# 62014CJ0492

JUDGMENT OF THE COURT (Second Chamber)

29 September 2016 (
  *1
  )

*1

‛Reference for a preliminary ruling — Regional legislation requiring the distribution, through the systems located in the region concerned, of electricity produced from renewable energy sources to be free of charge — Different treatment depending on the origin of the green electricity — Articles 28 EC and 30 EC — Free movement of goods — Directive 2001/77/EC — Articles 3 and 4 — National support mechanisms for the production of green energy — Directive 2003/54/EC — Articles 3 and 20 — Directive 96/92/EC — Articles 3 and 16 — Internal market in electricity — Access to distribution systems on non-discriminatory tariff conditions — Public service obligations — Lack of proportionality’

In Case C‐492/14,

REQUEST for a preliminary ruling under Article 267 TFEU from the Nederlandstalige rechtbank van eerste aanleg te Brussel (Dutch-language Court of First Instance, Brussels, Belgium), made by decision of 2 September 2014, received at the Court on 5 November 2014, in the proceedings

Essent Belgium NV

Essent Belgium NV

v

Vlaams Gewest,

Vlaams Gewest,

Inter-Energa,

Inter-Energa,

IVEG,

IVEG,

Infrax West,

Infrax West,

Provinciale Brabantse Energiemaatschappij CVBA (PBE),

Provinciale Brabantse Energiemaatschappij CVBA (PBE),

Vlaamse Regulator van de Elektriciteits- en Gasmarkt (VREG),

Vlaamse Regulator van de Elektriciteits- en Gasmarkt (VREG),

interveners:

Intercommunale Maatschappij voor Energievoorziening Antwerpen (IMEA),

Intercommunale Maatschappij voor Energievoorziening Antwerpen (IMEA),

Intercommunale Maatschappij voor Energievoorziening in West- en Oost-Vlaanderen (IMEWO),

Intercommunale Maatschappij voor Energievoorziening in West- en Oost-Vlaanderen (IMEWO),

Intercommunale Vereniging voor Energielevering in Midden-Vlaanderen (Intergem),

Intercommunale Vereniging voor Energielevering in Midden-Vlaanderen (Intergem),

Intercommunale Vereniging voor de Energiedistributie in de Kempen en het Antwerpse (IVEKA),

Intercommunale Vereniging voor de Energiedistributie in de Kempen en het Antwerpse (IVEKA),

Iverlek,

Iverlek,

Gaselwest CVBA,

Gaselwest CVBA,

Sibelgas CVBA,

Sibelgas CVBA,

THE COURT (Second Chamber),

composed of M. Ilešič, President of the Chamber, C. Toader, A. Rosas, A. Prechal (Rapporteur) and E. Jarašiūnas, Judges,

Advocate General: Y. Bot,

Registrar: M. Ferreira, Principal Administrator,

having regard to the written procedure and further to the hearing on 19 November 2015,

after considering the observations submitted on behalf of:

| — | Essent Belgium NV, by D. Haverbeke and W. Vandorpe, advocaten, |
| --- | --- |

—

Essent Belgium NV, by D. Haverbeke and W. Vandorpe, advocaten,

| — | Vlaams Gewest and the VREG, by S. Vernaillen, advocaat, |
| --- | --- |

—

Vlaams Gewest and the VREG, by S. Vernaillen, advocaat,

| — | the Hellenic Republic, by S. Lekkou and V. Pelekou, acting as Agents, |
| --- | --- |

—

the Hellenic Republic, by S. Lekkou and V. Pelekou, acting as Agents,

| — | the European Commission, by E. Manhaeve, G. Wilms and O. Beynet, acting as Agents, |
| --- | --- |

—

the European Commission, by E. Manhaeve, G. Wilms and O. Beynet, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 14 April 2016,

gives the following

Judgment

Judgment

| 1 | This request for a preliminary ruling concerns the interpretation of Articles 12 EC, 28 EC and 30 EC, and Article 3(1) and (4) of Directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in electricity and repealing Directive 96/92/EC (OJ 2003 L 176, p. 37). |
| --- | --- |

1

This request for a preliminary ruling concerns the interpretation of Articles 12 EC, 28 EC and 30 EC, and Article 3(1) and (4) of Directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in electricity and repealing Directive 96/92/EC (OJ 2003 L 176, p. 37).

| 2 | The request has been made in proceedings between Essent Belgium NV and Vlaams Gewest (Flemish Region, Belgium) and Others concerning the Flemish Region’s non-contractual liability owing to the adoption of successive regional legislation limiting the benefit of free distribution through the distribution systems located in that region, initially solely to electricity produced from renewable energy sources (‘green electricity’) that is fed directly into those distribution systems by the generating installations connected to them, and, subsequently, solely to green electricity fed directly by generating installations into the distribution systems located throughout the Member State of which that region forms part. |
| --- | --- |

2

The request has been made in proceedings between Essent Belgium NV and Vlaams Gewest (Flemish Region, Belgium) and Others concerning the Flemish Region’s non-contractual liability owing to the adoption of successive regional legislation limiting the benefit of free distribution through the distribution systems located in that region, initially solely to electricity produced from renewable energy sources (‘green electricity’) that is fed directly into those distribution systems by the generating installations connected to them, and, subsequently, solely to green electricity fed directly by generating installations into the distribution systems located throughout the Member State of which that region forms part.

Legal context

Legal context

EU law

EU law

Directive 2001/77/EC

| 3 | Directive 2001/77/EC of the European Parliament and of the Council of 27 September 2001 on the promotion of electricity produced from renewable energy sources in the internal electricity market (OJ 2001 L 283, p. 33) was repealed, from 1 January 2012, by Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77 and 2003/30/EC (OJ 2009 L 140, p. 16). Nevertheless, given the dates of the facts at issue in the main proceedings, the provisions of Directive 2001/77 must be taken into account in the present case. |
| --- | --- |

3

Directive 2001/77/EC of the European Parliament and of the Council of 27 September 2001 on the promotion of electricity produced from renewable energy sources in the internal electricity market (OJ 2001 L 283, p. 33) was repealed, from 1 January 2012, by Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77 and 2003/30/EC (OJ 2009 L 140, p. 16). Nevertheless, given the dates of the facts at issue in the main proceedings, the provisions of Directive 2001/77 must be taken into account in the present case.

| 4 | According to recitals 1 to 3 and 14 of Directive 2001/77:





  ‘(1) | The potential for the exploitation of renewable energy sources is underused in the Community at present. The Community recognises the need to promote renewable energy sources as a priority measure given that their exploitation contributes to environmental protection and sustainable development. In addition this can also create local employment, have a positive impact on social cohesion, contribute to security of supply and make it possible to meet Kyoto targets more quickly. It is therefore necessary to ensure that this potential is better exploited within the framework of the internal electricity market. |
| --- | --- | --- |

4

According to recitals 1 to 3 and 14 of Directive 2001/77:

‘(1)

The potential for the exploitation of renewable energy sources is underused in the Community at present. The Community recognises the need to promote renewable energy sources as a priority measure given that their exploitation contributes to environmental protection and sustainable development. In addition this can also create local employment, have a positive impact on social cohesion, contribute to security of supply and make it possible to meet Kyoto targets more quickly. It is therefore necessary to ensure that this potential is better exploited within the framework of the internal electricity market.

| (2) | The promotion of electricity produced from renewable energy sources is a high Community priority as outlined in the White Paper on Renewable Energy Sources ... for reasons of security and diversification of energy supply, of environmental protection and of social and economic cohesion. ... |
| --- | --- |

(2)

The promotion of electricity produced from renewable energy sources is a high Community priority as outlined in the White Paper on Renewable Energy Sources ... for reasons of security and diversification of energy supply, of environmental protection and of social and economic cohesion. ...

| (3) | The increased use of electricity produced from renewable energy sources constitutes an important part of the package of measures needed to comply with the Kyoto Protocol to the United Nations Framework Convention on Climate Change, and of any policy package to meet further commitments. |
| --- | --- |

(3)

The increased use of electricity produced from renewable energy sources constitutes an important part of the package of measures needed to comply with the Kyoto Protocol to the United Nations Framework Convention on Climate Change, and of any policy package to meet further commitments.

...

| (14) | Member States operate different mechanisms of support for renewable energy sources at the national level, including green certificates, investment aid, tax exemptions or reductions, tax refunds and direct price support schemes. One important means to achieve the aim of this Directive is to guarantee the proper functioning of these mechanisms, until a Community framework is put into operation, in order to maintain investor confidence.’ |
| --- | --- |

(14)

Member States operate different mechanisms of support for renewable energy sources at the national level, including green certificates, investment aid, tax exemptions or reductions, tax refunds and direct price support schemes. One important means to achieve the aim of this Directive is to guarantee the proper functioning of these mechanisms, until a Community framework is put into operation, in order to maintain investor confidence.’

| 5 | Article 1 of Directive 2001/77 provided:
  ‘The purpose of this Directive is to promote an increase in the contribution of renewable energy sources to electricity production in the internal market for electricity and to create a basis for a future Community framework thereof.’ |
| --- | --- |

5

Article 1 of Directive 2001/77 provided:

‘The purpose of this Directive is to promote an increase in the contribution of renewable energy sources to electricity production in the internal market for electricity and to create a basis for a future Community framework thereof.’

| 6 | Article 3(1) and (2) of that directive provided:
  ‘1.   Member States shall take appropriate steps to encourage greater consumption of electricity produced from renewable energy sources in conformity with the national indicative targets referred to in paragraph 2. These steps must be in proportion to the objective to be attained.
  2.   Not later than 27 October 2002 and every five years thereafter, Member States shall adopt and publish a report setting national indicative targets for future consumption of electricity produced from renewable energy sources in terms of a percentage of electricity consumption for the next 10 years. ... To set these targets until the year 2010, the Member States shall:





  — | take account of the reference values in the Annex, |
| --- | --- | --- |

6

Article 3(1) and (2) of that directive provided:

‘1.   Member States shall take appropriate steps to encourage greater consumption of electricity produced from renewable energy sources in conformity with the national indicative targets referred to in paragraph 2. These steps must be in proportion to the objective to be attained.

2.   Not later than 27 October 2002 and every five years thereafter, Member States shall adopt and publish a report setting national indicative targets for future consumption of electricity produced from renewable energy sources in terms of a percentage of electricity consumption for the next 10 years. ... To set these targets until the year 2010, the Member States shall:

—

take account of the reference values in the Annex,

| — | ensure that the targets are compatible with any national commitments accepted in the context of the climate change commitments accepted by the Community pursuant to the Kyoto Protocol to the United Nations Framework Convention on Climate Change.’ |
| --- | --- |

—

ensure that the targets are compatible with any national commitments accepted in the context of the climate change commitments accepted by the Community pursuant to the Kyoto Protocol to the United Nations Framework Convention on Climate Change.’

| 7 | Paragraph 1 of Article 4 of that directive, which is entitled ‘Support schemes’, provided:
  ‘Without prejudice to Articles 87 and 88 of the [EC] Treaty, the [European] Commission shall evaluate the application of mechanisms used in Member States according to which a producer of electricity, on the basis of regulations issued by the public authorities, receives direct or indirect support, and which could have the effect of restricting trade, on the basis that these contribute to the objectives set out in Articles 6 and 174 of the Treaty.’ |
| --- | --- |

7

Paragraph 1 of Article 4 of that directive, which is entitled ‘Support schemes’, provided:

‘Without prejudice to Articles 87 and 88 of the [EC] Treaty, the [European] Commission shall evaluate the application of mechanisms used in Member States according to which a producer of electricity, on the basis of regulations issued by the public authorities, receives direct or indirect support, and which could have the effect of restricting trade, on the basis that these contribute to the objectives set out in Articles 6 and 174 of the Treaty.’

| 8 | Entitled ‘Grid system issues’, Article 7 of Directive 2001/77 stated:
  ‘1.   Without prejudice to the maintenance of the reliability and safety of the grid, Member States shall take the necessary measures to ensure that transmission system operators and distribution system operators in their territory guarantee the transmission and distribution of electricity produced from renewable energy sources. They may also provide for priority access to the grid system of electricity produced from renewable energy sources. When dispatching generating installations, transmission system operators shall give priority to generating installations using renewable energy sources insofar as the operation of the national electricity system permits.
  2.   Member States shall put into place a legal framework or require transmission system operators and distribution system operators to set up and publish their standard rules relating to the bearing of costs of technical adaptations, such as grid connections and grid reinforcements, which are necessary in order to integrate new producers feeding electricity produced from renewable energy sources into the interconnected grid.
  ...
  3.   Where appropriate, Member States may require transmission system operators and distribution system operators to bear, in full or in part, the costs referred to in paragraph 2.
  ...
  6.   Member States shall ensure that the charging of transmission and distribution fees does not discriminate against electricity from renewable energy sources, including in particular electricity from renewable energy sources produced in peripheral regions, such as island regions and regions of low population density.
  Where appropriate, Member States shall put in place a legal framework or require transmission system operators and distribution system operators to ensure that fees charged for the transmission and distribution of electricity from plants using renewable energy sources reflect realisable cost benefits resulting from the plant’s connection to the network. Such cost benefits could arise from the direct use of the low-voltage grid.
  ...’ |
| --- | --- |

8

Entitled ‘Grid system issues’, Article 7 of Directive 2001/77 stated:

‘1.   Without prejudice to the maintenance of the reliability and safety of the grid, Member States shall take the necessary measures to ensure that transmission system operators and distribution system operators in their territory guarantee the transmission and distribution of electricity produced from renewable energy sources. They may also provide for priority access to the grid system of electricity produced from renewable energy sources. When dispatching generating installations, transmission system operators shall give priority to generating installations using renewable energy sources insofar as the operation of the national electricity system permits.

2.   Member States shall put into place a legal framework or require transmission system operators and distribution system operators to set up and publish their standard rules relating to the bearing of costs of technical adaptations, such as grid connections and grid reinforcements, which are necessary in order to integrate new producers feeding electricity produced from renewable energy sources into the interconnected grid.

...

3.   Where appropriate, Member States may require transmission system operators and distribution system operators to bear, in full or in part, the costs referred to in paragraph 2.

...

6.   Member States shall ensure that the charging of transmission and distribution fees does not discriminate against electricity from renewable energy sources, including in particular electricity from renewable energy sources produced in peripheral regions, such as island regions and regions of low population density.

Where appropriate, Member States shall put in place a legal framework or require transmission system operators and distribution system operators to ensure that fees charged for the transmission and distribution of electricity from plants using renewable energy sources reflect realisable cost benefits resulting from the plant’s connection to the network. Such cost benefits could arise from the direct use of the low-voltage grid.

...’

