Brussels, 25/07/2001 (Agence Europe) - On Wednesday, the Commission adopted a document setting out the principals according to which it will analyse the compatibility with the Treaty of State aids aiming to compensate the long-term investments or undertakings made by former monopolies in the electricity sector at the time when the electricity market was closed.
The fall in electricity prices for consumption caused by the liberalisation of the sector could, in fact, compromise the profitability of these investments or contracts, thus generating costs generally known under the name "stranded costs". Certain companies could be tempted to pass on all of these costs to the captive consumers and others could see their profitability threatened when they provide essential services. The Commission feels that this situation justified in certain cases the allocation of compensatory aids for the losses generated by the non-economic investments or contracts due to liberalisation. It has also just defined the criteria in the light of which it will analyse the State aids for the compensation of high costs. These criteria aim to ensure that the aids compensate the costs truly incurred by the beneficiary companies and directly linked to the sector's liberalisation. The aids must be limited in time and take into account the true development of the electricity market, and especially the market price. They must also favour the transition of companies towards a competitive market. The State aid provisions satisfying the detailed criteria defined in the document adopted on Wednesday could, when they satisfy all of the other Treaty provisions, be authorised under its article 87(3)c.