PGE Górnictwo i Energetyka Konwencjonalna SA v Prezes Urzędu Regulacji Energetyki.

• Jurisdiction: European Union
• Celex Number: 62014CJ0574
• ECLI: ECLI:EU:C:2016:686
• Date: 15 September 2016
• Court: Court of Justice (European Union)
• Procedure Type: Reference for a preliminary ruling
• Docket Number: C-574/14

JUDGMENT OF THE COURT (Fifth Chamber)

15 September 2016 ( *1 )

‛Reference for a preliminary ruling — State aid — Power Purchase Agreements — Compensation paid for voluntary termination — Commission decision finding State aid compatible with the internal market — Assessment of the lawfulness of aid by a national court — Annual adjustment of stranded costs — Point at which an energy generator’s membership of a group of undertakings is taken into account’

In Case C‑574/14,

REQUEST for a preliminary ruling under Article 267 TFEU from the Sąd Najwyższy (Supreme Court, Poland), made by decision of 8 October 2014, received at the Court on 11 December 2014, in the proceedings

PGE Górnictwo i Energetyka Konwencjonalna S.A.

v

Prezes Urzędu Regulacji Energetyki,

THE COURT (Fifth Chamber),

composed of J.L. da Cruz Vilaça, President of the Chamber, A. Tizzano (Rapporteur), Vice-President of the Court, F. Biltgen, A. Borg Barthet and E. Levits, Judges,

Advocate General: M. Campos Sánchez-Bordona,

Registrar: M. Aleksejev, Administrator,

having regard to the written procedure and further to the hearing on 27 January 2016,

after considering the observations submitted on behalf of:

— PGE Górnictwo i Energetyka Konwencjonalna S.A., by A. Jodkowski, adwokat,

— the Prezes Urzędu Regulacji Energetyki, by Z. Muras and A. Walkiewicz, acting as Agents,

— the Polish Government, by B. Majczyna, M. Rzotkiewicz and E. Gromnicka, acting as Agents,

— the European Commission, by K. Herrmann, P. Němečková and R. Sauer, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 14 April 2016,

gives the following

Judgment

1 This request for a preliminary ruling concerns the interpretation of Article 107 TFEU and Article 4(3) TEU, read together with the provisions of Commission Decision 2009/287/EC of 25 September 2007 on State aid awarded by Poland as part of Power Purchase Agreements and the State aid which Poland is planning to award concerning compensation for the voluntary termination of Power Purchase Agreements (OJ 2009 L 83, p. 1).

2 The request has been made in proceedings between PGE Górnictwo i Energetyka Konwencjonalna S.A. (‘PGE’) and the Prezes Urzędu Regulacji Energetyki (President of the Authority for the Regulation of the Energy Sector, Poland; ‘the President of URE’), concerning the determination of the annual adjustment of the compensation, for the year 2009, for which PGE is eligible by virtue of so-called ‘stranded’ costs.

Legal context

European Union law

Communication relating to the methodology for analysing State aid linked to stranded costs

3 Directive 96/92/EC of the European Parliament and of the Council of 19 December 1996 concerning common rules for the internal market in electricity (OJ 1997 L 27, p. 20) was adopted with a view to achieving a competitive market in electricity. The implementation of that directive was accompanied, in certain Member States, by public aid in favour of national companies active in the electricity sector.

4 In that context, on 26 July 2001 the European Commission adopted a communication relating to the methodology for analysing State aid linked to stranded costs (‘the Stranded Costs Methodology’).

5 According to the sixth paragraph of section 2 of the Stranded Costs Methodology, its purpose is to show the methodology which the Commission intends to apply, in the context of the application of the FEU Treaty rules on State aid, with respect to aid measures designed to compensate for the cost of commitments or guarantees that it might no longer be possible to honour on account of the fact that Directive 96/92 opened up the electricity sector to competition.