Directive 96/92/EC

| 9 | Recitals 3, 15 and 19 of Directive 96/92/EC of the European Parliament and of the Council of 19 December 1996 concerning common rules for the internal market in electricity (OJ 1997 L 27, p. 20) provided:





  ‘(3) | Whereas the provisions of this Directive should not affect the full application of the Treaty, in particular the provisions concerning the internal market and competition; |
| --- | --- | --- |

9

Recitals 3, 15 and 19 of Directive 96/92/EC of the European Parliament and of the Council of 19 December 1996 concerning common rules for the internal market in electricity (OJ 1997 L 27, p. 20) provided:

‘(3)

Whereas the provisions of this Directive should not affect the full application of the Treaty, in particular the provisions concerning the internal market and competition;

...

| (15) | Whereas the Treaty lays down specific rules with regard to restrictions on the free movement of goods and on competition; |
| --- | --- |

(15)

Whereas the Treaty lays down specific rules with regard to restrictions on the free movement of goods and on competition;

...

| (19) | Whereas the Member States, when imposing public service obligations on the undertakings of the electricity sector, must therefore respect the relevant rules of the Treaty as interpreted by the Court of Justice’. |
| --- | --- |

(19)

Whereas the Member States, when imposing public service obligations on the undertakings of the electricity sector, must therefore respect the relevant rules of the Treaty as interpreted by the Court of Justice’.

| 10 | According to Article 1 of that directive:
  ‘This Directive establishes common rules for the generation, transmission and distribution of electricity. It lays down the rules relating to the organisation and functioning of the electricity sector, access to the market, the criteria and procedures applicable to calls for tender and the granting of authorisations and the operation of systems.’ |
| --- | --- |

10

According to Article 1 of that directive:

‘This Directive establishes common rules for the generation, transmission and distribution of electricity. It lays down the rules relating to the organisation and functioning of the electricity sector, access to the market, the criteria and procedures applicable to calls for tender and the granting of authorisations and the operation of systems.’

| 11 | Article 2 of that directive provided:
  ‘For the purposes of this Directive:
  ...





  (6) | “distribution” shall mean the transport of electricity on medium-voltage and low-voltage distribution systems with a view to its delivery to customers; |
| --- | --- | --- |

11

Article 2 of that directive provided:

‘For the purposes of this Directive:

...

(6)

“distribution” shall mean the transport of electricity on medium-voltage and low-voltage distribution systems with a view to its delivery to customers;

...

| (15) | “system user” shall mean any natural or legal person supplying to, or being supplied by, a transmission or distribution system; |
| --- | --- |

(15)

“system user” shall mean any natural or legal person supplying to, or being supplied by, a transmission or distribution system;

...’

| 12 | Article 3 of Directive 96/92 provided:
  ‘1.   Member States shall ensure, on the basis of their institutional organisation and with due regard for the principle of subsidiarity, that, without prejudice to paragraph 2, electricity undertakings are operated in accordance with the principles of this Directive, with a view to achieving a competitive market in electricity, and shall not discriminate between these undertakings as regards either rights or obligations. ...
  2.   Having full regard to the relevant provisions of the Treaty, in particular Article 90, Member States may impose on undertakings operating in the electricity sector, in the general economic interest, public service obligations which may relate to security, including security of supply, regularity, quality and price of supplies and to environmental protection. Such obligations must be clearly defined, transparent, non-discriminatory and verifiable; ...
  3.   Member States may decide not to apply the provisions of Articles 5, 6, 17, 18 and 21 insofar as the application of these provisions would obstruct the performance, in law or in fact, of the obligations imposed on electricity undertakings in the general economic interest and insofar as the development of trade would not be affected to such an extent as would be contrary to the interests of the Community. The interests of the Community include, inter alia, competition with regard to eligible customers in accordance with this Directive and Article 90 of the Treaty.’ |
| --- | --- |

12

Article 3 of Directive 96/92 provided:

‘1.   Member States shall ensure, on the basis of their institutional organisation and with due regard for the principle of subsidiarity, that, without prejudice to paragraph 2, electricity undertakings are operated in accordance with the principles of this Directive, with a view to achieving a competitive market in electricity, and shall not discriminate between these undertakings as regards either rights or obligations. ...

2.   Having full regard to the relevant provisions of the Treaty, in particular Article 90, Member States may impose on undertakings operating in the electricity sector, in the general economic interest, public service obligations which may relate to security, including security of supply, regularity, quality and price of supplies and to environmental protection. Such obligations must be clearly defined, transparent, non-discriminatory and verifiable; ...

3.   Member States may decide not to apply the provisions of Articles 5, 6, 17, 18 and 21 insofar as the application of these provisions would obstruct the performance, in law or in fact, of the obligations imposed on electricity undertakings in the general economic interest and insofar as the development of trade would not be affected to such an extent as would be contrary to the interests of the Community. The interests of the Community include, inter alia, competition with regard to eligible customers in accordance with this Directive and Article 90 of the Treaty.’

| 13 | Article 11(2) and (3) of Directive 96/92 provided:
  ‘2.   In any event, [the distribution system operator] must not discriminate between system users or classes of system users, particularly in favour of its subsidiaries or shareholders.
  3.   A Member State may require the distribution system operator, when dispatching generating installations, to give priority to generating installations using renewable energy sources or waste or producing combined heat and power.’ |
| --- | --- |

13

Article 11(2) and (3) of Directive 96/92 provided:

‘2.   In any event, [the distribution system operator] must not discriminate between system users or classes of system users, particularly in favour of its subsidiaries or shareholders.

3.   A Member State may require the distribution system operator, when dispatching generating installations, to give priority to generating installations using renewable energy sources or waste or producing combined heat and power.’

| 14 | Article 16 of that directive provided:
  ‘For the organisation of access to the system, Member States may choose between the procedures referred to in Article 17 and/or in Article 18. Both sets of procedure shall operate in accordance with objective, transparent and non-discriminatory criteria.’ |
| --- | --- |

14

Article 16 of that directive provided:

‘For the organisation of access to the system, Member States may choose between the procedures referred to in Article 17 and/or in Article 18. Both sets of procedure shall operate in accordance with objective, transparent and non-discriminatory criteria.’

Directive 2003/54

| 15 | Directive 2003/54 was repealed with effect from 3 March 2011 by Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in electricity (OJ 2009 L 211, p. 55). |
| --- | --- |

15

Directive 2003/54 was repealed with effect from 3 March 2011 by Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in electricity (OJ 2009 L 211, p. 55).

| 16 | Recitals 2, 4, 6, 7, 13, 15 and 17 of Directive 2003/54 stated:





  ‘(2) | Experience in implementing this Directive shows the benefits that may result from the internal market in electricity, in terms of efficiency gains, price reductions, higher standards of service and increased competitiveness. However, important shortcomings and possibilities for improving the functioning of the market remain, notably concrete provisions are needed to ensure a level playing field in generation and to reduce the risks of market dominance and predatory behaviour, ensuring non-discriminatory transmission and distribution tariffs, through access to the network on the basis of tariffs published prior to their entry into force ... |
| --- | --- | --- |

16

Recitals 2, 4, 6, 7, 13, 15 and 17 of Directive 2003/54 stated:

‘(2)

Experience in implementing this Directive shows the benefits that may result from the internal market in electricity, in terms of efficiency gains, price reductions, higher standards of service and increased competitiveness. However, important shortcomings and possibilities for improving the functioning of the market remain, notably concrete provisions are needed to ensure a level playing field in generation and to reduce the risks of market dominance and predatory behaviour, ensuring non-discriminatory transmission and distribution tariffs, through access to the network on the basis of tariffs published prior to their entry into force ...

...

| (4) | The freedoms which the Treaty guarantees European citizens — free movement of goods, freedom to provide services and freedom of establishment — are only possible in a fully open market, which enables all consumers freely to choose their suppliers and all suppliers freely to deliver to their customers. |
| --- | --- |

(4)

The freedoms which the Treaty guarantees European citizens — free movement of goods, freedom to provide services and freedom of establishment — are only possible in a fully open market, which enables all consumers freely to choose their suppliers and all suppliers freely to deliver to their customers.

...

| (6) | For competition to function, network access must be non-discriminatory, transparent and fairly priced. |
| --- | --- |

(6)

For competition to function, network access must be non-discriminatory, transparent and fairly priced.

| (7) | In order to complete the internal electricity market, non-discriminatory access to the network of the transmission or the distribution system operator is of paramount importance. ... |
| --- | --- |

(7)

In order to complete the internal electricity market, non-discriminatory access to the network of the transmission or the distribution system operator is of paramount importance. ...

...

| (13) | Further measures should be taken in order to ensure transparent and non-discriminatory tariffs for access to networks. Those tariffs should be applicable to all system users on a non-discriminatory basis. |
| --- | --- |

(13)

Further measures should be taken in order to ensure transparent and non-discriminatory tariffs for access to networks. Those tariffs should be applicable to all system users on a non-discriminatory basis.

...

| (15) | The existence of effective regulation, carried out by one or more national regulatory authorities, is an important factor in guaranteeing non-discriminatory access to the network. ... Those authorities should have the competence to fix or approve the tariffs, or at least, the methodologies underlying the calculation of transmission and distribution tariffs. In order to avoid uncertainty and costly and time consuming disputes, these tariffs should be published prior to their entry into force. |
| --- | --- |

(15)

The existence of effective regulation, carried out by one or more national regulatory authorities, is an important factor in guaranteeing non-discriminatory access to the network. ... Those authorities should have the competence to fix or approve the tariffs, or at least, the methodologies underlying the calculation of transmission and distribution tariffs. In order to avoid uncertainty and costly and time consuming disputes, these tariffs should be published prior to their entry into force.

...

| (17) | In order to ensure effective market access for all market players, including new entrants, non-discriminatory and cost-reflective balancing mechanisms are necessary. ...’ |
| --- | --- |

(17)

In order to ensure effective market access for all market players, including new entrants, non-discriminatory and cost-reflective balancing mechanisms are necessary. ...’

| 17 | Article 1 of Directive 2003/54, entitled ‘Scope’, provided:
  ‘This Directive establishes common rules for the generation, transmission, distribution and supply of electricity. It lays down the rules relating to the organisation and functioning of the electricity sector, access to the market, the criteria and procedures applicable to calls for tenders and the granting of authorisations and the operation of systems.’ |
| --- | --- |

17

Article 1 of Directive 2003/54, entitled ‘Scope’, provided:

‘This Directive establishes common rules for the generation, transmission, distribution and supply of electricity. It lays down the rules relating to the organisation and functioning of the electricity sector, access to the market, the criteria and procedures applicable to calls for tenders and the granting of authorisations and the operation of systems.’

| 18 | Article 2 of that directive provided:
  ‘For the purposes of this Directive:
  ...





  (5) | “distribution” means the transport of electricity on high-voltage, medium voltage and low voltage distribution systems with a view to its delivery to customers, but not including supply; |
| --- | --- | --- |

18

Article 2 of that directive provided:

‘For the purposes of this Directive:

...

(5)

“distribution” means the transport of electricity on high-voltage, medium voltage and low voltage distribution systems with a view to its delivery to customers, but not including supply;

...

| (18) | “system users” means any natural or legal persons supplying to, or being supplied by, a transmission or distribution system; |
| --- | --- |

(18)

“system users” means any natural or legal persons supplying to, or being supplied by, a transmission or distribution system;

...’

| 19 | Article 3 of that directive, entitled ‘Public service obligations and customer protection’, provided:
  ‘1.   Member States shall ensure, on the basis of their institutional organisation and with due regard to the principle of subsidiarity, that, without prejudice to paragraph 2, electricity undertakings are operated in accordance with the principles of this Directive with a view to achieving a competitive, secure and environmentally sustainable market in electricity, and shall not discriminate between these undertakings as regards either rights or obligations.
  2.   Having full regard to the relevant provisions of the Treaty, in particular Article 86 thereof, Member States may impose on undertakings operating in the electricity sector, in the general economic interest, public service obligations which may relate to security, including security of supply, regularity, quality and price of supplies and environmental protection, including energy efficiency and climate protection. Such obligations shall be clearly defined, transparent, non-discriminatory, verifiable and shall guarantee equality of access for EU electricity companies to national consumers. ...
  ...
  4.   When financial compensation, other forms of compensation and exclusive rights which a Member State grants for the fulfilment of the obligations set out in paragraphs 2 and 3 are provided, this shall be done in a non-discriminatory and transparent way.
  ...
  8.   Member States may decide not to apply the provisions of Articles 6, 7, 20 and 22 insofar as their application would obstruct the performance, in law or in fact, of the obligations imposed on electricity undertakings in the general economic interest and insofar as the development of trade would not be affected to such an extent as would be contrary to the interests of the Community. The interests of the Community include, amongst others, competition with regard to eligible customers in accordance with this Directive and Article 86 of the Treaty.
  ...’ |
| --- | --- |

19

Article 3 of that directive, entitled ‘Public service obligations and customer protection’, provided:

‘1.   Member States shall ensure, on the basis of their institutional organisation and with due regard to the principle of subsidiarity, that, without prejudice to paragraph 2, electricity undertakings are operated in accordance with the principles of this Directive with a view to achieving a competitive, secure and environmentally sustainable market in electricity, and shall not discriminate between these undertakings as regards either rights or obligations.

2.   Having full regard to the relevant provisions of the Treaty, in particular Article 86 thereof, Member States may impose on undertakings operating in the electricity sector, in the general economic interest, public service obligations which may relate to security, including security of supply, regularity, quality and price of supplies and environmental protection, including energy efficiency and climate protection. Such obligations shall be clearly defined, transparent, non-discriminatory, verifiable and shall guarantee equality of access for EU electricity companies to national consumers. ...

...

4.   When financial compensation, other forms of compensation and exclusive rights which a Member State grants for the fulfilment of the obligations set out in paragraphs 2 and 3 are provided, this shall be done in a non-discriminatory and transparent way.

...

8.   Member States may decide not to apply the provisions of Articles 6, 7, 20 and 22 insofar as their application would obstruct the performance, in law or in fact, of the obligations imposed on electricity undertakings in the general economic interest and insofar as the development of trade would not be affected to such an extent as would be contrary to the interests of the Community. The interests of the Community include, amongst others, competition with regard to eligible customers in accordance with this Directive and Article 86 of the Treaty.

...’

| 20 | Article 14 of Directive 2003/54 provided:
  ‘...
  2.   In any event, [the distribution system operator] must not discriminate between system users or classes of system users, particularly in favour of its related undertakings.
  ...
  4.   A Member State may require the distribution system operator, when dispatching generating installations, to give priority to generating installations using renewable energy sources or waste or producing combined heat and power.
  ...’ |
| --- | --- |

20

Article 14 of Directive 2003/54 provided:

‘...

2.   In any event, [the distribution system operator] must not discriminate between system users or classes of system users, particularly in favour of its related undertakings.

...

4.   A Member State may require the distribution system operator, when dispatching generating installations, to give priority to generating installations using renewable energy sources or waste or producing combined heat and power.

...’

| 21 | According to Article 20(1) of that directive:
  ‘Member States shall ensure the implementation of a system of third party access to the transmission and distribution systems based on published tariffs, applicable to all eligible customers and applied objectively and without discrimination between system users. Member States shall ensure that these tariffs, or the methodologies underlying their calculation, are approved prior to their entry into force in accordance with Article 23 and that these tariffs, and the methodologies — where only methodologies are approved — are published prior to their entry into force.’ |
| --- | --- |

21

According to Article 20(1) of that directive:

‘Member States shall ensure the implementation of a system of third party access to the transmission and distribution systems based on published tariffs, applicable to all eligible customers and applied objectively and without discrimination between system users. Member States shall ensure that these tariffs, or the methodologies underlying their calculation, are approved prior to their entry into force in accordance with Article 23 and that these tariffs, and the methodologies — where only methodologies are approved — are published prior to their entry into force.’

| 22 | Article 23 of that directive provided:
  ‘...
  2.   The regulatory authorities shall be responsible for fixing or approving, prior to their entry into force, at least the methodologies used to calculate or establish the terms and conditions for:





  (a) | connection and access to national networks, including transmission and distribution tariffs. ... |
| --- | --- | --- |

22

Article 23 of that directive provided:

‘...

