute, Schleswag applied to PreussenElektra for payment of certain sums which it had already spent in accordance with its purchase obligation.
PreussenElektra brought an action before the Landgericht Kiel (Regional Court, Kiel) for recovery of DEM 500,000, representing the sum paid to Schleswag in compensation for the additional costs caused by the purchase of wind electricity. PreussenElektra considers that that payment was contrary to Community law since it amounted to applying an amended system of State aid that had not been notified to the Commission.
The Landgericht Kiel asked the Court of Justice of the European Communities whether the amendment of the statutory system did indeed constitute an amendment of aid within the meaning of Community law, and whether, moreover, the system thus established was contrary to the prohibition on quantitative restrictions on trade.
The Court began by recalling that aid granted by States or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods is incompatible with the Treaty.
However, not all advantages granted by a State constitute aid. Only aid granted directly or indirectly through State resources constitutes aid within the meaning of the Treaty.
The Court considered that neither the statutory obligation introduced by the German rules, nor the allocation of the financial burden between private supply undertakings and private operators of upstream electricity networks involved a direct or indirect transfer of State resources.
The Court held that the fact that the purchase obligation is imposed by statute and confers an undeniable advantage on certain undertakings was not capable of conferring upon it the character of State aid within the meaning of the Treaty.
The Court further found that those rules were capable, at least potentially, of hindering intra-Community trade. However, they are aimed in particular at protecting the environment by contributing to the reduction of emissions of greenhouse gases. Thus the objective of those rules appears amongst the priority objectives of the Community.
In those circumstances and in the current state of Community law applicable to the electricity market, the Court held that the German rules were not contrary to the free movement of goods.
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