Judgments nº T-735/18 of Tribunal General de la Unión Europea, November 18, 2020

• Resolution Date: November 18, 2020
• Issuing Organization: Tribunal General de la Unión Europea
• Decision Number: T-735/18

(Energy - Article 17 of Regulation (EC) No 714/2009 - Decision of ACER refusing a request for exemption relating to new electrical interconnectors - Appeal before the Board of Appeal of ACER - Intensity of the review)

In Case T-735/18,

Aquind Ltd, established in Wallsend (United Kingdom), represented by S. Goldberg, Solicitor, E. White, lawyer, and C. Davis, Solicitor,

applicant,

v

European Union Agency for the Cooperation of Energy Regulators (ACER), represented by P. Martinet, E. Tremmel, C. Gence-Creux and A. Hofstadter, acting as Agents,

defendant,

APPLICATION under Article 263 TFEU for annulment of (i) Decision A-001-2018 of the Board of Appeal of ACER of 17 October 2018 which upheld Decision No 05/2018 of ACER of 19 June 2018 refusing a request for exemption relating to an electrical interconnector connecting the electricity transmission systems in the United Kingdom and France, and (ii) the decision of ACER thus upheld,

THE GENERAL COURT (Second Chamber),

composed of V. Tomljenović, President, P. Škvařilová-Pelzl and I. Nõmm (Rapporteur), Judges,

Registrar: B. Lefebvre, Administrator,

having regard to the written part of the procedure and further to the hearing on 30 June 2020,

gives the following

Judgment

Background to the dispute

1 The applicant, Aquind Ltd, is a private limited company incorporated in the United Kingdom. It is the project promoter for a proposed electricity interconnector connecting the electricity transmission systems in the United Kingdom and France (‘the Aquind interconnector’).

2 On 17 May 2017, the applicant submitted a request for an exemption for the Aquind interconnector under Article 17 of Regulation (EC) No 714/2009 of the European Parliament and of the Council of 13 July 2009 on conditions for access to the network for cross-border exchanges in electricity and repealing Regulation (EC) No 1228/2003 (OJ 2009 L 211, p. 15). That request for exemption was submitted to the national regulatory authorities in France and the United Kingdom, namely the Commission de régulation de l’énergie (CRE) and the Office of Gas and Electricity Markets Authority (Ofgem) respectively.

3 Having failed to reach an agreement on the request for exemption, the national regulatory authorities in France and the United Kingdom forwarded that request, on 29 November and 19 December 2017 respectively, to the European Union Agency for the Cooperation of Energy Regulators (ACER), under Article 17(5) of Regulation No 714/2009, in order to have ACER take the decision itself.

4 On 12 March, 22 March and 16 May 2018, ACER held hearings at which the applicant made submissions.

5 On 26 April 2018, the Aquind interconnector obtained the status of project of common interest.

6 By Decision No 05/2018 of 19 June 2018 (‘the decision of the Agency’), ACER refused the request for an exemption for the Aquind interconnector. It took the view that although the applicant satisfied the conditions for obtaining an exemption listed in Article 17(1)(a) and (c) to (f) of Regulation No 714/2009, the condition laid down in Article 17(1)(b) thereof, according to which the level of risk attached to the investment must be such that the investment would not take place unless an exemption is granted, was not satisfied. In particular, it noted that in April 2018, the Aquind interconnector had obtained the status of project of common interest and that, as such, the applicant was entitled to request the application of Article 12 of Regulation (EU) No 347/2013 of the European Parliament and of the Council of 17 April 2013 on guidelines for trans-European energy infrastructure and repealing Decision No 1364/2006/EC and amending Regulations (EC) No 713/2009, (EC) No 714/2009 and (EC) No 715/2009 (OJ 2013 L 115, p. 39), which provides for the possibility of cross-border cost allocation. Nonetheless, the applicant had not made such a request. ACER thus found that it could not be ruled out that financial support under the regulated scheme might be available for the Aquind interconnector and concluded that it was not in a position to identify, with the required certainty, the existence of risk based on the lack of financial support from the regulated scheme with regard to that interconnector. It also found that the revenue risk, the exceptional market risk, the risk linked to direct competition with other interconnectors and congestion revenue uncertainty, the risk of curtailment of the UK network, the risk associated with construction of the Aquind interconnector, and political and macroeconomic risks, particularly those stemming from Brexit, were insufficient or had not been demonstrated.

7 On 17 August 2018, the applicant brought an appeal against that decision before the Board of Appeal of ACER.

8 On 26 September 2018, the Board of Appeal of ACER held a hearing during which, inter alia, five experts invited by the applicant gave evidence.

9 By Decision A-001-2018 of 17 October 2018 (‘the decision of the Board of Appeal’), the Board of Appeal of ACER upheld the decision of the Agency and thus refused the request for an exemption for the Aquind interconnector. First, it pointed out that the Agency enjoyed discretion when verifying whether the conditions for obtaining an exemption laid down in Article 17(1) of Regulation No 714/2009 were satisfied and that the evaluation of those conditions involved a complex assessment. Second, with reference to the case-law providing for limited judicial review where the assessments made by the administration are economically or technically complex, the Board of Appeal stated that review on appeal was limited in the case of assessments with those characteristics and that it had to confine itself to determining whether the Agency had committed a manifest error of assessment in its examination of the conditions laid down in Article 17(1) of Regulation No 714/2009. Third, the Board of Appeal rejected the complaint that the Agency had, when assessing the risk attached to the investment, taken account of the possibility of recourse to the cross-border cost allocation procedure set out in Article 12 of Regulation No 347/2013 and found that the applicant had not discharged its burden of proof, as it had not demonstrated that the regulated scheme provided by Regulation No 347/2013 would not have been sufficient to make the investment and that, consequently, no investment would have been made without the exemption laid down in Article 17 of Regulation No 714/2009.

10 Fourth, the Board of Appeal examined the applicant’s complaint that the Agency had committed a manifest error of assessment by requiring an ‘exceptional level of risk’ and took the view, after considering section 6.6 of the decision of the Agency, that there was no evidence to support the conclusion that the Agency had departed from the risk criterion laid down in Article 17(1)(b) of Regulation No 714/2009. The Board of Appeal added in that regard that the Agency had neither stated that an exceptional level of risk was required for an exemption to be granted nor adopted a line of reasoning following that approach.

11 Fifth, the Board of Appeal rejected the complaint alleging that legal restrictions in France prevented the applicant from qualifying for the regulated scheme and noted that the risks referred to in Article 17(1)(b) of Regulation No 714/2009 should essentially be market risks or financial risks and did not cover potential ‘risks’ stemming from French law.

12 Sixth, the Board of Appeal stated, first of all, that it was for the applicant to adduce evidence that no investor (that is, no investor of any kind) would have been attracted by the investment in the Aquind interconnector in the absence of an exemption; applying a different legal test would be tantamount to allowing exemption applicants to circumvent the requirement of Article 17(1)(b) of Regulation No 714/2009 by artificially limiting the range of potential investors. It went on to find, providing examples, that the climate was conducive to investments in interconnectors on the France-UK border. Furthermore, in the light of the risks associated with the size of the Aquind interconnector, the Board of Appeal considered that the Agency had correctly applied the ‘no investment in the absence of an exemption’ test, since it had not questioned the choice of size made by the promoter of the Aquind interconnector, but had instead taken account of the fact that that interconnector formed part of a cluster of potentially competing ‘projects of common interest’ on the France-UK border and had assessed the combined size of all those projects within that cluster. Last, it found that the Agency had been right to take the view that the applicant had not sufficiently demonstrated that the alleged development and construction risks, either alone or in combination with other risks, meant that no investment would have been made in the absence of an exemption.

13 Seventh, the Board of Appeal examined the complaint alleging that the cumulative effect of the risks had not been taken into account and made clear that the Agency had analysed each type of risk identified by the applicant in its request for exemption and had provided a reasoned evaluation of each of those risks, that the applicant had not mentioned a cumulative effect of the risks anywhere in its request for exemption, and that it had not substantiated that argument in its appeal.

Procedure and forms of order sought

14 By application lodged at the Registry of the General Court on 14 December 2018, the applicant brought the present action, which contains a request for priority treatment under Article 67(2) of the Rules of Procedure of the General Court. The defence, reply and rejoinder were lodged on 1 April, 20 May and 4 July 2019.

15 By decision of 17 October 2019, the President of the General Court, pursuant to Article 27(3) of the Rules of Procedure, reassigned the case to a new Judge-Rapporteur attached to the Second...