2.   The regulatory authorities shall be responsible for fixing or approving, prior to their entry into force, at least the methodologies used to calculate or establish the terms and conditions for:

(a)

connection and access to national networks, including transmission and distribution tariffs. ...

...

4.   Regulatory authorities shall have the authority to require transmission and distribution system operators, if necessary, to modify the terms and conditions, tariffs, rules, mechanisms and methodologies referred to in paragraphs 1, 2 and 3, to ensure that they are proportionate and applied in a non-discriminatory manner.

...’

Flemish legislation

Flemish legislation

The Electricity Decree

| 23 | According to Article 2 of the vlaams decreet houdende de organisatie van de elektriciteitsmarkt (Flemish Decree on the organisation of the electricity market) of 17 July 2000 (Belgisch Staatsblad, 22 September 2000, p. 32166; ‘the Electricity Decree’):
  ‘For the purposes of this Decree:





  1° | “distribution” shall mean the transport of electricity on distribution systems with a view to its delivery to customers; |
| --- | --- | --- |

23

According to Article 2 of the vlaams decreet houdende de organisatie van de elektriciteitsmarkt (Flemish Decree on the organisation of the electricity market) of 17 July 2000 (Belgisch Staatsblad, 22 September 2000, p. 32166; ‘the Electricity Decree’):

Belgisch Staatsblad

‘For the purposes of this Decree:

1°

“distribution” shall mean the transport of electricity on distribution systems with a view to its delivery to customers;

| 2° | “distribution system” shall mean the totality of connections within a geographically defined area operating at a nominal voltage of no more than 70 kV and the transformer stations, switching stations, distribution stations and electricity substations and other equipment necessary for the transmission of electricity to customers at regional or local level; |
| --- | --- |

2°

“distribution system” shall mean the totality of connections within a geographically defined area operating at a nominal voltage of no more than 70 kV and the transformer stations, switching stations, distribution stations and electricity substations and other equipment necessary for the transmission of electricity to customers at regional or local level;

...’

| 24 | Article 15, in Chapter III of the Electricity Decree, entitled ‘Access to the distribution system’, provided:
  ‘The system operator shall perform, free of charge, all tasks necessary for the distribution of green electricity, with the exception of connection to the distribution system.
  The Flemish Government may impose restrictions on the arrangement referred to in the first paragraph.’ |
| --- | --- |

24

Article 15, in Chapter III of the Electricity Decree, entitled ‘Access to the distribution system’, provided:

‘The system operator shall perform, free of charge, all tasks necessary for the distribution of green electricity, with the exception of connection to the distribution system.

The Flemish Government may impose restrictions on the arrangement referred to in the first paragraph.’

| 25 | Article 15 of the Electricity Decree was repealed by Article 61 of the vlaams decreet houdende bepalingen tot begeleiding van de begroting 2005 (Flemish Decree on measures to accompany the 2005 budget) of 24 December 2004 (Belgisch Staatsblad, 31 December 2004, p. 87220). |
| --- | --- |

25

Article 15 of the Electricity Decree was repealed by Article 61 of the vlaams decreet houdende bepalingen tot begeleiding van de begroting 2005 (Flemish Decree on measures to accompany the 2005 budget) of 24 December 2004 (Belgisch Staatsblad, 31 December 2004, p. 87220).

Belgisch Staatsblad

The decisions promoting the production of green electricity

| 26 | In its original version, Article 14 of the besluit van de Vlaamse regering inzake de bevordering van elektriciteitsopwekking uit hernieuwbare energiebronnen (Decision of the Flemish Government promoting the production of electricity from renewable energy sources) of 28 September 2001 (Belgisch Staatsblad, 23 October 2001, p. 36778) provided:
  ‘Each supplier shall report monthly, per customer and per system tariff period, to the system operators concerned the amount of electricity from the renewable energy sources listed in Article 8(1) which is transmitted through their distribution system.
  The system operator shall perform, free of charge, the tasks referred to in Article 15 of the [Electricity Decree], in accordance with the report specified in the preceding paragraph.
  As regards electricity not produced in the Flemish Region, the authority responsible for issuing green-electricity certificates for the generating site concerned shall provide the regulatory authority with a certificate guaranteeing that that electricity was produced from a renewable energy source appearing on the list provided for in Article 8(1) and is intended for an end-user in Flanders.
  ...’ |
| --- | --- |

26

In its original version, Article 14 of the besluit van de Vlaamse regering inzake de bevordering van elektriciteitsopwekking uit hernieuwbare energiebronnen (Decision of the Flemish Government promoting the production of electricity from renewable energy sources) of 28 September 2001 (Belgisch Staatsblad, 23 October 2001, p. 36778) provided:

Belgisch Staatsblad

‘Each supplier shall report monthly, per customer and per system tariff period, to the system operators concerned the amount of electricity from the renewable energy sources listed in Article 8(1) which is transmitted through their distribution system.

The system operator shall perform, free of charge, the tasks referred to in Article 15 of the [Electricity Decree], in accordance with the report specified in the preceding paragraph.

As regards electricity not produced in the Flemish Region, the authority responsible for issuing green-electricity certificates for the generating site concerned shall provide the regulatory authority with a certificate guaranteeing that that electricity was produced from a renewable energy source appearing on the list provided for in Article 8(1) and is intended for an end-user in Flanders.

...’

| 27 | As amended by virtue of Article 2 of the besluit van de Vlaamse regering tot wijziging van het besluit van de Vlaamse regering van 28 september 2001 (Decision of the Flemish Government amending the Decision of the Flemish Government of 28 September 2001) of 4 April 2003 (Belgisch Staatsblad, 30 April 2003, p. 23334; ‘the Decision of 4 April 2003’), which entered into force on 30 April 2003, Article 14 provided:
  ‘§ 1.   In accordance with the second paragraph of Article 15 of the [Electricity Decree], free distribution, as referred to in the first paragraph of Article 15 of that Decree, is restricted to the feed-in of electricity produced by the generating installations connected to the distribution systems in the Flemish Region.
  § 2.   Suppliers of electricity produced from the renewable energy sources referred to in Article 8 shall not charge in an interim invoice to, or the final account of, the end-user of that electricity any fee for the cost of its distribution, as referred to in the first paragraph of Article 15.
  ...’ |
| --- | --- |

27

As amended by virtue of Article 2 of the besluit van de Vlaamse regering tot wijziging van het besluit van de Vlaamse regering van 28 september 2001 (Decision of the Flemish Government amending the Decision of the Flemish Government of 28 September 2001) of 4 April 2003 (Belgisch Staatsblad, 30 April 2003, p. 23334; ‘the Decision of 4 April 2003’), which entered into force on 30 April 2003, Article 14 provided:

Belgisch Staatsblad

‘§ 1.   In accordance with the second paragraph of Article 15 of the [Electricity Decree], free distribution, as referred to in the first paragraph of Article 15 of that Decree, is restricted to the feed-in of electricity produced by the generating installations connected to the distribution systems in the Flemish Region.

§ 2.   Suppliers of electricity produced from the renewable energy sources referred to in Article 8 shall not charge in an interim invoice to, or the final account of, the end-user of that electricity any fee for the cost of its distribution, as referred to in the first paragraph of Article 15.

...’

| 28 | Having been seised of an action brought by Essent Belgium for annulment of Article 2 of the Decision of 4 April 2003, the Raad van State (Council of State, Belgium) suspended operation of that provision by a decision of 12 January 2004. |
| --- | --- |

28

Having been seised of an action brought by Essent Belgium for annulment of Article 2 of the Decision of 4 April 2003, the Raad van State (Council of State, Belgium) suspended operation of that provision by a decision of 12 January 2004.

| 29 | The Decision of the Flemish Government promoting the production of electricity from renewable energy sources of 28 September 2001 was repealed and replaced by the besluit van de Vlaamse regering inzake de bevordering van elektriciteitsopwekking uit hernieuwbare energiebronnen (Decision of the Flemish Government promoting the production of electricity from renewable energy sources) of 5 March 2004 (Belgisch Staatsblad, 23 March 2004, p. 16296; ‘the Decision of 5 March 2004’). |
| --- | --- |

29

The Decision of the Flemish Government promoting the production of electricity from renewable energy sources of 28 September 2001 was repealed and replaced by the besluit van de Vlaamse regering inzake de bevordering van elektriciteitsopwekking uit hernieuwbare energiebronnen (Decision of the Flemish Government promoting the production of electricity from renewable energy sources) of 5 March 2004 (Belgisch Staatsblad, 23 March 2004, p. 16296; ‘the Decision of 5 March 2004’).

Belgisch Staatsblad

| 30 | Article 18 of the Decision of 5 March 2004 provided:
  ‘§ 1.   In accordance with the second paragraph of Article 15 of the [Electricity Decree], free distribution, as referred to in the first paragraph of Article 15 of that Decree, is restricted to the electricity supplied to end-users connected to a distribution system in the Flemish Region which is produced from a renewable energy source, as provided for in Article 15, in a generating installation which feeds its electricity directly into a distribution system in Belgium.
  § 2.   Suppliers of electricity, as referred to in § 1, shall not charge in the final account of the end-users of that electricity any fee for the cost of its distribution, as referred to in the first paragraph of Article 15 of the [Electricity Decree].
  ...’ |
| --- | --- |

30

Article 18 of the Decision of 5 March 2004 provided:

‘§ 1.   In accordance with the second paragraph of Article 15 of the [Electricity Decree], free distribution, as referred to in the first paragraph of Article 15 of that Decree, is restricted to the electricity supplied to end-users connected to a distribution system in the Flemish Region which is produced from a renewable energy source, as provided for in Article 15, in a generating installation which feeds its electricity directly into a distribution system in Belgium.

§ 2.   Suppliers of electricity, as referred to in § 1, shall not charge in the final account of the end-users of that electricity any fee for the cost of its distribution, as referred to in the first paragraph of Article 15 of the [Electricity Decree].

...’

| 31 | Having been seised of an action brought by Essent Belgium for annulment of Article 18 of the Decision of 5 March 2004, the Raad van State (Council of State) suspended operation of that provision by a decision of 23 December 2004. |
| --- | --- |

31

Having been seised of an action brought by Essent Belgium for annulment of Article 18 of the Decision of 5 March 2004, the Raad van State (Council of State) suspended operation of that provision by a decision of 23 December 2004.

| 32 | Following the repeal of Article 15 of the Electricity Decree by the Decree of 24 December 2004 on measures to accompany the 2005 budget, Article 18 of the Decision of 5 March 2004 was repealed, with effect from 1 January 2005, by the besluit van de Vlaamse regering (Decision of the Flemish Government) of 25 March 2005 (Belgisch Staatsblad, 27 May 2005, p. 24763). |
| --- | --- |

32

Following the repeal of Article 15 of the Electricity Decree by the Decree of 24 December 2004 on measures to accompany the 2005 budget, Article 18 of the Decision of 5 March 2004 was repealed, with effect from 1 January 2005, by the besluit van de Vlaamse regering (Decision of the Flemish Government) of 25 March 2005 (Belgisch Staatsblad, 27 May 2005, p. 24763).

Belgisch Staatsblad

The dispute in the main proceedings and the questions referred for a preliminary ruling

The dispute in the main proceedings and the questions referred for a preliminary ruling

| 33 | Essent Belgium supplies to undertakings and private customers in Flanders electricity which it imports mainly from the Netherlands and which, it claims, is green electricity. |
| --- | --- |

33

Essent Belgium supplies to undertakings and private customers in Flanders electricity which it imports mainly from the Netherlands and which, it claims, is green electricity.

| 34 | Having formed the view that it had suffered damage because the green electricity thus imported from another Member State was, as a result of the successive changes to the legislation introduced by the Decisions of 4 April 2003 and 5 March 2004 (‘the regional legislation at issue in the main proceedings’), excluded from the scheme for free distribution through the distribution system in Flanders from which it benefited originally, Essent Belgium brought two actions before the Nederlandstalige rechtbank van eerste aanleg te Brussel (Dutch-language Court of First Instance, Brussels, Belgium) claiming, in essence, that the Flemish Region should be ordered pay it compensation for that damage in the amount of EUR 15958252. |
| --- | --- |

34

Having formed the view that it had suffered damage because the green electricity thus imported from another Member State was, as a result of the successive changes to the legislation introduced by the Decisions of 4 April 2003 and 5 March 2004 (‘the regional legislation at issue in the main proceedings’), excluded from the scheme for free distribution through the distribution system in Flanders from which it benefited originally, Essent Belgium brought two actions before the Nederlandstalige rechtbank van eerste aanleg te Brussel (Dutch-language Court of First Instance, Brussels, Belgium) claiming, in essence, that the Flemish Region should be ordered pay it compensation for that damage in the amount of EUR 15958252.

| 35 | Essent Belgium also brought into the proceedings the Vlaamse Regulator van de Elektriciteits- en Gasmarkt (VREG) (Flemish regulator of the electricity and gas market), the body competent to rule on distribution tariffs, and a number of distribution system operators which had sought payment by Essent Belgium of distribution costs, so as to have the judgments to be delivered declared applicable also to those other parties. |
| --- | --- |

35

Essent Belgium also brought into the proceedings the Vlaamse Regulator van de Elektriciteits- en Gasmarkt (VREG) (Flemish regulator of the electricity and gas market), the body competent to rule on distribution tariffs, and a number of distribution system operators which had sought payment by Essent Belgium of distribution costs, so as to have the judgments to be delivered declared applicable also to those other parties.

| 36 | In support of those actions, Essent Belgium submitted, inter alia, that, in adopting the regional legislation at issue in the main proceedings, the Flemish Region infringed EU law, in particular, Articles 18 TFEU and 34 TFEU and Articles 3(1) and 11(2) of Directive 96/92. |
| --- | --- |

36

In support of those actions, Essent Belgium submitted, inter alia, that, in adopting the regional legislation at issue in the main proceedings, the Flemish Region infringed EU law, in particular, Articles 18 TFEU and 34 TFEU and Articles 3(1) and 11(2) of Directive 96/92.

| 37 | In those circumstances, the Nederlandstalige rechtbank van eerste aanleg te Brussel (Dutch-language Court of First Instance, Brussels) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:





  ‘(1) | Should Article 28 EC and Article 30 EC be interpreted as precluding a regulation of a Member State — in the present case the [Flemish Electricity Decree], read in conjunction with the Decision of 4 April 2003 ... — restricting the free distribution of green electricity to the feed-in of electricity produced by the generating installations connected to the distribution systems in the Flemish Region and excluding electricity from generating installations which are not connected to distribution systems in the Flemish Region? |
| --- | --- | --- |

37

In those circumstances, the Nederlandstalige rechtbank van eerste aanleg te Brussel (Dutch-language Court of First Instance, Brussels) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1)

Should Article 28 EC and Article 30 EC be interpreted as precluding a regulation of a Member State — in the present case the [Flemish Electricity Decree], read in conjunction with the Decision of 4 April 2003 ... — restricting the free distribution of green electricity to the feed-in of electricity produced by the generating installations connected to the distribution systems in the Flemish Region and excluding electricity from generating installations which are not connected to distribution systems in the Flemish Region?

| (2) | Should Article 28 EC and Article 30 EC be interpreted as precluding a regulation of a Member State — in the present case the [Flemish Electricity Decree], read in conjunction with the Decision of 5 March 2004 ..., as applied by the VREG — which restricts the free distribution of green electricity to electricity produced by generating installations which feed directly into a distribution system in Belgium and excludes from free distribution the electricity produced by generating installations which do not feed directly into a distribution system in Belgium? |
| --- | --- |

(2)

Should Article 28 EC and Article 30 EC be interpreted as precluding a regulation of a Member State — in the present case the [Flemish Electricity Decree], read in conjunction with the Decision of 5 March 2004 ..., as applied by the VREG — which restricts the free distribution of green electricity to electricity produced by generating installations which feed directly into a distribution system in Belgium and excludes from free distribution the electricity produced by generating installations which do not feed directly into a distribution system in Belgium?

| (3) | Is a national rule as referred to in question 1 and question 2 compatible with the principle of equal treatment and the prohibition of discrimination as embodied inter alia in Article 12 EC and Article 3(1) and (4) of the then Directive 2003/54?’ |
| --- | --- |

(3)

Is a national rule as referred to in question 1 and question 2 compatible with the principle of equal treatment and the prohibition of discrimination as embodied inter alia in Article 12 EC and Article 3(1) and (4) of the then Directive 2003/54?’

