Energy and Infrastructure

ENERGY MARKET INTERVENTIONS

Regulation (EU) 2022/1854 on an emergency intervention to address high energy prices was time-limited and is no longer in force but case law arising from it is worth noting in any contractual negotiations in case analogous measures are introduced by the EU in the future, or by a Member State acting on its own initiative. (For background, we looked at the Regulation in our insights blog post here: Update on Energy Market Interventions in Electricity.)

Caps on wholesale market revenues

In C-633/23 (Electrabel and others), the applicants challenged the declaration model for Belgium’s levy on surplus revenues. National legislation set a cap of EUR 130/MWh (and EUR 180/MWh for electricity produced from solid or gaseous biomass fuels) for 1 August 2022 to 30 June 2023 and used presumptions to determine market revenues. The applicants argued this required them to declare revenues not received. The CJEU noted that the cap must apply to amounts reflecting actual revenues received by operators concerned. However, the relevant provisions of the Regulation read with the principle of proportionality did not prevent the amount of revenue to which a cap applies being determined based either on irrebuttable presumptions or on rebuttable presumptions provided that, in either case, they produced reasonable estimates representative of market reality during the relevant period. Account must be taken of the factual and technical factors characterising not only the situation of the operators and installations, but also the national electricity market. The CJEU also ruled that the Regulation did not prevent national legislation adopted after its entry into force from applying a similar cap to an earlier period. The EU had not regulated that earlier period or deprived Member States of their competence to do so (though States nevertheless had to exercise powers in compliance with EU law more generally).

In C-423/23, Secab, an operator of hydroelectric power plants, challenged Italian rules capping market revenues for 1 February 2022 to 30 June 2023 at reference prices ranging from EUR 56 to EUR 75/MWh, depending on the market zone. The CJEU held that the Regulation did not require such producers to retain 10% of revenues exceeding the cap. This was an option for Member States, not an obligation. Provisions in the Electricity Market Directive did not prevent a cap based on an arithmetic average of market-zone prices during 2010–2020, adjusted for inflation, provided it did not adversely affect investment in the renewable energy sector and ensured that investment and operating costs were covered. Member States could set a cap on the market revenues obtained by hydroelectric power plants without imposing a cap on revenues from the sale of energy produced from hard coal or a differentiated cap for producers of electricity from solar, geothermal or wind sources.

In C‑187/25, EVN Bulgaria Renewables challenged an assessment applying a revenue cap of BGN 191 per MWh, rather than BGN 350 (approximately EUR 180 per MWh), for 1 December 2022 to 30 June 2023. The approach also involved applying different revenue caps for renewable electricity producers, depending on whether contracts for compensation by way of premiums were still in force on 8 October 2022, including where the premium payable was zero. The CJEU held that relevant provisions of the Regulation do not prevent a national cap below EUR 180 per MWh, subject to compliance with Article 8(2). The Court also noted that the cap applies in principle to revenues from electricity sales in the balancing energy market unless the Member State exercises the Article 7(4) exclusion. The question concerning differential treatment was inadmissible because the reference did not sufficiently explain the producers’ respective situations, the objectives of the distinction or the reasons for uncertainty about Article 8(2)(a).

In C‑327/25, VETS Svoge, which owns hydropower plants, was subject to two separate contributions: (1) a monthly contribution of 5% of its revenues, net of VAT, from electricity sales, and (2) earmarked contributions flowing from the cap on revenues under the Regulation. When calculating the 5% contribution, VETS Svoge deducted the earmarked contributions from its electricity sales revenues. The relevant authority considered that there was no legal basis for this. The CJEU held that Article 8 of the Regulation does not prevent the 5% contribution (levied on all electricity sales revenues) operating alongside the revenue cap. The 5% contribution fell outside the Regulation. Questions concerning other EU energy and climate provisions and the free movement of capital were inadmissible because the reference did not sufficiently explain their relationship with the national legislation or the dispute. The Court lacked jurisdiction to interpret Article 17 (Right to property) of the Charter of Fundamental Rights of the EU (the “Charter”) because the scheme fell outside the Regulation and the reference did not show a connection with another act of EU law.

C-391/23 (Brăila Winds) is a Romanian reference which did not concern the Regulation. The CJEU found that the Electricity Market Directive and the European Climate Law did not prevent a tax on renewable electricity producers’ revenues above a specified price, notwithstanding the exemption of fossil-fuel and biomass producers. The tax pursued, at least partly, a budgetary objective and did not appear equivalent to fixing selling prices. Its compatibility with climate-neutrality objectives had to be considered in the context of the Member State’s overall measures. Its temporary application did not appear capable of significantly affecting greenhouse gas emissions. State aid and fundamental-freedom questions that had been referred were inadmissible (for several reasons including insufficient information), and the Court lacked jurisdiction to interpret Article 17 of the Charter.

Further applications are pending:

Temporary Solidarity Contribution (from surplus profits generated by businesses with activities in the crude petroleum, natural gas, coal and refinery sectors)

In the context of several applications which are pending, Advocate General Rantos provided Opinions that the Regulation, including Article 14, was validly adopted under Article 122(1) TFEU, notwithstanding the contribution’s fiscal nature, and without requiring unanimity in the Council. Article 14(1) required that surplus profits generated by companies and permanent establishments with activities in the crude petroleum, natural gas, coal and refinery sectors were subject to a mandatory temporary solidarity contribution, unless Member States had enacted equivalent national measures. A summary is available by clicking here (PDF 145 KB). Further details of the individual applications are below: