Judgment;Summary — ECLI:EU:C:2020:189
Date: 2020-03-11
Language of the case: Swedish
Court formation: Third Chamber
Subject matter: Approximation of laws
Procedure: Reference for a preliminary ruling
Origin: Sweden

Translation C-454/18 — 1 
Case C-454/18 
Request for a preliminary ruling 
Date lodged:  
12 July 2018 
Referring court:  
Förvaltningsrätten i Linköping (Administrative Court, Linköping), 
(Sweden) 
Date of the decision to refer:  
5 July 2018 
Applicant:  
Baltic Cable AB 
Defendant:  
Energimarknadsinspektionen (national inspectorate of the energy 
market) 
  
APPLICANT 
Baltic Cable AB, […] 
[…] 
DEFENDANT 
Energimarknadsinspektionen 
CONTESTED DECISION 
Energimarknadsinspektionen decision of 9 June 2016 (see Annex 1) and decision 
of 2 November 2017 (see Annex 2) 
SUBJECT-MATTER 
EN 
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Application of Article 16(6) of the Electricity Regulation 1 and the Viteslagen 
(Law on penalty payments) (1997:857); now a matter relating to a preliminary 
ruling etc. 
DECISION OF THE FÖRVALTNINGSRÄTTEN 
The Förvaltningsrätten has decided to request a preliminary ruling from the Court 
of Justice of the European Union, pursuant to Article 267 TFEU. 
Proceedings are stayed pending a response from the Court of Justice of the 
European Union. [Or.2] 
BACKGROUND 
Energimarknadsinspektionen decision of 9 July 2016 
1 By decision of 9 July 2016 (and pursuant to Article 2(1) and 2(4) of the Electricity 
Regulation, and the first subparagraph of Article 16(6) thereof) the 
Energimarknadsinspektionen (Ei) requested Baltic Cable AB (BCAB) to place 
revenues resulting from the allocation of interconnection (congestion revenues) 
during the periods from 1 July 2013 to 30 June 2014 and 1 July 2014 to 30 June 
2015 on a separate internal account line until such time as the company could use 
the revenues for the following purposes: 
(a) guaranteeing the actual availability of the allocated capacity; and/or 
(b) maintaining or increasing interconnection capacities through network 
investments, in particular in new interconnectors. 
2 BCAB was also requested to submit an extract from the accounts and auditor’s 
certification to prove that the revenues in question had been placed on a separate 
internal account line. 
3 The order included a penalty payment of SEK 5 million for each month or part 
thereof in which the order was not complied with, three months from the month in 
which BCAB was notified of the decision. The grounds are set out in the decision 
(Annex 1). 
4 BCAB claims that the decision should be annulled. If the Förvaltningsrätten finds 
that Ei’s decision should be upheld in whole or in part, the company requests that 
enforcement be postponed for at least a certain period after the final (res judicata) 
ruling in the case. The company also requests payment of its legal costs. [Or.3] 
 
1 Regulation (EC) No 714/2009 of the European Parliament and of the Council of 13 July 2009 
on conditions for access to the network for cross-border exchanges in electricity, and repealing 
Regulation (EC) No 1228/2003. 
BALTIC CABLE 
 
3 
5 Ei contests the appeal. However, the authority has no objection to amendment of 
the time-limit relating to the order. Ei further contends that BCAB’s request for 
payment of legal costs should be dismissed. 
Ei’s decision of 2 November 2017 
6 By decision of 2 November 2017 Ei dismissed BCAB’s request for permission to 
use its congestion revenue as income to be taken into account by the Ei when 
approving the methodology for calculating network tariffs and/or fixing them 
(second subparagraph of Article 16(6) of the Electricity Regulation). The grounds 
are set out in the decision (Annex 2). 
7 BCAB claims the company may use the congestion revenues in accordance with 
the request which it submitted to Ei on 21 September 2017. The company also 
requests payment of its legal costs. 
8 Ei contests the appeal and contends that BCAB’s request for payment of legal 
costs should be dismissed. 
SUBMISSIONS OF THE PARTIES 
Baltic Cable AB 
Article 16(6) of the Electricity Regulation is not directed at BCAB 
9 Baltic Cable is a high-voltage electricity cable which connects the Swedish grid to 
the transmission network in north-west Germany. The object of the company 
BCAB is to construct, own and operate Baltic Cable. The company has revenues 
resulting from the allocation of interconnection, known as ‘congestion revenues’. 
This is the company’s sole source of income. [Or.4] 
10 Article 16 of the Electricity Regulation is aimed only at transmission system 
operators (TSOs). BCAB is only responsible for Baltic Cable, which is a single 
cable connecting two systems to one another (an interconnector). Baltic Cable is 
not a transmission system as such and BCAB is thus not a transmission system 
operator. The rules on transmission system operators are aimed at national and 
regional network operators and drawn up with such activities in mind. 
11 The wording of Article 2(4) of the Electricity Market Directive 2 shows clearly 
that transmission system operator is defined as the person responsible for a 
 
2 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 and repealing Directive 
2003/54/EC. 
 
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transmission system. Responsibility for an interconnection is not in itself a 
sufficient condition for being covered by the definition. If the intention was for the 
provision to apply also to operators responsible for a single interconnection, it 
must be assumed that the text would have been worded accordingly, for example 
by stating ‘or interconnections’ instead of ‘and ... its interconnections’. As the text 
is worded, it is clear that that definition does not include and, on the contrary, 
excludes, operators which own and manage an interconnector without also being 
responsible for a transmission system. The purpose, scheme and history of the 
Electricity Market Regulation also demonstrate that it neither covers, nor is 
intended to cover, the activities carried out by BCAB. 
12 The circle of persons at whom Article 16(6) of the Electricity Regulation is 
directed are not identified. Therefore, it is not possible to find, on the basis of the 
wording, that the provision could be applied to all congestion revenues. On the 
other hand, the context surrounding Article 16(6), like the purpose of the 
provision, suggests that it concerns only TSOs. The second subparagraph of 
Article 16, [Or.5] like the annex to the Electricity Regulation and the CACM 
Regulation, 3 show that the provisions on the distribution, receipt and use of 
congestion revenues relate to TSOs. The congestion revenues do not constitute, 
and never have constituted, secondary or additional revenue for BCAB (as they 
are for TSOs with connected customers). The rules therefore have widely different 
effects on the type of activity concerned. 
13 Ei considers that BCAB cannot be allowed to use the congestion revenues without 
infringing the Electricity Regulation. However, this view means that interpretation 
is being wrongly equated with annulment. The EU legal order requires that EU 
law be applied nationally and the national authorities and courts are to make 
interpretations unless they are under an obligation to request a preliminary ruling 
from the Court of Justice of the European Union or they choose to do so. The 
national authorities’ or courts’ interpretations when applying EU law do not 
conflict with the principle that the validity of EU law can be determined solely by 
the Court of Justice of the European Union. National courts and authorities also 
have a right and a responsibility independently to carry out proportionality tests 
when applying EU law, having regard to the circumstances of each individual 
case. 
BCAB used the congestion revenues in the permitted manner 
14 If the Förvaltningsrätten should find that BCAB is a TSO and is covered by 
Article 16(6) of the Electricity Regulation, the company’s actual use of the 
congestion revenues was nevertheless permitted under the provision since the 
congestion revenues are entirely attributable to BCAB’s investment in 
interconnection capacity. 
 
3 Commission Regulation (EU) 2015/1222 of 24 July 2015 establishing a guideline on capacity 
allocation and congestion management. 
BALTIC CABLE 
 