Consideration of the questions referred

Consideration of the questions referred

Admissibility

Admissibility

| 38 | By its third question, the referring court asks, inter alia, whether the provisions of Article 3(1) and (4) of Directive 2003/54 must be interpreted as precluding legislation such as the regional legislation at issue in the main proceedings. |
| --- | --- |

38

By its third question, the referring court asks, inter alia, whether the provisions of Article 3(1) and (4) of Directive 2003/54 must be interpreted as precluding legislation such as the regional legislation at issue in the main proceedings.

| 39 | It must be borne in mind in that regard that, under Article 94(c) of the Rules of Procedure of the Court of Justice, a request for a preliminary ruling must contain a statement of the reasons which prompted the referring court or tribunal to inquire about the interpretation of a provision of EU law, and the relationship between that provision and the national legislation applicable to the main proceedings. |
| --- | --- |

39

It must be borne in mind in that regard that, under Article 94(c) of the Rules of Procedure of the Court of Justice, a request for a preliminary ruling must contain a statement of the reasons which prompted the referring court or tribunal to inquire about the interpretation of a provision of EU law, and the relationship between that provision and the national legislation applicable to the main proceedings.

| 40 | In the present case, however, the order for reference contains no explanation as to the reasons that prompted the referring court to inquire about the interpretation of Article 3(4) of Directive 2003/54. Nor, moreover, is it possible to establish from the description in that order of the national factual and legislative context how that provision of EU law might be capable of having any influence on the dispute in the main proceedings. |
| --- | --- |

40

In the present case, however, the order for reference contains no explanation as to the reasons that prompted the referring court to inquire about the interpretation of Article 3(4) of Directive 2003/54. Nor, moreover, is it possible to establish from the description in that order of the national factual and legislative context how that provision of EU law might be capable of having any influence on the dispute in the main proceedings.

| 41 | Thus, although Article 3(4) of Directive 2003/54 provides that, when financial compensation, other forms of compensation or exclusive rights are provided by a Member State for the fulfilment of a public service obligation, these must be granted in a non-discriminatory and transparent way, the referring court does not refer to any form of compensation or exclusive rights which, under the regional legislation at issue in the main proceedings, might be granted to electricity distributors in order to compensate them for their obligation to distribute green electricity free of charge. Nor is it apparent from that order that the dispute in the main proceedings relates to such compensation or exclusive rights. |
| --- | --- |

41

Thus, although Article 3(4) of Directive 2003/54 provides that, when financial compensation, other forms of compensation or exclusive rights are provided by a Member State for the fulfilment of a public service obligation, these must be granted in a non-discriminatory and transparent way, the referring court does not refer to any form of compensation or exclusive rights which, under the regional legislation at issue in the main proceedings, might be granted to electricity distributors in order to compensate them for their obligation to distribute green electricity free of charge. Nor is it apparent from that order that the dispute in the main proceedings relates to such compensation or exclusive rights.

| 42 | In those circumstances, the third question must be declared inadmissible in so far as it relates to the interpretation of Article 3(4) of Directive 2003/54. |
| --- | --- |

42

In those circumstances, the third question must be declared inadmissible in so far as it relates to the interpretation of Article 3(4) of Directive 2003/54.

Substance

Substance

Preliminary observations

| 43 | The fact that a national court has, formally speaking, worded its request for a preliminary ruling with reference to certain provisions of EU law does not preclude the Court of Justice from providing to the national court all the elements of interpretation which may be of assistance in adjudicating on the case pending before it, whether or not that court has referred to them in its questions. It is for the Court to extract from all the information provided by the national court, in particular from the grounds of the order for reference, the points of EU law which require interpretation, having regard to the subject matter of the dispute (see, in particular, judgment of 27 October 2009, ČEZ, C‐115/08, EU:C:2009:660, paragraph 81 and the case-law cited). |
| --- | --- |

43

The fact that a national court has, formally speaking, worded its request for a preliminary ruling with reference to certain provisions of EU law does not preclude the Court of Justice from providing to the national court all the elements of interpretation which may be of assistance in adjudicating on the case pending before it, whether or not that court has referred to them in its questions. It is for the Court to extract from all the information provided by the national court, in particular from the grounds of the order for reference, the points of EU law which require interpretation, having regard to the subject matter of the dispute (see, in particular, judgment of 27 October 2009, ČEZ, C‐115/08, EU:C:2009:660, paragraph 81 and the case-law cited).

| 44 | In the present case, it is apparent from the order for reference that, by the actions it has brought in the main proceedings, Essent Belgium is, in essence, seeking compensation for the damage it claims to have suffered because it is no longer able to benefit from the scheme for the free distribution of green electricity imposed by Flemish regional legislation on distribution system operators in Flanders, for the distribution to which it used, in that region, green electricity imported from a Member State other than the Kingdom of Belgium. Essent Belgium thus claims to have been deprived of the benefit of that scheme during (1) the period from 30 April 2003, when the Decision of 4 April 2003 entered into force, to 12 January 2004, the date from which that decision was suspended by the Raad van State (Council of State), and (2) the period from 23 March 2004, when the Decision of 5 March 2004 entered into force, to 31 December 2004, the date on which Article 15 of the Electricity Decree was repealed. |
| --- | --- |

44

In the present case, it is apparent from the order for reference that, by the actions it has brought in the main proceedings, Essent Belgium is, in essence, seeking compensation for the damage it claims to have suffered because it is no longer able to benefit from the scheme for the free distribution of green electricity imposed by Flemish regional legislation on distribution system operators in Flanders, for the distribution to which it used, in that region, green electricity imported from a Member State other than the Kingdom of Belgium. Essent Belgium thus claims to have been deprived of the benefit of that scheme during (1) the period from 30 April 2003, when the Decision of 4 April 2003 entered into force, to 12 January 2004, the date from which that decision was suspended by the Raad van State (Council of State), and (2) the period from 23 March 2004, when the Decision of 5 March 2004 entered into force, to 31 December 2004, the date on which Article 15 of the Electricity Decree was repealed.

| 45 | In the light both of the subject matter of the dispute in the main proceedings thus described and its timeframe, it must be noted that, for the purposes of answering the questions raised by the referring court, it is appropriate to take into consideration, so far as concerns EU secondary law, not Article 3(1) of Directive 2003/54 but other provisions of that directive, as well as provisions contained in Directives 96/92 and 2001/77, respectively. |
| --- | --- |

45

In the light both of the subject matter of the dispute in the main proceedings thus described and its timeframe, it must be noted that, for the purposes of answering the questions raised by the referring court, it is appropriate to take into consideration, so far as concerns EU secondary law, not Article 3(1) of Directive 2003/54 but other provisions of that directive, as well as provisions contained in Directives 96/92 and 2001/77, respectively.

| 46 | As regards, in the first place, Directives 96/92 and 2003/54 establishing common rules for the internal market in electricity, it is clear, first of all, from Articles 29 to 31 of Directive 2003/54 that that directive did not enter into force until 4 August 2003 and was required to be transposed not later than 1 July 2004, the date on which Directive 96/92 was repealed. The latter, therefore, to which the Flemish Region and the VREG in particular referred in their observations to the Court, and which Essent Belgium, in support of its action in the main proceedings, notably claimed had been infringed, is applicable, ratione temporis, with regard to part of the period at issue in the main proceedings. |
| --- | --- |

46

As regards, in the first place, Directives 96/92 and 2003/54 establishing common rules for the internal market in electricity, it is clear, first of all, from Articles 29 to 31 of Directive 2003/54 that that directive did not enter into force until 4 August 2003 and was required to be transposed not later than 1 July 2004, the date on which Directive 96/92 was repealed. The latter, therefore, to which the Flemish Region and the VREG in particular referred in their observations to the Court, and which Essent Belgium, in support of its action in the main proceedings, notably claimed had been infringed, is applicable, ratione temporis, with regard to part of the period at issue in the main proceedings.

ratione temporis

| 47 | Secondly, and from an aspect ratione materiae, it should be noted, in the light of the subject matter of the dispute in the main proceedings outlined in paragraph 44 of the present judgment, that, although the referring court refers in its third question to Article 3(1) of Directive 2003/54, which prohibits any discrimination as regards either rights or obligations of electricity undertakings, that directive includes a provision, Article 20(1), which deals more specifically with the obligation of Member States to ensure that there is no discrimination in relation to access to distribution systems and to the conditions, in particular the tariff conditions, governing such access. It is thus appropriate, in the context of the present case, to take the latter provision into consideration. |
| --- | --- |

47

Secondly, and from an aspect ratione materiae, it should be noted, in the light of the subject matter of the dispute in the main proceedings outlined in paragraph 44 of the present judgment, that, although the referring court refers in its third question to Article 3(1) of Directive 2003/54, which prohibits any discrimination as regards either rights or obligations of electricity undertakings, that directive includes a provision, Article 20(1), which deals more specifically with the obligation of Member States to ensure that there is no discrimination in relation to access to distribution systems and to the conditions, in particular the tariff conditions, governing such access. It is thus appropriate, in the context of the present case, to take the latter provision into consideration.

ratione materiae

| 48 | As regards Directive 96/92, it is, for similar reasons, appropriate to take into consideration not Article 3(1) thereof, the content of which essentially corresponds to that of Article 3(1) of Directive 2003/54, but rather Article 16, which also deals with the conditions for non-discriminatory access to distribution systems. |
| --- | --- |

48

As regards Directive 96/92, it is, for similar reasons, appropriate to take into consideration not Article 3(1) thereof, the content of which essentially corresponds to that of Article 3(1) of Directive 2003/54, but rather Article 16, which also deals with the conditions for non-discriminatory access to distribution systems.

| 49 | Furthermore, given that distribution system operators in Flanders are required, under the regional legislation at issue in the main proceedings, to distribute free of charge green electricity fed directly into those systems or into the distribution systems in Belgium, regard must also be had to Article 3(2) and (8) of Directive 2003/54 concerning the public service obligations which the Member States can impose on undertakings in the electricity sector and which relate, in particular, to environmental protection, including climate protection. The same applies to the corresponding provisions in Article 3(2) and (3) of Directive 96/92. |
| --- | --- |

49

Furthermore, given that distribution system operators in Flanders are required, under the regional legislation at issue in the main proceedings, to distribute free of charge green electricity fed directly into those systems or into the distribution systems in Belgium, regard must also be had to Article 3(2) and (8) of Directive 2003/54 concerning the public service obligations which the Member States can impose on undertakings in the electricity sector and which relate, in particular, to environmental protection, including climate protection. The same applies to the corresponding provisions in Article 3(2) and (3) of Directive 96/92.

| 50 | In the second place, given the subject matter of the dispute in the main proceedings, as outlined in paragraph 44 of the present judgment, it is also important, in view of the objectives of promoting the production of green electricity pursued by the regional legislation at issue in the main proceedings, to take into account Articles 3, 4 and 7 of Directive 2001/77, the purpose of which is precisely to promote an increase in such production in the internal market for electricity. |
| --- | --- |

50

In the second place, given the subject matter of the dispute in the main proceedings, as outlined in paragraph 44 of the present judgment, it is also important, in view of the objectives of promoting the production of green electricity pursued by the regional legislation at issue in the main proceedings, to take into account Articles 3, 4 and 7 of Directive 2001/77, the purpose of which is precisely to promote an increase in such production in the internal market for electricity.

| 51 | In view of all the foregoing, it must be concluded that, by its questions, which it is appropriate to examine together, the referring court asks, in essence, whether the provisions of Articles 12 EC, 28 EC and 30 EC, and of Article 3(2) and (8) and Article 20(1) of Directive 2003/54, Article 3(2) and (3) and Article 16 of Directive 96/92 and Articles 3, 4 and 7 of Directive 2001/77 must be interpreted as precluding legislation such as the regional legislation at issue in the main proceedings which imposes a scheme for the free distribution of green electricity through the distribution systems in the region concerned, while limiting the benefit of that scheme, in the case of the first piece of legislation, solely to green electricity fed directly into those distribution systems by the generating installations and, in the case of the second piece of legislation, solely to green electricity fed directly by such installations into the distribution systems in the Member State to which that region belongs, thereby excluding from that benefit green electricity imported from other Member States. |
| --- | --- |

51

In view of all the foregoing, it must be concluded that, by its questions, which it is appropriate to examine together, the referring court asks, in essence, whether the provisions of Articles 12 EC, 28 EC and 30 EC, and of Article 3(2) and (8) and Article 20(1) of Directive 2003/54, Article 3(2) and (3) and Article 16 of Directive 96/92 and Articles 3, 4 and 7 of Directive 2001/77 must be interpreted as precluding legislation such as the regional legislation at issue in the main proceedings which imposes a scheme for the free distribution of green electricity through the distribution systems in the region concerned, while limiting the benefit of that scheme, in the case of the first piece of legislation, solely to green electricity fed directly into those distribution systems by the generating installations and, in the case of the second piece of legislation, solely to green electricity fed directly by such installations into the distribution systems in the Member State to which that region belongs, thereby excluding from that benefit green electricity imported from other Member States.

