Joined Cases C‑702/20 and C‑17/21
‘DOBELES HES’ SIA (C‑702/20)
Sabiedrisko pakalpojumu regulēšanas komisija (C‑17/21)
(Request for a preliminary ruling from the Augstākā tiesa (Senāts))
Judgment of the Court (Grand Chamber), 12 January 2023
(Reference for a preliminary ruling – State aid – Article 107(1) TFEU – National legislation imposing an obligation on the public operator to purchase from renewable energy producers at a price higher than the market price – Failure to pay a portion of the aid concerned – Application for compensation submitted by those producers to a public authority distinct from that which is, in principle, required, under that national legislation, to pay that aid and whose budget is intended solely to ensure its own operation – New aid – Notification requirement – De minimis aid – Regulation (EU) No 1407/2013 – Article 5(2) – Cumulation – Taking into account the amounts of aid already received during the reference period on the basis of that national legislation)
1. State aid – Definition – Aid from State resources – Concept of State resources – Public policy of supporting producers of electricity from renewable sources – Offsetting the additional costs imposed on an operator on account of an obligation to purchase surplus production at a price higher than the market price – Funds generated by a levy imposed on end consumers – Included – Conditions – Levy assimilated to a parafiscal charge – Legislative framework for the management and apportionment of the funds thus generated – Funds constantly under State control – Alternative conditions
(Art. 107(1) TFEU)
(see paragraphs 35-39, 42, 43, operative part 1)
2. State aid – Effect on trade between Member States – Adverse effect on competition – Criteria for assessment – Public policy of supporting producers of electricity from renewable sources – Obligation to purchase surplus production at a price higher than the market price – Aid liable to affect trade between Member States and to distort competition – Entry into force prior to the complete liberalisation of the electricity market – Irrelevant
(Art. 107(1) TFEU)
(see paragraphs 51-54, operative part 2)
3. Questions referred for a preliminary ruling – Jurisdiction of the Court – Limits – Examination of the compatibility of an aid with the internal market – Not included – Providing the national court with full guidance on the interpretation of EU law – Interpretation of the concept of aid – Included
(Arts 107(1) and 267 TFEU)
(see paragraphs 56-58, 97)
4. State aid – Definition – Damages for harm caused by the State for which the State is liable – Not included – Payment of a sum claimed before the courts in accordance with national legislation establishing State aid – Included
(Art. 107(1) TFEU)
(see paragraphs 59, 60, 64, 65, operative part 3)
5. State aid – Definition – Grant of advantages imputable to the State – National legislation establishing a statutory right to a higher payment for producers of renewable energy – Respective powers of the Commission and the national courts – Role of the national courts – Duty of sincere cooperation – Legal proceedings seeking full entitlement to the statutory right established by the national legislation at issue – No grant of separate State aid – Establishment of State aid falling outside the scope of a court’s powers and obligations
(Art. 4(3) TEU; Arts 107(1) and 108(2) and (3) TFEU)
(see paragraphs 75-79, operative part 4)
6. State aid – Prohibition – Exceptions – Categories of aid, defined by regulation, which may be regarded as compatible with the internal market – Regulation No 1407/2013 – De minimis aid – Conditions for exemption from the requirement for notification – Assessment of compliance with the de minimis threshold
(Art. 108(3) TFEU; Commission Regulation No 1407/2013, Arts 3(2) and 5(2))
(see paragraphs 91-93, operative part 5)
7. State aid – Existing aid and new aid – Accession of a new Member State to the European Union – Distinction by reference to the specific rules established in Annex IV to the Act of Accession – Classification as new aid – Criteria for exclusion – Verification a matter for the national court
(Art. 107(1) and (3) TFEU; 2003 Act of Accession, Annex IV, point 3(1), second subpara.; Council Regulation 2015/1589, Art. 1(b)(i))
(see paragraphs 99-103)
8. State aid – Existing aid and new aid – Classification as existing aid – Criteria – Aid measures not notified – Authorisation merely due to silence on the part of the Commission – Not included
(Art. 108(3) TFEU; Council Regulation 2015/1589, Art. 1(b)(ii) and (iii))
(see paragraph 104)
9. State aid – Existing aid and new aid – Classification as existing aid – Criteria – Expiry of the 10-year limitation period – Point from which the limitation period starts to run – Date on which aid granted to the beneficiary
