EU to Probe into Slovenia's Preferential Electricity Dispatching

Brussels, 2 February

The European Commission has decided to open a formal investigation into Slovenia's system of preferential dispatching of electricity aimed at boosting renewable energy, to assess its compatibility with the EU's state aid rules.

An initial analysis has resulted in doubts as to the compatibility of the aid with these rules, the Commission said on Wednesday. It said the opening of a formal investigation did not prejudge its final outcome.
The European Commission meanwhile authorised state aids for what is known as "stranded costs" for three Slovenian electricity generators: TE Sostanj, NE Krsko and TE Trbovlje.
The two decisions concerning state aids are the first of this type for Slovenia after the country joined the EU in May 2004.
The preferential dispatching of electricity is a scheme that provides support to producers of renewable energy, producers that use efficient combined heat and power technology and a coal fired part of the Trbovlje power plant.
These producers are known as "qualified producers". Network operators have the obligation to purchase the electricity produced by them at a price fixed by the state, which is above market price.
The Commission analysed the measure both in the light of the Community guidelines on state aid for environmental protection and the stranded costs methodology. The measure was also analysed as a compensation for charges linked to services of general economic interest.
The analysis resulted in doubts as to the compatibility of the aid with these rules. Therefore the Commission decided to initiate a formal state aid inquiry, something that is foreseen in Article 88 of the EC Treaty.
If the Commission should find the system incompatible with the EU rules or establish that it has been abused, it will call on the country to abolish the scheme or amend it in a given period.
If the country then fails to meet the requirement by the deadline, the Commission or some other party interested may refer the case to the Court of Justice of the European Communities.
The other decision the Commission took today in regards to Slovenia's electricity sector is positive for the country. It refers to compensations for "stranded costs". These are defined as costs arising from commitments undertaken before electricity markets were liberalised, the Commission says in its press release.
It explains that the programme for recovery of stranded costs in electricity generation plants in Slovenia aims at mitigating the difficulties faced by a number of power plants during the process of liberalisation of the electricity sector. The measure is envisaged for four years - until the end of 2006 with estimated budget of EUR 548.2m.
The Commission concluded that the scheme was in line with the communication relating to the methodology for analysing state aid linked to stranded costs in the electricity sector and therefore could be authorised.

EU to Probe into Slovenia's Preferential Electricity Dispatching

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