Brussels, 13/02/2012 (Agence Europe) - Electricity purchase agreements concluded in the second half of the 1990s between the state-owned public company Magyar Villamos Muvek Zrt (MVM) and privately owned supplier Budapesti Eromu Zrt contain illegal state aid. Although signed before Hungary's accession to the European Union on 1 May 2004, the agreement has to be assessed, from the time of accession, against European Union's rules on state aid. That was the ruling delivered by the General Court on Monday 13 February in Cases T-80/06 and T-182/09.
The agreements at issue, concluded from 1996 and due to expire in 2024, are part of a system of long-term power purchase agreements (PPAs) put in place by Hungary in the 1990s, under which the MVM undertook, as a “single buyer”, to buy a fixed quantity of electricity at a fixed price over a number of years or even decades in order to supply the Hungarian retail market. The European Commission opened an investigation into this arrangement in 2005 and reached the conclusion in 2008 that PPAs constituted state aid and had to be recovered. The Commission said that the PPAs shielded the power generators concerned from any commercial risk and thus put them in a better position than other power generators on the market. Budapesti Eromu Zrt appealed against the decision. With this judgment, however, the General Court rejects this challenge.
The Court notes, firstly, that the aid resulting from the PPAs does not feature among the state aid measures adopted by Hungary before its accession to the EU which are considered compatible with the common market and are listed in Hungary's Act of Accession. From the time of Hungary's accession, the Commission could investigate the PPAs as new aid and consider them to be illegal state aid under EU rules. The Court finds, too, that the fact that power generators are given a guarantee that a fixed quantity of their product will be purchased at a fixed price for periods as long as those laid down in the PPAs does not correspond to European wholesale market conditions in that sector where the amount of energy that power generators can sell and the sale price that they can expect depend on the amount of energy requested, which is constantly fluctuating. Thus, MVM agreed to take on a risk of loss that a private operator would not have accepted. The Commission was correct, then, in taking the view that these agreements enabled power generators to enjoy economic advantages which they would not have been able to obtain if MVM had acted in accordance with the rules of a competitive market. Lastly, the Court finds that the Commission was right to choose a simulation method based on the electricity “spot” market to calculate the exact amount of the aid to be recovered: any other available method would have introduced less objective assumptions and would have led to less reliable results. (FG/transl.rt)