Directive 2001/77

| 52 | The regional legislation at issue in the main proceedings, which is designed, through the establishment of a scheme for the free distribution of green electricity, to promote the production of such electricity, must be considered, first of all, in the light of the provisions of Directive 2001/77. |
| --- | --- |

52

The regional legislation at issue in the main proceedings, which is designed, through the establishment of a scheme for the free distribution of green electricity, to promote the production of such electricity, must be considered, first of all, in the light of the provisions of Directive 2001/77.

| 53 | As is apparent from Articles 1, 3, 4 and 7 of that directive, the purpose of the directive is specifically to promote an increase in the contribution of renewable energy sources to electricity production in the internal market for electricity and, on that basis, it includes provisions relating to national support mechanisms for the production of green electricity and to the conditions governing the access of green electricity to the distribution systems. |
| --- | --- |

53

As is apparent from Articles 1, 3, 4 and 7 of that directive, the purpose of the directive is specifically to promote an increase in the contribution of renewable energy sources to electricity production in the internal market for electricity and, on that basis, it includes provisions relating to national support mechanisms for the production of green electricity and to the conditions governing the access of green electricity to the distribution systems.

| 54 | It must be noted in that regard, in the first place, that, according to recitals 1 to 3 of that directive, such promotion of renewable energy sources, which is a high priority for the European Union, is justified in particular because the exploitation of those energy sources contributes to environmental protection and sustainable development, and can also contribute to security and diversification of energy supply and make it possible to meet the Kyoto Protocol targets more quickly (see, to that effect, judgment of 26 September 2013, IBV & Cie, C‐195/12, EU:C:2013:598, paragraph 56). |
| --- | --- |

54

It must be noted in that regard, in the first place, that, according to recitals 1 to 3 of that directive, such promotion of renewable energy sources, which is a high priority for the European Union, is justified in particular because the exploitation of those energy sources contributes to environmental protection and sustainable development, and can also contribute to security and diversification of energy supply and make it possible to meet the Kyoto Protocol targets more quickly (see, to that effect, judgment of 26 September 2013, IBV & Cie, C‐195/12, EU:C:2013:598, paragraph 56).

| 55 | As is apparent from recital 14 of Directive 2001/77, the EU legislature took the view, when adopting the directive, that guaranteeing the proper functioning of the various mechanisms of support for renewable energy sources at the national level operated by Member States is an important means to achieve the aim of that directive, so as to maintain investor confidence until a Community framework is put into operation. |
| --- | --- |

55

As is apparent from recital 14 of Directive 2001/77, the EU legislature took the view, when adopting the directive, that guaranteeing the proper functioning of the various mechanisms of support for renewable energy sources at the national level operated by Member States is an important means to achieve the aim of that directive, so as to maintain investor confidence until a Community framework is put into operation.

| 56 | Article 4(1) of that directive states that such mechanisms are capable of contributing to attaining the objectives set out in Article 6 EC and Article 174(1) EC, the latter listing the objectives of EU policy on the environment (see, to that effect, judgment of 26 September 2013, IBV & Cie, C‐195/12, EU:C:2013:598, paragraphs 59 and 60). |
| --- | --- |

56

Article 4(1) of that directive states that such mechanisms are capable of contributing to attaining the objectives set out in Article 6 EC and Article 174(1) EC, the latter listing the objectives of EU policy on the environment (see, to that effect, judgment of 26 September 2013, IBV & Cie, C‐195/12, EU:C:2013:598, paragraphs 59 and 60).

| 57 | Article 174(1) EC refers to preserving, protecting and improving the quality of the environment, protecting human health, the prudent and rational utilisation of natural resources, and promoting measures at international level to deal with regional or worldwide environmental problems (judgment of 26 September 2013, IBV & Cie, C‐195/12, EU:C:2013:598, paragraph 60). |
| --- | --- |

57

Article 174(1) EC refers to preserving, protecting and improving the quality of the environment, protecting human health, the prudent and rational utilisation of natural resources, and promoting measures at international level to deal with regional or worldwide environmental problems (judgment of 26 September 2013, IBV & Cie, C‐195/12, EU:C:2013:598, paragraph 60).

| 58 | In the second place, as regards the form that mechanisms of support for renewable energy sources at the national level may take, it must be noted that recital 14 of Directive 2001/77 does no more than list the various kinds of measures to which the Member States generally have recourse in that connection, namely, green certificates, investment aid, tax exemptions or reductions, tax refunds and direct price support schemes (judgment of 26 November 2014, Green Network, C‐66/13, EU:C:2014:2399, paragraph 52 and the case-law cited). |
| --- | --- |

58

In the second place, as regards the form that mechanisms of support for renewable energy sources at the national level may take, it must be noted that recital 14 of Directive 2001/77 does no more than list the various kinds of measures to which the Member States generally have recourse in that connection, namely, green certificates, investment aid, tax exemptions or reductions, tax refunds and direct price support schemes (judgment of 26 November 2014, Green Network, C‐66/13, EU:C:2014:2399, paragraph 52 and the case-law cited).

| 59 | Article 4(1) of that directive merely indicates that the national support mechanisms whose adoption is thus encouraged by the EU legislature are intended to enable green electricity producers to receive direct or indirect support. |
| --- | --- |

59

Article 4(1) of that directive merely indicates that the national support mechanisms whose adoption is thus encouraged by the EU legislature are intended to enable green electricity producers to receive direct or indirect support.

| 60 | It follows, in particular, that Directive 2001/77 allows Member States considerable latitude for the purposes of the adoption and implementation of such support schemes for green electricity producers (judgment of 26 November 2014, Green Network, C‐66/13, EU:C:2014:2399, paragraph 54 and the case-law cited). |
| --- | --- |

60

It follows, in particular, that Directive 2001/77 allows Member States considerable latitude for the purposes of the adoption and implementation of such support schemes for green electricity producers (judgment of 26 November 2014, Green Network, C‐66/13, EU:C:2014:2399, paragraph 54 and the case-law cited).

| 61 | In the present case, the free distribution provided for by the regional legislation at issue in the main proceedings constitutes neither an advantage nor direct support to green electricity producers, since that free distribution primarily benefits suppliers and therefore, in principle, the consumer. Free access to the distribution systems could only indirectly therefore, if at all, also prove to be a source of support for those producers and to that extent fall within the scope of Article 4(1) of Directive 2001/77. |
| --- | --- |

61

In the present case, the free distribution provided for by the regional legislation at issue in the main proceedings constitutes neither an advantage nor direct support to green electricity producers, since that free distribution primarily benefits suppliers and therefore, in principle, the consumer. Free access to the distribution systems could only indirectly therefore, if at all, also prove to be a source of support for those producers and to that extent fall within the scope of Article 4(1) of Directive 2001/77.

| 62 | However, it is important also to take into account, in that context, the fact that Article 3(1) and (2) of Directive 2001/77 makes clear that national support mechanisms for producers of electricity as referred to in Article 4 of Directive 2001/77, which are used inter alia to help Member States achieve their respective national indicative targets under Article 3, must in principle lead to an increase in national production of green electricity (see, to that effect, judgment of 26 November 2014, Green Network, C‐66/13, EU:C:2014:2399, paragraphs 56 and 57 and the case-law cited). |
| --- | --- |

62

However, it is important also to take into account, in that context, the fact that Article 3(1) and (2) of Directive 2001/77 makes clear that national support mechanisms for producers of electricity as referred to in Article 4 of Directive 2001/77, which are used inter alia to help Member States achieve their respective national indicative targets under Article 3, must in principle lead to an increase in national production of green electricity (see, to that effect, judgment of 26 November 2014, Green Network, C‐66/13, EU:C:2014:2399, paragraphs 56 and 57 and the case-law cited).

| 63 | Furthermore, and as Article 3(1) of Directive 2001/77 makes clear, such mechanisms must, like all other measures adopted by the Member States in order to achieve those national indicative targets, be in proportion to the objective to be attained. |
| --- | --- |

63

Furthermore, and as Article 3(1) of Directive 2001/77 makes clear, such mechanisms must, like all other measures adopted by the Member States in order to achieve those national indicative targets, be in proportion to the objective to be attained.

| 64 | It must also be borne in mind that it is apparent from the case-law of the Court that the national support schemes for the production of green electricity referred to in Article 4 of Directive 2001/77 must satisfy the requirements arising under Articles 28 EC and 30 EC (in that respect, see, in particular, judgment of 11 September 2014, Essent Belgium, C‐204/12 to C‐208/12, EU:C:2014:2192). |
| --- | --- |

64

It must also be borne in mind that it is apparent from the case-law of the Court that the national support schemes for the production of green electricity referred to in Article 4 of Directive 2001/77 must satisfy the requirements arising under Articles 28 EC and 30 EC (in that respect, see, in particular, judgment of 11 September 2014, Essent Belgium, C‐204/12 to C‐208/12, EU:C:2014:2192).

| 65 | In those circumstances, in so far in particular as the assessment of the regional legislation at issue in the main proceedings in the light of those provisions of the Treaty which will be considered below may require that that legislation be examined from the aspect of the principle of proportionality already mentioned in paragraph 63 of the present judgment, it is appropriate to defer consideration of the requirements likely to arise under that principle to a later stage of the analysis. |
| --- | --- |

65

In those circumstances, in so far in particular as the assessment of the regional legislation at issue in the main proceedings in the light of those provisions of the Treaty which will be considered below may require that that legislation be examined from the aspect of the principle of proportionality already mentioned in paragraph 63 of the present judgment, it is appropriate to defer consideration of the requirements likely to arise under that principle to a later stage of the analysis.

| 66 | In the third place, as regards the provisions of Article 7 of Directive 2001/77, concerning various issues relating to the grid, it must be noted, first, that, contrary to what was claimed in that regard by the Flemish Region and the VREG in their observations, Article 7(3) and the second subparagraph of Article 7(6) are not capable of justifying measures under which distribution is selectively free of charge, such as those provided for by the regional legislation at issue in the main proceedings. |
| --- | --- |

66

In the third place, as regards the provisions of Article 7 of Directive 2001/77, concerning various issues relating to the grid, it must be noted, first, that, contrary to what was claimed in that regard by the Flemish Region and the VREG in their observations, Article 7(3) and the second subparagraph of Article 7(6) are not capable of justifying measures under which distribution is selectively free of charge, such as those provided for by the regional legislation at issue in the main proceedings.

| 67 | Article 7(3) of that directive deals not with the costs of distribution but with the costs associated with technical adaptations, such as the grid connections and grid reinforcements which are necessary in order to integrate new producers of green electricity. As to the second subparagraph of Article 7(6), this merely provides for account to be taken, in fixing the costs of distributing green electricity, of realisable cost benefits resulting from the connection to the network of plants using renewable energy sources. Yet it has been neither established nor even claimed that that is the purpose of the regional legislation at issue in the main proceedings, which provides, purely and simply, for the free distribution of green electricity in order to promote growth in the production of such electricity. |
| --- | --- |

67

Article 7(3) of that directive deals not with the costs of distribution but with the costs associated with technical adaptations, such as the grid connections and grid reinforcements which are necessary in order to integrate new producers of green electricity. As to the second subparagraph of Article 7(6), this merely provides for account to be taken, in fixing the costs of distributing green electricity, of realisable cost benefits resulting from the connection to the network of plants using renewable energy sources. Yet it has been neither established nor even claimed that that is the purpose of the regional legislation at issue in the main proceedings, which provides, purely and simply, for the free distribution of green electricity in order to promote growth in the production of such electricity.

| 68 | As regards, secondly, the first subparagraph of Article 7(6) of Directive 2001/77, to which the Advocate General notably referred in points 57, 62 and 74 of his Opinion, it must indeed be noted that that provision requires the Member States to ensure that the charging of distribution fees does not discriminate against green electricity. |
| --- | --- |

68

As regards, secondly, the first subparagraph of Article 7(6) of Directive 2001/77, to which the Advocate General notably referred in points 57, 62 and 74 of his Opinion, it must indeed be noted that that provision requires the Member States to ensure that the charging of distribution fees does not discriminate against green electricity.

| 69 | However, there is no need to determine whether that provision must, in so far as it prohibits discrimination against green electricity, be interpreted as referring also to differences in treatment that might be observed between various forms of green electricity depending, inter alia, on their respective origin, it being appropriate to note instead that Article 16 of Directive 96/92 and Article 20(1) of Directive 2003/54, to be considered below, contain provisions dealing specifically with suppliers’ access to the distribution systems, on terms that are non-discriminatory, in particular, from the aspect of tariffs. Since there is no doubt about the applicability of those provisions in the context of the case in the main proceedings, it will suffice in this case to take those provisions into consideration. |
| --- | --- |

69

However, there is no need to determine whether that provision must, in so far as it prohibits discrimination against green electricity, be interpreted as referring also to differences in treatment that might be observed between various forms of green electricity depending, inter alia, on their respective origin, it being appropriate to note instead that Article 16 of Directive 96/92 and Article 20(1) of Directive 2003/54, to be considered below, contain provisions dealing specifically with suppliers’ access to the distribution systems, on terms that are non-discriminatory, in particular, from the aspect of tariffs. Since there is no doubt about the applicability of those provisions in the context of the case in the main proceedings, it will suffice in this case to take those provisions into consideration.

Directives 96/92 and 2003/54

| 70 | Since the dispute in the main proceedings concerns the distribution fees which Essent Belgium was charged for its use, as supplier, of the distribution systems as referred to in Article 2(6) of Directive 96/92 and Article 2(5) of Directive 2003/54, fees which Essent Belgium claims are discriminatory on the ground that, unlike suppliers marketing green electricity of domestic origin, it is no longer able to benefit from the scheme for the free distribution of green electricity imposed on distributors by the regional legislation at issue in the main proceedings, certain provisions of those directives must also be taken into consideration, as has been noted in paragraphs 47 to 49 of the present judgment. |
| --- | --- |

70

Since the dispute in the main proceedings concerns the distribution fees which Essent Belgium was charged for its use, as supplier, of the distribution systems as referred to in Article 2(6) of Directive 96/92 and Article 2(5) of Directive 2003/54, fees which Essent Belgium claims are discriminatory on the ground that, unlike suppliers marketing green electricity of domestic origin, it is no longer able to benefit from the scheme for the free distribution of green electricity imposed on distributors by the regional legislation at issue in the main proceedings, certain provisions of those directives must also be taken into consideration, as has been noted in paragraphs 47 to 49 of the present judgment.