(Art. 108(3) TFEU; Council Regulation 2015/1589, Arts 1(b)(iv) and 17(1) and (2))
(see paragraphs 108, 109)
10. State aid – Respective powers of the Commission and the national courts – Role of the national courts – Safeguarding of the rights of individuals when the obligation to give prior notice has been infringed – Obligation of the national courts to draw the appropriate conclusions from that infringement in accordance with national law – Scope – Requests seeking full entitlement to unlawful aid – Positive decision permissible subject to obtaining the Commission’s consent after notification of the aid in question
(Art. 108(2) and (3) TFEU; Council Regulation 2015/1589, Arts 2(1) and (3))
(see paragraphs 119-123, operative part 7)
11. State aid – Definition – Aid from State resources – Requests made by producers of renewable energy seeking full entitlement to support provided for under national legislation – Public authority to which the matter referred not the same as that in principle responsible for payment of the aid concerned – Irrelevant
(Art. 107(1) TFEU)
(see paragraphs 125-127, operative part 8)
Résumé
The companies ‘DOBELES HES’ SIA and ‘GM’ SIA (‘the producers concerned’) operate hydroelectric power plants in Latvia and generate electricity from renewable energy sources.
Until 7 June 2005, a provision of the Latvian Law on Energy granted electricity producers, subject to certain conditions, the right to sell their surplus electricity production to the approved electricity distribution undertaking at a preferential price corresponding to twice the average electricity sale tariff, as determined by the national regulatory authority. From the entry into force, on 8 June 2005, of new provisions governing the sale by electricity producers of surplus production at a preferential tariff, a provision allowed producers of electricity from renewable energy sources that had already commenced their activity on that date to continue to benefit from the previous scheme.
The regulatory authority interpreted that provision as blocking for those producers the applicable preferential tariff at its value on 7 June 2005, so that it ceased to update it. Thus, from that date, the two producers concerned sold their surplus production at a price corresponding to twice the average tariff for the sale of electricity then in force. However, by decision of 20 January 2010, the Latvijas Republikas Satversmes tiesa (Constitutional Court, Latvia) held that the regulatory authority’s interpretation of the provision at issue was incorrect, in so far as the latter had taken the view that the term ‘price’ had to be understood as a fixed price and not a price-fixing mechanism, with the result that it was also wrong to consider itself no longer competent, from 8 June 2005, to fix the average electricity sale tariff.
In those circumstances, each of the producers concerned submitted to the regulatory authority a claim for compensation for the losses sustained as a result of the failure to update that average tariff as from 8 June 2005. In 2011, when the regulatory authority refused to grant their respective claims, the producers concerned applied to the administrative judicature which, by judgments of 31 May 2019 and 10 July 2019, upheld their respective claims in part, while making the payment of the sums charged to the regulatory authority, as payment of State aid, subject to the adoption of a decision of the European Commission authorising such aid.
The regulatory authority brought an appeal on a point of law against those judgments before the Augstākā tiesa (Supreme Court, Latvia). Uncertain, in particular, as to the classification of the compensation at issue in the light of the concept of ‘State aid’ and of the requirements to be satisfied, where appropriate, in order to enable payment of the compensation in the light of the Commission’s prerogatives in the field of State aid, the Supreme Court decided to stay the proceedings and, in turn, to refer to the Court of Justice for a preliminary ruling a series of questions on that subject, worded identically in both cases.
By its Grand Chamber judgment, the Court specifies the conditions under which a national measure allowing producers of electricity from renewable energy sources to receive a higher tariff may be classified as ‘State aid’ within the meaning of Article 107(1) TFEU. Moreover, if the measure in question receives that classification, although it has not been duly notified to the Commission, the Court nevertheless accepts that the national court may grant a request for payment of a sum in respect of such a support measure, while making the payment subject to the requirement of prior notification of the aid to the Commission and to the Commission’s consent in that regard.
