EU Commission Clears EEG 2012 – Orders Partial Recovery of EEG Surcharge Reduction

Following an in-depth investigation, the European Commission announced yesterday that aid granted under the German Renewable Resources Act of 2012 (EEG 2012) was in line with EU state aid rules. The Commission also approved the majority of reductions granted to energy-intensive companies on the surcharge paid by end consumers to finance the support for renewables (EEG-surcharge). As the Commission found a limited portion of the reductions exceeding what is permitted under EU state aid rules, the Commission ordered a partial recovery for the years 2013 and 2014. The Commission, which had already approved most parts of the EEG revision that entered into force on 1 August 2014, also approved the EEG 2014 for the railway sector.

1. EEG 2012 Involves State Aid

In the view of the Commission, the EEG 2012 involves state aid, but support to renewable energy production under the EEG 2012 was in line with the Commission’s 2008 environmental aid guidelines, notably because it was limited to compensating the extra costs of renewable energy production that exceeded the market price for electricity.

2. EEG Surcharge Reductions

For the EEG surcharge reductions granted under the EEG 2012 to energy-intensive consumers, which were not notified to the Commission, the new Environmental and Energy Guidelines (EEAG) of 1 July 2014 applied, the Commission said.

To ensure a smooth transition for the companies concerned, Member States were required to submit an adjustment plan to progressively bring non-notified reductions in line with the criteria of the 2014 guidelines. The Commission assessed and approved the adjustment plan proposed by Germany for the reductions on the EEG-surcharge applied in 2013 and 2014 on the basis of the 2014 guidelines. As the actual reductions granted to some energy-intensive users exceeded the levels set under the adjustment plan, they gave the beneficiaries an undue advantage over their competitors in breach of EU state aid rules. Hence the Commission ordered repayments. The press release does not give any information as to the scope of the repayments. According to Frankfurter Allgemeine Zeitung, the Commission did not name a total, but said it was up to the German authorities to establish the exact amount. In summer this year media reports said the government was expecting repayments by 350 company totalling EUR 30 million.

3. EEG 2014 Provisions for the Railway Sector

On 23 April 2014 the Commission approved the amendment of the EEG 2012, the EEG 2014, except for the provision concerning the railway sector (see Section 65 EEG 2014), which had to be measured against the Guidelines for State Aid to Rail Undertakings. In its decision of 25 November 2014, the EU Commission approved of the EEG 2014 for the railway sector as well. Regarding efforts to amend the EEG 2014 for the railroad sector to meet concerns by the Commission, please see here.

Source: European Commission; Frankfurter Allgemeine Zeitung, 26 November 2014, page 19

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