– Article 16 of Directive 96/92 and Article 20(1) of Directive 2003/54, concerning non-discriminatory access to the distribution systems

| 71 | Article 20(1) of Directive 2003/54 provides, in particular, that Member States are to ensure the implementation of ‘a system of third party access to the transmission and distribution systems ..., applicable to all eligible customers’, and that that system is to be ‘based on published tariffs’ and ‘applied objectively and without discrimination between system users’. |
| --- | --- |

71

Article 20(1) of Directive 2003/54 provides, in particular, that Member States are to ensure the implementation of ‘a system of third party access to the transmission and distribution systems ..., applicable to all eligible customers’, and that that system is to be ‘based on published tariffs’ and ‘applied objectively and without discrimination between system users’.

| 72 | As regards, first, the concept of ‘access to the system’ within the meaning of that provision, the Court has made clear that that includes not the connection which corresponds to physical connection to the system, but the right to use electricity systems (see, to that effect, judgment of 9 October 2008, Sabatauskas and Others, C‐239/07, EU:C:2008:551, paragraph 42). |
| --- | --- |

72

As regards, first, the concept of ‘access to the system’ within the meaning of that provision, the Court has made clear that that includes not the connection which corresponds to physical connection to the system, but the right to use electricity systems (see, to that effect, judgment of 9 October 2008, Sabatauskas and Others, C‐239/07, EU:C:2008:551, paragraph 42).

| 73 | The term ‘access’ is thus linked to the supply of electricity, including the cost of the service. Recitals 2, 6, 13, 15 and 17 of Directive 2003/54 state in particular that such access must be fairly priced and use non-discriminatory tariffs in order to ensure effective market access for all market players (see, to that effect, judgment of 9 October 2008, Sabatauskas and Others, C‐239/07, EU:C:2008:551, paragraph 40). |
| --- | --- |

73

The term ‘access’ is thus linked to the supply of electricity, including the cost of the service. Recitals 2, 6, 13, 15 and 17 of Directive 2003/54 state in particular that such access must be fairly priced and use non-discriminatory tariffs in order to ensure effective market access for all market players (see, to that effect, judgment of 9 October 2008, Sabatauskas and Others, C‐239/07, EU:C:2008:551, paragraph 40).

| 74 | Secondly, as regards the concept of ‘third party’ within the meaning of Article 20(1) of Directive 2003/54, it must be borne in mind that the text of that provision itself explains that term by also using the term ‘system users’, defined in Article 2(18) of the directive as meaning any natural or legal persons supplying to, or being supplied by, a transmission or distribution system (see judgment of 9 October 2008, Sabatauskas and Others, C‐239/07, EU:C:2008:551, paragraph 44). |
| --- | --- |

74

Secondly, as regards the concept of ‘third party’ within the meaning of Article 20(1) of Directive 2003/54, it must be borne in mind that the text of that provision itself explains that term by also using the term ‘system users’, defined in Article 2(18) of the directive as meaning any natural or legal persons supplying to, or being supplied by, a transmission or distribution system (see judgment of 9 October 2008, Sabatauskas and Others, C‐239/07, EU:C:2008:551, paragraph 44).

| 75 | Those users include suppliers of electricity, the Court having stated, inter alia, that, in order for eligible customers to be able, as stated in recital 4 of Directive 2003/54, freely to choose their suppliers, it is necessary that suppliers should have the right to access the distribution systems which carry electricity to customers (see, to that effect, judgment of 9 October 2008, Sabatauskas and Others, C‐239/07, EU:C:2008:551, paragraphs 32, 33 and 43). |
| --- | --- |

75

Those users include suppliers of electricity, the Court having stated, inter alia, that, in order for eligible customers to be able, as stated in recital 4 of Directive 2003/54, freely to choose their suppliers, it is necessary that suppliers should have the right to access the distribution systems which carry electricity to customers (see, to that effect, judgment of 9 October 2008, Sabatauskas and Others, C‐239/07, EU:C:2008:551, paragraphs 32, 33 and 43).

| 76 | Lastly, it must be borne in mind that open third party access to transmission and distribution systems established in particular by Article 20 of Directive 2003/54 constitutes one of the essential measures which the Member States are required to implement in order to bring about completion of the internal market in electricity (see judgment of 9 October 2008, Sabatauskas and Others, C‐239/07, EU:C:2008:551, paragraph 33 and the case-law cited). |
| --- | --- |

76

Lastly, it must be borne in mind that open third party access to transmission and distribution systems established in particular by Article 20 of Directive 2003/54 constitutes one of the essential measures which the Member States are required to implement in order to bring about completion of the internal market in electricity (see judgment of 9 October 2008, Sabatauskas and Others, C‐239/07, EU:C:2008:551, paragraph 33 and the case-law cited).

| 77 | As regards Directive 96/92, it will be recalled that, as provided by Article 16 thereof, although, for the organisation of access to the electricity distribution system, Member States remained free to choose between the ‘access to the system’ procedure or the single buyer procedure, referred to respectively in Articles 17 and 18 of that directive, both procedures had to be operated in accordance with objective, transparent and non-discriminatory criteria. |
| --- | --- |

77

As regards Directive 96/92, it will be recalled that, as provided by Article 16 thereof, although, for the organisation of access to the electricity distribution system, Member States remained free to choose between the ‘access to the system’ procedure or the single buyer procedure, referred to respectively in Articles 17 and 18 of that directive, both procedures had to be operated in accordance with objective, transparent and non-discriminatory criteria.

| 78 | Article 16 thus prohibits Member States from organising access to the distribution system in a discriminatory manner, this prohibition relating generally to all discrimination, including, therefore, any discrimination in terms of the cost of using the distribution system (see, to that effect, judgments of 14 April 2005, AEM and AEM Torino, C‐128/03 and C‐129/03, EU:C:2005:224, paragraph 59, and of 7 June 2005, VEMW and Others, C‐17/03, EU:C:2005:362, paragraphs 36, 45 and 46). |
| --- | --- |

78

Article 16 thus prohibits Member States from organising access to the distribution system in a discriminatory manner, this prohibition relating generally to all discrimination, including, therefore, any discrimination in terms of the cost of using the distribution system (see, to that effect, judgments of 14 April 2005, AEM and AEM Torino, C‐128/03 and C‐129/03, EU:C:2005:224, paragraph 59, and of 7 June 2005, VEMW and Others, C‐17/03, EU:C:2005:362, paragraphs 36, 45 and 46).

| 79 | As to whether regional legislation such as that at issue in the main proceedings entails discrimination contrary to Article 16 of Directive 96/92 and Article 20(1) of Directive 2003/54, it must be noted that those provisions which require that the action of the State in creating access to the system should not be discriminatory are specific expressions of the general principle of equality (see, with regard to Article 16 of Directive 96/92, judgment of 7 June 2005, VEMW and Others, C‐17/03, EU:C:2005:362, paragraph 47 and the case-law cited). |
| --- | --- |

79

As to whether regional legislation such as that at issue in the main proceedings entails discrimination contrary to Article 16 of Directive 96/92 and Article 20(1) of Directive 2003/54, it must be noted that those provisions which require that the action of the State in creating access to the system should not be discriminatory are specific expressions of the general principle of equality (see, with regard to Article 16 of Directive 96/92, judgment of 7 June 2005, VEMW and Others, C‐17/03, EU:C:2005:362, paragraph 47 and the case-law cited).

| 80 | In accordance with settled case-law, the prohibition of discrimination requires that comparable situations are not treated differently unless such difference in treatment is objectively justified (see, in particular, judgment of 7 June 2005, VEMW and Others, C‐17/03, EU:C:2005:362, paragraph 48). |
| --- | --- |

80

In accordance with settled case-law, the prohibition of discrimination requires that comparable situations are not treated differently unless such difference in treatment is objectively justified (see, in particular, judgment of 7 June 2005, VEMW and Others, C‐17/03, EU:C:2005:362, paragraph 48).

| 81 | On that last point, it must be borne in mind that a difference in treatment is justified if it is based on an objective and reasonable criterion, that is, if the difference relates to a legally permitted aim pursued by the legislation in question, and it is proportionate to the aim pursued by the treatment (see, in particular, judgment of 16 December 2008, Arcelor Atlantique and Lorraine and Others, C‐127/07, EU:C:2008:728, paragraph 47 and the case-law cited). |
| --- | --- |

81

On that last point, it must be borne in mind that a difference in treatment is justified if it is based on an objective and reasonable criterion, that is, if the difference relates to a legally permitted aim pursued by the legislation in question, and it is proportionate to the aim pursued by the treatment (see, in particular, judgment of 16 December 2008, Arcelor Atlantique and Lorraine and Others, C‐127/07, EU:C:2008:728, paragraph 47 and the case-law cited).

| 82 | In the present case, although the regional legislation at issue in the main proceedings applies in the same way to all electricity suppliers using a distribution system that is located in the region concerned, it nevertheless does not lead to any exemption from the fees for the distribution of electricity delivered by those suppliers except where that electricity is green electricity fed directly into such a system or into a distribution system located in the Member State to which that region belongs, and therefore results in electricity suppliers being treated differently, depending in particular, as Essent Belgium complains in the main proceedings, on the origin of the green electricity being marketed by those suppliers. |
| --- | --- |

82

In the present case, although the regional legislation at issue in the main proceedings applies in the same way to all electricity suppliers using a distribution system that is located in the region concerned, it nevertheless does not lead to any exemption from the fees for the distribution of electricity delivered by those suppliers except where that electricity is green electricity fed directly into such a system or into a distribution system located in the Member State to which that region belongs, and therefore results in electricity suppliers being treated differently, depending in particular, as Essent Belgium complains in the main proceedings, on the origin of the green electricity being marketed by those suppliers.

| 83 | As regards any possible justification for such a difference in treatment, it must be noted at the outset that, contrary to what is contended by the Flemish Region and the VREG, Article 11(3) of Directive 96/92 or Article 14(4) of Directive 2003/54 cannot in themselves be invoked in order to justify it. Those provisions do not deal with the charging of distribution costs; they merely provide that the system operators may be required by a Member State to give priority, when dispatching generating installations, inter alia to generating installations producing green electricity. |
| --- | --- |

83

As regards any possible justification for such a difference in treatment, it must be noted at the outset that, contrary to what is contended by the Flemish Region and the VREG, Article 11(3) of Directive 96/92 or Article 14(4) of Directive 2003/54 cannot in themselves be invoked in order to justify it. Those provisions do not deal with the charging of distribution costs; they merely provide that the system operators may be required by a Member State to give priority, when dispatching generating installations, inter alia to generating installations producing green electricity.

| 84 | That being the case, the legitimacy of the objective of the regional legislation at issue in the main proceedings, namely promoting the production of green electricity, is not in doubt. It should be noted in particular that the use of renewable energy sources for the production of electricity is useful for the protection of the environment inasmuch as it contributes to the reduction in greenhouse gas emissions, which are amongst the main causes of climate change that the European Union and its Member States have pledged to combat (see judgment of 11 September 2014, Essent Belgium, C‐204/12 to C‐208/12, EU:C:2014:2192, paragraph 91 and the case-law cited). |
| --- | --- |

84

That being the case, the legitimacy of the objective of the regional legislation at issue in the main proceedings, namely promoting the production of green electricity, is not in doubt. It should be noted in particular that the use of renewable energy sources for the production of electricity is useful for the protection of the environment inasmuch as it contributes to the reduction in greenhouse gas emissions, which are amongst the main causes of climate change that the European Union and its Member States have pledged to combat (see judgment of 11 September 2014, Essent Belgium, C‐204/12 to C‐208/12, EU:C:2014:2192, paragraph 91 and the case-law cited).

| 85 | The question which arises therefore is whether that objective is capable of justifying the difference in treatment referred to above, that is to say, in essence, whether it is based on an objective and reasonable criterion that is proportionate to the aim pursued. |
| --- | --- |

85

The question which arises therefore is whether that objective is capable of justifying the difference in treatment referred to above, that is to say, in essence, whether it is based on an objective and reasonable criterion that is proportionate to the aim pursued.

| 86 | However, in view, on the one hand, of the many provisions of EU law and, therefore, parameters within which the proportionality of the regional legislation at issue in the main proceedings will, as has already been noted in paragraph 65 of the present judgment, have to be examined, and, on the other, of the need to take account also, in that context, of other provisions of Directives 96/92 and 2003/54, to be considered below, that examination of proportionality will have to be deferred to a later stage of the analysis. |
| --- | --- |

86

However, in view, on the one hand, of the many provisions of EU law and, therefore, parameters within which the proportionality of the regional legislation at issue in the main proceedings will, as has already been noted in paragraph 65 of the present judgment, have to be examined, and, on the other, of the need to take account also, in that context, of other provisions of Directives 96/92 and 2003/54, to be considered below, that examination of proportionality will have to be deferred to a later stage of the analysis.

– Article 3(2) and (3) of Directive 96/92 and Article 3(2) and (8) of Directive 2003/54, concerning public service obligations

| 87 | Both Article 3(2) of Directive 96/92 and Article 3(2) of Directive 2003/54 authorise Member States to impose on undertakings in the electricity sector public service obligations relating, inter alia, to environmental protection, including climate protection. |
| --- | --- |

87

Both Article 3(2) of Directive 96/92 and Article 3(2) of Directive 2003/54 authorise Member States to impose on undertakings in the electricity sector public service obligations relating, inter alia, to environmental protection, including climate protection.

| 88 | As the Commission has submitted, that appears to be the case with regard to the regional legislation at issue in the main proceedings, in that it imposes on all operators of distribution systems in Flanders an obligation to distribute free of charge green electricity that is fed by producers directly into those systems or into distribution systems in Belgium, and is thus designed to promote growth in the production of green electricity. |
| --- | --- |

88

As the Commission has submitted, that appears to be the case with regard to the regional legislation at issue in the main proceedings, in that it imposes on all operators of distribution systems in Flanders an obligation to distribute free of charge green electricity that is fed by producers directly into those systems or into distribution systems in Belgium, and is thus designed to promote growth in the production of green electricity.

| 89 | However, it must also be emphasised in that regard, first, that, as is apparent from the provisions mentioned in paragraph 87 of the present judgment, the public service obligations established under those provisions must not be discriminatory. Article 3(2) of Directive 2003/54 adds, moreover, that those obligations must guarantee equality of access for EU electricity companies to national consumers. |
| --- | --- |

89

However, it must also be emphasised in that regard, first, that, as is apparent from the provisions mentioned in paragraph 87 of the present judgment, the public service obligations established under those provisions must not be discriminatory. Article 3(2) of Directive 2003/54 adds, moreover, that those obligations must guarantee equality of access for EU electricity companies to national consumers.

| 90 | While it appears that all distribution system operators are subject to the regional legislation at issue in the main proceedings, so that no difference in treatment between them can apparently be observed, it has already been pointed out in paragraph 82 of the present judgment that that legislation nevertheless does not lead to any exemption from the fees for the distribution of electricity delivered by suppliers except where that electricity is green electricity fed directly into a system that is in the region concerned or into a distribution system in the Member State to which that region belongs, and therefore results in electricity suppliers being treated differently, depending in particular on the origin of the green electricity being marketed by them. That difference in treatment is therefore liable in particular to affect equality of access for EU electricity companies to national consumers within the meaning of Article 3(2) of Directive 2003/54. |
| --- | --- |

90

While it appears that all distribution system operators are subject to the regional legislation at issue in the main proceedings, so that no difference in treatment between them can apparently be observed, it has already been pointed out in paragraph 82 of the present judgment that that legislation nevertheless does not lead to any exemption from the fees for the distribution of electricity delivered by suppliers except where that electricity is green electricity fed directly into a system that is in the region concerned or into a distribution system in the Member State to which that region belongs, and therefore results in electricity suppliers being treated differently, depending in particular on the origin of the green electricity being marketed by them. That difference in treatment is therefore liable in particular to affect equality of access for EU electricity companies to national consumers within the meaning of Article 3(2) of Directive 2003/54.