Findings of the Court
In the first place, the Court provides the interpretative guidance sought by the referring court in order to enable it to determine whether the national measure giving rise to the cases before it may be classified as ‘State aid’ within the meaning of Article 107(1) TFEU.
In that regard, the Court examines, first of all, whether national legislation which obliges the approved electricity distribution undertaking to purchase electricity generated from renewable energy sources at a price higher than the market price and which provides that the resulting additional costs are financed by a compulsory surcharge borne by end consumers constitutes intervention ‘through State resources’ within the meaning of that provision. In the present case, the Court points out that funds resulting from a surcharge, the financial burden of which is borne in practice by a defined category of persons, can be regarded as being ‘State resources’ only where the surcharge in question is compulsory under national law. Therefore, funds financed by a levy or other compulsory surcharges under national legislation and managed and apportioned in accordance with that legislation constitute ‘State resources’ within the meaning of that provision. However, the fact that sums constantly remain under public control, and therefore available to the competent national authorities, is sufficient for them to be categorised as ‘State resources’. Consequently, subject to the verifications which it is for the referring court to carry out, the funds by means of which a tariff advantage is granted, pursuant to the Latvian legislation concerned, to producers of electricity from renewable energy sources are ‘State resources’, within the meaning of Article 107(1) TFEU, in the light of the two alternative criteria for that concept.
In addition, the Court states that the date of complete liberalisation of the electricity market in Latvia is irrelevant for the purpose of determining whether the aid provided by the public operator in that Member State by purchasing electricity generated from renewable energy sources at a price higher than the market price must be classified as State aid.
Furthermore, where national legislation has established ‘State aid’ within the meaning of that provision, the payment of a sum claimed before the courts in accordance with that legislation also constitutes such aid. According to the Court, it is irrelevant, for the purpose of determining whether sums correspond to ‘State aid’, whether actions seeking payment of those sums are classified as ‘claims for compensation’ or as ‘claims for damages’ under national law.
Finally, the Court observes that, although the national court may, where appropriate, deliver a judgment from which it follows that one of the parties must, in accordance with national law, receive a sum corresponding to State aid, that does not mean that, in that case, it itself grants that aid. The establishment as such of State aid cannot result from a judicial decision since it entails a decision as to the appropriate course of action which falls outside the scope of a court’s powers and obligations. The Court thus concludes that, where national legislation establishing a statutory right to a higher payment for electricity generated from renewable energy sources constitutes ‘State aid’, within the meaning of Article 107(1) TFEU, legal proceedings seeking full entitlement to that right must be regarded as requests for payment of the portion of that State aid not received, and not as requests for the grant by the court seised of a separate State aid.
In the second place, the Court provides clarification on the application of the criteria laid down by Regulation No 1407/2013 (1) in relation to de minimis aid, which is not subject to the notification obligation laid down in Article 108(3) TFEU. In that regard, the Court considers that compliance with the de minimis threshold laid down in Article 3(2) of that regulation must be assessed in the light of the amount of aid claimed under the relevant national legislation cumulated with the amount of the payments already received during the reference period under that legislation.
In the third place, the Court rules on the relationship between the respective prerogatives of the national court and the Commission, in the event that the sums sought by the producers concerned in the cases in the main proceedings correspond to State aid.
In the present case, in so far as the aid in question does not correspond to any of the categories of existing aid provided for by EU law, (2) subject to the verifications which it is for the referring court to carry out, the Court concludes that the support in question, including the portion thereof whose payment is claimed subsequently, must be classified as ‘new aid’. (3)
Thus placing itself, in the light of the foregoing finding, in a situation where the national court is seised of a request seeking the payment of aid which is unlawful, since it was not notified to the Commission, the Court points out that the task of reviewing State aid which EU law confers on that court must, in principle, lead the latter to reject such a request. Nevertheless, the Court accepts that a decision of the national court ordering the defendant to pay the aid in question subject to the condition that that aid must first be notified to the Commission by the national authorities concerned and that that institution gives its consent, or is deemed to have given it, is also likely to prevent new aid from being paid in breach of Article 108(3) TFEU and Article 2(1) and Article 3 of Regulation 2015/1589.