6 Section 3 of that methodology states that the concept of ‘stranded costs’ covers commitments or guarantees of operation that may, in practice, take a variety of forms, and in particular long-term purchase contracts, investment undertaken with an implicit or explicit guarantee of sale, as well as investment undertaken outside the scope of normal activity. In particular, point 3.3 of the Stranded Costs Methodology provides that, in order to qualify as eligible stranded costs, capable of being recognised as such by the Commission, those commitments or guarantees of operation must: ‘… run the risk of not being honoured on account of the provisions of Directive 96/92/EC. In order to qualify as stranded costs, commitments or guarantees must consequently become non-economical on account of the effects of the Directive and must significantly affect the competitiveness of the undertaking concerned. Among other things, this must result in that undertaking’s making accounting entries (e.g. provisions) designed to reflect the foreseeable impact of the commitment or guarantee. Especially where, as a result of the commitments or guarantees in question, the viability of the undertakings might be jeopardised in the absence of aid or any transitional measures, the commitments or guarantees are deemed to meet the requirements laid down in the preceding paragraph. The effect of such commitments or guarantees on the competitiveness or viability of the undertakings concerned will be assessed at the consolidated level. For commitments or guarantees to constitute stranded costs, it must be possible to establish a cause-and-effect relationship between the entry into force of Directive 96/92/EC and the difficulty that the undertakings concerned have in honouring or securing compliance with such commitments or guarantees. In order to establish such cause-and-effect relationship, the Commission will take into account any fall in electricity prices or market share losses suffered by the undertakings concerned. Commitments or guarantees that could not have been honoured irrespective of the entry into force of the Directive do not constitute stranded costs.’

7 According to the wording of points 4.2, 4.3 and 4.5 appearing in the fifth paragraph of Section 4 of the Stranded Costs Methodology: ‘4.2 The arrangements for paying the aid must allow account to be taken of future developments in competition. Such developments may be gauged in particular by way of quantifiable factors (prices, market shares, other relevant factors indicated by the Member State). Since changes in the conditions of competition have a direct effect on the amount of eligible stranded costs, the amount of the aid paid will necessarily be conditional on the development of genuine competition, and the calculation of aid paid over time will have to take account of changes in the relevant factors in order to gauge the degree of competition achieved. 4.3 The Member State must undertake to send to the Commission an annual report that, in particular, describes developments in the competitive situation on its electricity market by indicating among other things the changes observed in the relevant quantifiable factors. The annual report will give details of how the stranded costs taken into account for the relevant year have been calculated and will specify the amounts of aid paid. … 4.5 The maximum amount of aid that can be paid to an undertaking to offset stranded costs must be specified in advance. It must take account of productivity gains that may be achieved by the undertaking. Similarly, the detailed arrangements for calculating and financing aid designed to offset stranded costs and the maximum period for which such aid can be granted must be clearly spelt out in advance. Notification of the aid will specify in particular how calculation of the stranded costs will take account of changes in the various factors mentioned in point 4.2.’

Decision 2009/287

8 Article 1 of Decision 2009/287, relating to long-term power purchase agreements (‘PPAs’) between the publicly owned Polish electricity network operator, Polskie Sieci Elektroenergetyczne S.A. (‘PSE’) and a certain number of companies operating in the sector at issue, is worded as follows: ‘1. The Power Purchase Agreements between [PSE] and the companies listed in Annex 1 to the [Ustawa o zasadach pokrywania kosztów powstałych u wytwórców w związku z przedterminowym rozwiązaniem umów długoterminowych sprzedaży mocy i energii elektrycznej (Act on the rules governing the covering of costs incurred by [electricity generators] in connection with the early termination of Power Purchase Agreements) of 29 June 2007 (Dz. U. of 2007, No 130, Item 905, (‘the KDT’)] constitute [, from the date of Poland’s accession to the European Union,] State aid within the meaning of Article [107(1) TFEU] to electricity generators. 2. The State aid referred to in paragraph 1 was awarded unlawfully and is incompatible with the [internal] market.’

9 Article 4 of that decision provides: ‘1. The compensation provided for in the [KDT] constitutes State aid within the meaning of Article [107(1) TFEU] to the electricity generators listed in Appendix 2 to that Act. 2. The State aid referred to in Article 4(1) is compatible with the [internal] market on the basis of the Stranded Costs Methodology. 3. The maximum amount of compensation provided for in the [KDT] shall be the amount following deduction of the total revenue generated by the assets under the PPAs and which is available to cover investment costs.’

Polish law

10 In the 1990s, the modernisation of Poland’s electricity infrastructure required significant investment. Since the financial position of national electricity generators did not allow such investment to be made, those generators entered into long-term Power Purchase Agreements (‘PPAs’) with PSE.

11

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