| 91 | It is, moreover, admittedly apparent from Article 3(8) of Directive 2003/54 that, unlike the rule which applied under Directive 96/92 with regard to Article 3(3) and Article 16 thereof (see, in that regard, judgment of 7 June 2005, VEMW and Others, C‐17/03, EU:C:2005:362, paragraph 65), Member States are permitted not to apply the provisions of Article 20 of Directive 2003/54 providing for non-discriminatory third party access to the transmission and distribution systems in so far as the application of Article 20 would obstruct the performance, in law or in fact, of the public service obligations thus imposed on electricity undertakings. However, the Court has already held that, in order to be able to derogate in this way from the requirements of Article 20 of Directive 2003/54, Member States must, inter alia, ascertain whether the performance by the system operators of their public service obligations cannot be achieved by other means which do not impact adversely on the right of access to the systems, which is one of the rights enshrined in Directive 2003/54 (judgment of 22 May 2008, citiworks, C‐439/06, EU:C:2008:298, paragraph 60). |
| --- | --- |

91

It is, moreover, admittedly apparent from Article 3(8) of Directive 2003/54 that, unlike the rule which applied under Directive 96/92 with regard to Article 3(3) and Article 16 thereof (see, in that regard, judgment of 7 June 2005, VEMW and Others, C‐17/03, EU:C:2005:362, paragraph 65), Member States are permitted not to apply the provisions of Article 20 of Directive 2003/54 providing for non-discriminatory third party access to the transmission and distribution systems in so far as the application of Article 20 would obstruct the performance, in law or in fact, of the public service obligations thus imposed on electricity undertakings. However, the Court has already held that, in order to be able to derogate in this way from the requirements of Article 20 of Directive 2003/54, Member States must, inter alia, ascertain whether the performance by the system operators of their public service obligations cannot be achieved by other means which do not impact adversely on the right of access to the systems, which is one of the rights enshrined in Directive 2003/54 (judgment of 22 May 2008, citiworks, C‐439/06, EU:C:2008:298, paragraph 60).

| 92 | Secondly, it must also be noted that the public service obligations established under Directives 96/92 and 2003/54 must be so established, as is apparent from Article 3(2) of each of those directives, having full regard to the relevant provisions of the Treaty, which include not only Article 90 of the EC Treaty (now Article 86 EC), to which Article 3(2) of each of those directives refers, but also Articles 30 of the EC Treaty (now Article 28 EC) and 36 of the EC Treaty (now, after amendment, Article 30 EC), enshrining the free movement of goods, as is apparent in particular from recitals 3, 15 and 19 of Directive 96/92. |
| --- | --- |

92

Secondly, it must also be noted that the public service obligations established under Directives 96/92 and 2003/54 must be so established, as is apparent from Article 3(2) of each of those directives, having full regard to the relevant provisions of the Treaty, which include not only Article 90 of the EC Treaty (now Article 86 EC), to which Article 3(2) of each of those directives refers, but also Articles 30 of the EC Treaty (now Article 28 EC) and 36 of the EC Treaty (now, after amendment, Article 30 EC), enshrining the free movement of goods, as is apparent in particular from recitals 3, 15 and 19 of Directive 96/92.

| 93 | As regards Article 86 EC, the Court has already held that, although Article 3(2) of Directive 2003/54, read in conjunction with that provision of the Treaty, allows obligations to be imposed on undertakings responsible for operating a public service as regards, inter alia, setting prices for the supply of electricity, national legislation imposing such obligations must be capable of securing the objective which it pursues and must not go beyond what is necessary in order to attain it, so as to be consistent with the principle of proportionality (see judgment of 21 December 2011, Enel Produzione, C‐242/10, EU:C:2011:861, paragraph 55). |
| --- | --- |

93

As regards Article 86 EC, the Court has already held that, although Article 3(2) of Directive 2003/54, read in conjunction with that provision of the Treaty, allows obligations to be imposed on undertakings responsible for operating a public service as regards, inter alia, setting prices for the supply of electricity, national legislation imposing such obligations must be capable of securing the objective which it pursues and must not go beyond what is necessary in order to attain it, so as to be consistent with the principle of proportionality (see judgment of 21 December 2011, Enel Produzione, C‐242/10, EU:C:2011:861, paragraph 55).

| 94 | As regards the examination of the proportionality of the regional measures at issue in the main proceedings, it has already been noted in paragraphs 65 and 86 of the present judgment that, in view of the various provisions of EU law in the light of which that examination will have to be conducted in the present case, that examination must be temporarily deferred. |
| --- | --- |

94

As regards the examination of the proportionality of the regional measures at issue in the main proceedings, it has already been noted in paragraphs 65 and 86 of the present judgment that, in view of the various provisions of EU law in the light of which that examination will have to be conducted in the present case, that examination must be temporarily deferred.

| 95 | As to Articles 28 EC and 30 EC, with which the public service obligations established under Article 3(2) of each of Directives 96/92 and 2003/54 must also comply, these will be considered below. |
| --- | --- |

95

As to Articles 28 EC and 30 EC, with which the public service obligations established under Article 3(2) of each of Directives 96/92 and 2003/54 must also comply, these will be considered below.

Articles 28 EC and 30 EC

| 96 | As is apparent from the Court’s settled case-law, Article 28 EC, in prohibiting all measures having equivalent effect to quantitative restrictions on imports, covers any national measure which is capable of hindering, directly or indirectly, actually or potentially, intra-Community trade (see, in particular, judgments of 11 July 1974, Dassonville, 8/74, EU:C:1974:82, paragraph 5; of 1 July 2014, Ålands Vindkraft, C‐573/12, EU:C:2014:2037, paragraph 66; and of 11 September 2014, Essent Belgium, C‐204/12 to C‐208/12, EU:C:2014:2192, paragraph 77). |
| --- | --- |

96

As is apparent from the Court’s settled case-law, Article 28 EC, in prohibiting all measures having equivalent effect to quantitative restrictions on imports, covers any national measure which is capable of hindering, directly or indirectly, actually or potentially, intra-Community trade (see, in particular, judgments of 11 July 1974, Dassonville, 8/74, EU:C:1974:82, paragraph 5; of 1 July 2014, Ålands Vindkraft, C‐573/12, EU:C:2014:2037, paragraph 66; and of 11 September 2014, Essent Belgium, C‐204/12 to C‐208/12, EU:C:2014:2192, paragraph 77).

| 97 | It must be noted that legislation such as the regional legislation at issue in the main proceedings is capable of hindering — at least indirectly and potentially — imports of electricity, especially green electricity, from other Member States. |
| --- | --- |

97

It must be noted that legislation such as the regional legislation at issue in the main proceedings is capable of hindering — at least indirectly and potentially — imports of electricity, especially green electricity, from other Member States.

| 98 | Encouraging, as it does, operators, particularly electricity suppliers, to buy green electricity produced in the particular region or in the Member State to which that region belongs, owing to the economic advantage arising from the fact that the distribution of that electricity is free of charge, such legislation must be regarded as a measure having an effect equivalent to a quantitative restriction as referred to in Article 28 EC (see, by analogy, judgment of 5 June 1986, Commission v Italy, 103/84, EU:C:1986:229, paragraphs 2 and 24 and the case-law cited). |
| --- | --- |

98

Encouraging, as it does, operators, particularly electricity suppliers, to buy green electricity produced in the particular region or in the Member State to which that region belongs, owing to the economic advantage arising from the fact that the distribution of that electricity is free of charge, such legislation must be regarded as a measure having an effect equivalent to a quantitative restriction as referred to in Article 28 EC (see, by analogy, judgment of 5 June 1986, Commission v Italy, 103/84, EU:C:1986:229, paragraphs 2 and 24 and the case-law cited).

| 99 | As regards the assertion by the Flemish Region and the VREG that any possible hindrance to the free movement of electricity remains of relatively limited significance in the present case, notably in so far as, at the material time, the proportion of green electricity produced in Flanders was still quite small, suffice it to note that even if that did prove to be so, it would still be the case that a national measure does not fall outside the scope of the prohibition laid down in Article 28 EC merely because the hindrance to imports which it creates is slight and because it is possible for imported products to be marketed in other ways (see, in particular, judgment of 5 June 1986, Commission v Italy, 103/84, EU:C:1986:229, paragraph 18 and the case-law cited). |
| --- | --- |

99

As regards the assertion by the Flemish Region and the VREG that any possible hindrance to the free movement of electricity remains of relatively limited significance in the present case, notably in so far as, at the material time, the proportion of green electricity produced in Flanders was still quite small, suffice it to note that even if that did prove to be so, it would still be the case that a national measure does not fall outside the scope of the prohibition laid down in Article 28 EC merely because the hindrance to imports which it creates is slight and because it is possible for imported products to be marketed in other ways (see, in particular, judgment of 5 June 1986, Commission v Italy, 103/84, EU:C:1986:229, paragraph 18 and the case-law cited).

| 100 | Moreover, the Court has consistently held that national legislation which constitutes a measure having equivalent effect to quantitative restrictions may nonetheless be justified on one of the public interest grounds listed in Article 30 EC or by overriding requirements. In either case, the national provision must, in accordance with the principle of proportionality, be appropriate for ensuring attainment of the objective pursued and must not go beyond what is necessary in order to attain that objective (see, in particular, judgment of 1 July 2014, Ålands Vindkraft, C‐573/12, EU:C:2014:2037, paragraph 76 and the case-law cited). |
| --- | --- |

100

Moreover, the Court has consistently held that national legislation which constitutes a measure having equivalent effect to quantitative restrictions may nonetheless be justified on one of the public interest grounds listed in Article 30 EC or by overriding requirements. In either case, the national provision must, in accordance with the principle of proportionality, be appropriate for ensuring attainment of the objective pursued and must not go beyond what is necessary in order to attain that objective (see, in particular, judgment of 1 July 2014, Ålands Vindkraft, C‐573/12, EU:C:2014:2037, paragraph 76 and the case-law cited).

| 101 | National measures that are capable of hindering intra-Community trade may thus, inter alia, be justified by overriding requirements relating to protection of the environment and notably by the concern to promote an increase in the use of renewable energy sources for the production of electricity, which, as has already been pointed out in paragraph 84 of the present judgment, is useful for such protection and which is also designed to protect the health and life of humans, animals and plants, which are among the public interest grounds listed in Article 30 EC (see, to that effect, in particular, judgment of 1 July 2014, Ålands Vindkraft, C‐573/12, EU:C:2014:2037, paragraphs 77 to 80 and the case-law cited). |
| --- | --- |

101

National measures that are capable of hindering intra-Community trade may thus, inter alia, be justified by overriding requirements relating to protection of the environment and notably by the concern to promote an increase in the use of renewable energy sources for the production of electricity, which, as has already been pointed out in paragraph 84 of the present judgment, is useful for such protection and which is also designed to protect the health and life of humans, animals and plants, which are among the public interest grounds listed in Article 30 EC (see, to that effect, in particular, judgment of 1 July 2014, Ålands Vindkraft, C‐573/12, EU:C:2014:2037, paragraphs 77 to 80 and the case-law cited).

| 102 | In those circumstances, it remains to be determined whether regional legislation such as that at issue in the main proceedings is consistent with the principle of proportionality. |
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102

In those circumstances, it remains to be determined whether regional legislation such as that at issue in the main proceedings is consistent with the principle of proportionality.

The principle of proportionality

| 103 | As is evident from paragraphs 63, 85, 93 and 100 of the present judgment, the conformity of regional legislation such as that at issue in the main proceedings with the provisions of Article 3(1) and Article 4 of Directive 2001/77, Article 3(2) and Article 16 of Directive 96/92, Article 3(2) and (8) and Article 20(1) of Directive 2003/54 and Articles 28 EC and 30 EC depends in the present case on whether that legislation satisfies the requirements arising under the principle of proportionality. |
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103

As is evident from paragraphs 63, 85, 93 and 100 of the present judgment, the conformity of regional legislation such as that at issue in the main proceedings with the provisions of Article 3(1) and Article 4 of Directive 2001/77, Article 3(2) and Article 16 of Directive 96/92, Article 3(2) and (8) and Article 20(1) of Directive 2003/54 and Articles 28 EC and 30 EC depends in the present case on whether that legislation satisfies the requirements arising under the principle of proportionality.

| 104 | As has been noted in paragraph 100 of the present judgment, for that to be the case, the regional legislation must be appropriate for ensuring attainment of the objective pursued — the lawfulness of which has, in this instance, already been established in paragraphs 54, 84 and 101 of the present judgment — namely, the promotion of an increase in the production of green electricity, and must, at the same time, be necessary for that purpose. |
| --- | --- |

104

As has been noted in paragraph 100 of the present judgment, for that to be the case, the regional legislation must be appropriate for ensuring attainment of the objective pursued — the lawfulness of which has, in this instance, already been established in paragraphs 54, 84 and 101 of the present judgment — namely, the promotion of an increase in the production of green electricity, and must, at the same time, be necessary for that purpose.

| 105 | It must first of all be pointed out in that regard that, as the Court has already stated, the fact that a national support scheme is designed to favour directly the production of green electricity, rather than solely its consumption, can be explained, in particular, by the fact that the green nature of the electricity relates only to its method of production and that, accordingly, it is primarily at the production stage that the environmental objectives in terms of the reduction of greenhouse gases can actually be pursued (see judgment of 11 September 2014, Essent Belgium, C‐204/12 to C‐208/12, EU:C:2014:2192, paragraph 98 and the case-law cited). |
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105

It must first of all be pointed out in that regard that, as the Court has already stated, the fact that a national support scheme is designed to favour directly the production of green electricity, rather than solely its consumption, can be explained, in particular, by the fact that the green nature of the electricity relates only to its method of production and that, accordingly, it is primarily at the production stage that the environmental objectives in terms of the reduction of greenhouse gases can actually be pursued (see judgment of 11 September 2014, Essent Belgium, C‐204/12 to C‐208/12, EU:C:2014:2192, paragraph 98 and the case-law cited).

| 106 | Similarly, it should be pointed out that, as has already been noted in paragraph 62 of the present judgment, it follows from a reading of Article 3(1) and (2) in conjunction with Article 4 of Directive 2001/77 that national support mechanisms for producers of electricity as referred to in the latter article, which are used inter alia to help Member States achieve the respective national indicative targets imposed on them by that directive, must in principle lead to an increase in national production of green electricity (see judgment of 26 November 2014, Green Network, C‐66/13, EU:C:2014:2399, paragraph 57 and the case-law cited). |
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106

Similarly, it should be pointed out that, as has already been noted in paragraph 62 of the present judgment, it follows from a reading of Article 3(1) and (2) in conjunction with Article 4 of Directive 2001/77 that national support mechanisms for producers of electricity as referred to in the latter article, which are used inter alia to help Member States achieve the respective national indicative targets imposed on them by that directive, must in principle lead to an increase in national production of green electricity (see judgment of 26 November 2014, Green Network, C‐66/13, EU:C:2014:2399, paragraph 57 and the case-law cited).

| 107 | That circumstance, combined in particular with the fact that EU law has not harmonised the national support schemes for green electricity, means that it is possible in principle for Member States to limit access to such schemes to green electricity production located in their territory (see, by analogy, in relation to Directive 2009/28, judgment of 1 July 2014, Ålands Vindkraft, C‐573/12, EU:C:2014:2037, paragraphs 94 and 97 to 99). |
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107

