Brussels, 25/07/2001 (Agence Europe) - While it adopted a methodology for the analysis of State aids linked to stranded costs in the electricity sector (see article above), the Commission decided on Wednesday not to raise objections to the measures taken by Austria, the Netherlands and Spain in view of compensating the non recoverable costs, which must be born by electricity companies following investments or undertakings prior to the liberalisation of the European electricity market.
The size of the compensation envisaged for the stranded costs in Spain total EUR 10.438 billion. These are divided between a subsidy for the production of electricity from coal of national origin and two budgets designated under the term "CTC Technologies" covering the investments made in the installation of costly electricity production. Spanish law foresees the compensation of CTC Technologies and their financing through a tax on the consumption of electricity until the end of 2010. The Commission concluded that this system, as notified by Madrid last February, is in accordance with the analysis methodology for State aids linked to stranded costs. On the other hand, it feels that the subsidy for the production of electricity from national coal does not meet the requirements set out in its methodology, but that may be authorised as a compensation for a service of general economic interest under supply security.
The compensation foreseen in Austria concern investments in three hydroelectric projects (EUR 456 million) and a lignite power station (EUR 1323 million). They are financed by contributions from operators of regional networks and through the customers that consumed in the past electricity produced in power station, which today constitute stranded costs. This system will expire at the end of 2009. The Commission feels that it respects the Community methodology with regards to compensation for hydroelectric project. As for the compensation notified for the lignite power station, they may enjoy an authorisation as compensation for services of general economic interest.
Finally, the compensation foreseen in the Netherlands for the stranded costs concerning long-term contracts for urban heating and a coal gasification plant are exclusively financed by the State. The Commission feels that though the Dutch system includes elements of State aid, it is nevertheless compatible with the methodology it defined.