That circumstance, combined in particular with the fact that EU law has not harmonised the national support schemes for green electricity, means that it is possible in principle for Member States to limit access to such schemes to green electricity production located in their territory (see, by analogy, in relation to Directive 2009/28, judgment of 1 July 2014, Ålands Vindkraft, C‐573/12, EU:C:2014:2037, paragraphs 94 and 97 to 99).

| 108 | As regards the ability of national support schemes for the production of green electricity to achieve the objective of increasing such production, the Court has notably held that an obligation to purchase green electricity at minimum prices was capable of conferring a certain economic advantage on producers of that type of electricity, since it guarantees them, with no risk, higher profits than they would make in its absence (judgment of 13 March 2001, PreussenElektra, C‐379/98, EU:C:2001:160, paragraph 54). |
| --- | --- |

108

As regards the ability of national support schemes for the production of green electricity to achieve the objective of increasing such production, the Court has notably held that an obligation to purchase green electricity at minimum prices was capable of conferring a certain economic advantage on producers of that type of electricity, since it guarantees them, with no risk, higher profits than they would make in its absence (judgment of 13 March 2001, PreussenElektra, C‐379/98, EU:C:2001:160, paragraph 54).

| 109 | Similarly, commenting on national support schemes that use the mechanism of what are known as ‘green certificates’, the Court observed that the obligation for electricity suppliers to obtain a quota of such certificates from green electricity producers was designed in particular to guarantee those producers a demand for the certificates they have been awarded and in that way to facilitate the sale of the green energy that they produce at a price higher than the market price for conventional energy. The Court also pointed out in that regard that the effect of that scheme in terms of offering an incentive for electricity producers in general to increase their production of green electricity did not appear to be open to doubt; nor, consequently, did it appear possible to call in question the ability of that scheme to attain the legitimate objective pursued in the circumstances of the case (see judgment of 11 September 2014, Essent Belgium, C‐204/12 to C‐208/12, EU:C:2014:2192, paragraphs 109 and 110 and the case-law cited). |
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109

Similarly, commenting on national support schemes that use the mechanism of what are known as ‘green certificates’, the Court observed that the obligation for electricity suppliers to obtain a quota of such certificates from green electricity producers was designed in particular to guarantee those producers a demand for the certificates they have been awarded and in that way to facilitate the sale of the green energy that they produce at a price higher than the market price for conventional energy. The Court also pointed out in that regard that the effect of that scheme in terms of offering an incentive for electricity producers in general to increase their production of green electricity did not appear to be open to doubt; nor, consequently, did it appear possible to call in question the ability of that scheme to attain the legitimate objective pursued in the circumstances of the case (see judgment of 11 September 2014, Essent Belgium, C‐204/12 to C‐208/12, EU:C:2014:2192, paragraphs 109 and 110 and the case-law cited).

| 110 | Such green energy support schemes, whose production costs seem to be still quite high as compared with the costs of electricity produced from non-renewable energy sources, are inherently designed in particular to foster, from a long-term perspective, investment in new installations, by giving producers certain guarantees about the future marketing of their green electricity (see judgment of 1 July 2014, Ålands Vindkraft, C‐573/12, EU:C:2014:2037, paragraph 103). |
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110

Such green energy support schemes, whose production costs seem to be still quite high as compared with the costs of electricity produced from non-renewable energy sources, are inherently designed in particular to foster, from a long-term perspective, investment in new installations, by giving producers certain guarantees about the future marketing of their green electricity (see judgment of 1 July 2014, Ålands Vindkraft, C‐573/12, EU:C:2014:2037, paragraph 103).

| 111 | In the present case, with regard to the scheme for the free distribution of green electricity established by the regional legislation at issue in the main proceedings, it must be noted at the outset that, unlike the national support schemes for green electricity in the form of purchase obligations or green certificates referred to in the preceding paragraphs of the present judgment, it is not the purpose of that scheme to give direct support to producers of green electricity. |
| --- | --- |

111

In the present case, with regard to the scheme for the free distribution of green electricity established by the regional legislation at issue in the main proceedings, it must be noted at the outset that, unlike the national support schemes for green electricity in the form of purchase obligations or green certificates referred to in the preceding paragraphs of the present judgment, it is not the purpose of that scheme to give direct support to producers of green electricity.

| 112 | As has already been observed in paragraph 61 of the present judgment, the free distribution of green electricity constitutes a financial advantage conferred primarily on the supplier of such electricity, which may, in certain circumstances, depending notably on the sale price which the consumer is charged by the supplier for his electricity, to a certain extent and indirectly also benefit the consumer. |
| --- | --- |

112

As has already been observed in paragraph 61 of the present judgment, the free distribution of green electricity constitutes a financial advantage conferred primarily on the supplier of such electricity, which may, in certain circumstances, depending notably on the sale price which the consumer is charged by the supplier for his electricity, to a certain extent and indirectly also benefit the consumer.

| 113 | By contrast, such a support mechanism offers no certainty that the economic advantage thus obtained for suppliers will ultimately actually and essentially be required to benefit producers of green electricity, particularly the smallest local generating installations which the Flemish Region claims to have wanted to support, which are not both producers and suppliers. |
| --- | --- |

113

By contrast, such a support mechanism offers no certainty that the economic advantage thus obtained for suppliers will ultimately actually and essentially be required to benefit producers of green electricity, particularly the smallest local generating installations which the Flemish Region claims to have wanted to support, which are not both producers and suppliers.

| 114 | The benefit that such green electricity producers may derive from that economic advantage will depend on various factors specific to the markets, such as, for example, electricity prices on the market, supply and demand, or the balance of power between the operators involved and the extent to which suppliers will be prepared to allow producers to benefit from that advantage. |
| --- | --- |

114

The benefit that such green electricity producers may derive from that economic advantage will depend on various factors specific to the markets, such as, for example, electricity prices on the market, supply and demand, or the balance of power between the operators involved and the extent to which suppliers will be prepared to allow producers to benefit from that advantage.

| 115 | In view of what is thus the indirect, uncertain and risky nature of any support that might flow for the green electricity producer himself from the free distribution scheme at issue in the main proceedings, it must be concluded that the genuine ability of that scheme to achieve the legitimate objective pursued in the present case, which is to create an effective incentive for operators to produce more green electricity notwithstanding the additional costs of production, thus contributing to the Member States’ achievement of the indicative production targets imposed on them under Article 3 of Directive 2001/77, has not been established. |
| --- | --- |

115

In view of what is thus the indirect, uncertain and risky nature of any support that might flow for the green electricity producer himself from the free distribution scheme at issue in the main proceedings, it must be concluded that the genuine ability of that scheme to achieve the legitimate objective pursued in the present case, which is to create an effective incentive for operators to produce more green electricity notwithstanding the additional costs of production, thus contributing to the Member States’ achievement of the indicative production targets imposed on them under Article 3 of Directive 2001/77, has not been established.

| 116 | On account of that indirect, uncertain and risky nature, and given that there were, moreover, other methods — such as, for example, the grant of green certificates — which do contribute in a certain and effective way to the pursuit of the objective of increasing green electricity production, notably without undermining the introduction of third-party free access to distribution systems on terms that are non-discriminatory, as provided for, inter alia, in Article 20(1) of Directive 2003/54, that being one of the measures that is essential to bringing about completion of the internal market in electricity, it must be concluded that regional legislation such as that at issue in the main proceedings does not satisfy the requirements arising under the principle of proportionality, and that the interference with that free access and with the free movement of goods which it entails cannot, therefore, be justified by that objective. |
| --- | --- |

116

On account of that indirect, uncertain and risky nature, and given that there were, moreover, other methods — such as, for example, the grant of green certificates — which do contribute in a certain and effective way to the pursuit of the objective of increasing green electricity production, notably without undermining the introduction of third-party free access to distribution systems on terms that are non-discriminatory, as provided for, inter alia, in Article 20(1) of Directive 2003/54, that being one of the measures that is essential to bringing about completion of the internal market in electricity, it must be concluded that regional legislation such as that at issue in the main proceedings does not satisfy the requirements arising under the principle of proportionality, and that the interference with that free access and with the free movement of goods which it entails cannot, therefore, be justified by that objective.

| 117 | In the light of the foregoing, it must be held that, failing as it does to satisfy the requirements arising under the principle of proportionality, regional legislation such as that at issue in the main proceedings infringes the provisions of Articles 28 EC and 30 EC, Article 3(2) and Article 16 of Directive 96/92, Article 3(2) and (8) and Article 20(1) of Directive 2003/54, and Articles 3 and 4 of Directive 2001/77. |
| --- | --- |

117

In the light of the foregoing, it must be held that, failing as it does to satisfy the requirements arising under the principle of proportionality, regional legislation such as that at issue in the main proceedings infringes the provisions of Articles 28 EC and 30 EC, Article 3(2) and Article 16 of Directive 96/92, Article 3(2) and (8) and Article 20(1) of Directive 2003/54, and Articles 3 and 4 of Directive 2001/77.

Article 12 EC

| 118 | In view of the finding in the preceding paragraph of the present judgment, from which it is apparent that regional legislation such as that at issue in the main proceedings infringes, inter alia, Articles 28 EC and 30 EC, and in the absence, moreover, of any explanation by the referring court as to why it considers that that legislation gives rise to discrimination on grounds of nationality within the meaning of Article 12 EC, it is not necessary for the Court to examine the latter provision in the context of the present case. |
| --- | --- |

118

In view of the finding in the preceding paragraph of the present judgment, from which it is apparent that regional legislation such as that at issue in the main proceedings infringes, inter alia, Articles 28 EC and 30 EC, and in the absence, moreover, of any explanation by the referring court as to why it considers that that legislation gives rise to discrimination on grounds of nationality within the meaning of Article 12 EC, it is not necessary for the Court to examine the latter provision in the context of the present case.

| 119 | Having regard to all the foregoing considerations, the answer to the questions referred is that the provisions of Articles 28 EC and 30 EC, and of Article 3(2) and (8) and Article 20(1) of Directive 2003/54, Article 3(2) and (3) and Article 16 of Directive 96/92 and Articles 3 and 4 of Directive 2001/77, read together, must be interpreted as precluding legislation such as the regional legislation at issue in the main proceedings which imposes a scheme for the free distribution of green electricity through the distribution systems in the region concerned, while limiting the benefit of that scheme, in the case of the first piece of regional legislation, solely to green electricity fed directly into those distribution systems by the generating installations and, in the case of the second piece of regional legislation, solely to green electricity fed directly by such installations into the distribution systems in the Member State to which that region belongs. |
| --- | --- |

119

Having regard to all the foregoing considerations, the answer to the questions referred is that the provisions of Articles 28 EC and 30 EC, and of Article 3(2) and (8) and Article 20(1) of Directive 2003/54, Article 3(2) and (3) and Article 16 of Directive 96/92 and Articles 3 and 4 of Directive 2001/77, read together, must be interpreted as precluding legislation such as the regional legislation at issue in the main proceedings which imposes a scheme for the free distribution of green electricity through the distribution systems in the region concerned, while limiting the benefit of that scheme, in the case of the first piece of regional legislation, solely to green electricity fed directly into those distribution systems by the generating installations and, in the case of the second piece of regional legislation, solely to green electricity fed directly by such installations into the distribution systems in the Member State to which that region belongs.

Costs

Costs

| 120 | Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable. |
| --- | --- |

120

Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

| | On those grounds, the Court (Second Chamber) hereby rules: |
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On those grounds, the Court (Second Chamber) hereby rules:

| | The provisions of Articles 28 EC and 30 EC, and of Article 3(2) and (8) and Article 20(1) of Directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in electricity and repealing Directive 96/92/EC, Article 3(2) and (3) and Article 16 of Directive 96/92/EC of the European Parliament and of the Council of 19 December 1996 concerning common rules for the internal market in electricity, and Articles 3 and 4 of Directive 2001/77/EC of the European Parliament and of the Council of 27 September 2001 on the promotion of electricity produced from renewable energy sources in the internal electricity market, read together, must be interpreted as precluding legislation such as the besluit van de Vlaamse regering tot wijziging van het besluit van de Vlaamse regering van 28 september 2001 (Decision of the Flemish Government amending the Decision of the Flemish Government of 28 September 2001) of 4 April 2003, and the besluit van de Vlaamse regering inzake de bevordering van elektriciteitsopwekking uit hernieuwbare energiebronnen (Decision of the Flemish Government promoting the production of electricity from renewable energy sources) of 5 March 2004, which imposes a scheme for the free distribution of green electricity through the distribution systems in the region concerned, while limiting the benefit of that scheme, in the case of the first decision, solely to green electricity fed directly into those distribution systems by the generating installations and, in the case of the second decision, solely to green electricity fed directly by such installations into the distribution systems in the Member State to which that region belongs. |
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The provisions of Articles 28 EC and 30 EC, and of Article 3(2) and (8) and Article 20(1) of Directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in electricity and repealing Directive 96/92/EC, Article 3(2) and (3) and Article 16 of Directive 96/92/EC of the European Parliament and of the Council of 19 December 1996 concerning common rules for the internal market in electricity, and Articles 3 and 4 of Directive 2001/77/EC of the European Parliament and of the Council of 27 September 2001 on the promotion of electricity produced from renewable energy sources in the internal electricity market, read together, must be interpreted as precluding legislation such as the besluit van de Vlaamse regering tot wijziging van het besluit van de Vlaamse regering van 28 september 2001 (Decision of the Flemish Government amending the Decision of the Flemish Government of 28 September 2001) of 4 April 2003, and the besluit van de Vlaamse regering inzake de bevordering van elektriciteitsopwekking uit hernieuwbare energiebronnen (Decision of the Flemish Government promoting the production of electricity from renewable energy sources) of 5 March 2004, which imposes a scheme for the free distribution of green electricity through the distribution systems in the region concerned, while limiting the benefit of that scheme, in the case of the first decision, solely to green electricity fed directly into those distribution systems by the generating installations and, in the case of the second decision, solely to green electricity fed directly by such installations into the distribution systems in the Member State to which that region belongs.

The provisions of Articles 28 EC and 30 EC, and of Article 3(2) and (8) and Article 20(1) of Directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in electricity and repealing Directive 96/92/EC, Article 3(2) and (3) and Article 16 of Directive 96/92/EC of the European Parliament and of the Council of 19 December 1996 concerning common rules for the internal market in electricity, and Articles 3 and 4 of Directive 2001/77/EC of the European Parliament and of the Council of 27 September 2001 on the promotion of electricity produced from renewable energy sources in the internal electricity market, read together, must be interpreted as precluding legislation such as the besluit van de Vlaamse regering tot wijziging van het besluit van de Vlaamse regering van 28 september 2001 (Decision of the Flemish Government amending the Decision of the Flemish Government of 28 September 2001) of 4 April 2003, and the besluit van de Vlaamse regering inzake de bevordering van elektriciteitsopwekking uit hernieuwbare energiebronnen (Decision of the Flemish Government promoting the production of electricity from renewable energy sources) of 5 March 2004, which imposes a scheme for the free distribution of green electricity through the distribution systems in the region concerned, while limiting the benefit of that scheme, in the case of the first decision, solely to green electricity fed directly into those distribution systems by the generating installations and, in the case of the second decision, solely to green electricity fed directly by such installations into the distribution systems in the Member State to which that region belongs.

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[Signatures]

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  )	Language of the case: Dutch.

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