5 
15 A typical system operator (TSO) has the possibility, through network tariffs, of 
financing new investments and making a return on investments already made. 
[Or.6] A purely interconnection undertaking such as BCAB has no other option 
than first to make the investment and hope that future revenues will cover the 
costs with a reasonable return in relation to the risks. The management of Baltic 
Cable constitutes the whole of BCAB’s activity. Any use of the company’s funds 
is therefore in one way or another attributable to the cable and thus to the original 
investment in interconnection capacity. Against this background, Article 16(6) of 
the Electricity Regulation must be construed as meaning that purely 
interconnection undertakings may freely dispose of all the congestion revenues 
resulting from interconnection in which they have invested. 
16 In an undertaking such as BCAB, which has no other possible revenues, the bulk 
of the congestion revenues are used on an ongoing basis to fulfil the company’s 
obligations relating to the management of the cable and the provision of 
transmissions. Therefore, the possible return never makes up more than a small 
proportion of the congestion revenues. The objective of the activity of a purely 
interconnection undertaking is of course constantly to select the measures which 
best maximise the reliability, availability and actual use of interconnection 
capacity since that increases the chances of a positive outcome. Therefore, where 
the activity is managed in an economically responsible manner in the owners’ 
interest, it is also appropriate in the light of the objective pursued by the rules on 
the electricity market, including Article 16(6). Against this background, the 
entirely free use of the congestion revenues means primarily that the Electricity 
Regulation does not specify in detail companies’ priorities in a manner which 
might result in a less rational choice.  
17 A prohibition on disposing of congestion revenues to cover costs or to make a 
return would seriously interfere with existing incentives for further commercial 
operation and new investment in interconnection capacity. That would run counter 
to the stated objective of Article 16(6) of the Electricity Regulation that the 
available interconnection capacities should [Or.7] be maintained or increased. If 
the rules do not exclude completely the commercial operation of interconnections, 
which was not stated to be the intention, it is essential that BCAB’s actual costs 
and returns of the investment can be classified as permitted uses of the congestion 
revenues. If Article 16(6) of the Electricity Regulation is considered applicable to 
a purely interconnection undertaking, such as BCAB, Ei’s extremely narrow 
interpretation of permitted uses cannot be accepted on account of its far-reaching 
and unreasonable consequences. Ei’s interpretation of what constitutes an 
investment is so narrow that it differs from how the word is normally construed 
and used. Such an application of the law would render the continued activity of a 
purely interconnection undertaking impossible and thus directly undermine the 
objective pursued by the rules. If Ei’s narrow interpretation of the first 
subparagraph of Article 16(6) of the Electricity Regulation is accepted, it is 
extremely unclear what use of the congestion revenues, if any, would be available 
to BCAB. 
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18 It does not follow from the wording of point (b) of the first paragraph of the 
Electricity Regulation that new investments in interconnectors should be the only 
permitted course of action and only new investments are prioritised. The permitted 
courses of action thus also include other measures, for example: investment in 
existing interconnectors (that is to say, regardless of the time of the investment). 
BCAB’s demonstrated use of the congestion revenues relates entirely to covering 
costs which are necessary for the company to provide allocated transmissions on 
Baltic Cable in accordance with the conditions applicable to them and in the 
longer term to maintain the cable’s operation and availability in general. The use 
is therefore compatible with the first subparagraph of Article 16(6) of the 
Electricity Regulation. 
Ei approved the free disposal of the congestion revenues by BCAB 
19 If the Förvaltningsrätten should find that the company is a TSO and is covered by 
Article 16(6) of the Electricity Regulation, and that BCAB’s use of the [Or.8] 
congestion revenues does not in all respects comply with points (a) and (b) of the 
first subparagraph of Article 16(6) of the Electricity Regulation, Ei’s decision is 
nevertheless incorrect. That is because Ei approved the company’s use of the 
congestion revenues by decisions on the revenue caps for the years 2013-2015. 
The decisions include the methodology for calculating network tariffs. The 
decisions take into account and include all the congestion revenues which BCAB 
receives for the respective year. Ei therefore accepted that the congestion revenues 
are used in accordance with the second subparagraph of Article 16(6) of the 
Electricity Regulation. This means that the revenues may be used freely by the 
company. The fact that in its decisions on the revenue cap Ei recalled how 
congestion revenues may be used under Article 16(6) of the Electricity Regulation 
does not alter this assessment. Ei’s reminder cannot be construed as anything 
other than information about the substance of existing law with no independent 
legal effects. 
The order is contrary to fundamental principles of law 
20 Regardless of how the Förvaltningsrätten assesses the contested order in relation 
to Article 16(6) of the Electricity Regulation, the decision has been taken in such a 
way and has such far-reaching consequences for BCAB that it is contrary to the 
fundamental principles of protection of property, legitimate expectations and 
proportionality. 
21 The rules are far from being sufficiently clear and explicit to justify interference in 
an individual’s right to his property. If Ei’s decision were to be upheld, it is easy 
to see that it would put BCAB in an impossible situation. The decision covers 
very large sums in relation to BCAB’s activity during the relevant period (around 
70% of the company’s gross revenues). Nor are the revenues retained by the 
company, but have mainly been used to fund the operation of Baltic Cable. In 
order to comply with Ei’s order to place funds on an internal account line, BCAB 
BALTIC CABLE 
 
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would have to assume liability for a considerably greater amount than it has the 
prospect of earning in a year. In addition, BCAB would [Or.9] be dependent on 
further loans or a continual increase in owner’s contribution to cover all the future 
costs of its activities. However, such funding opportunities are ruled out if there is 
no prospect of the owners making a return and if repayment of the loans taken out 
is not possible. Against this background, it must be concluded that the order is 
probably impossible for BCAB to comply with and will render impossible the 
continued management and operation of Baltic Cable. It is therefore evident that 
the decision constitutes an indefensible infringement of the protection afforded to 
respect for BCAB’s property rights. The decision is therefore contrary to Chapter 
2, Section 15, of the Regeringsformen (Swedish Basic Law), Article 1 of the First 
Additional Protocol to the European Convention of 4 November 1950 for the 
Protection of Human Rights and Fundamental Freedoms, and Article 17 of the 
European Union Charter of Fundamental Rights. 
22 The decision also runs counter to Ei’s previous practice in relation to BCAB as 
regards congestion revenues. Ei decided on the revenue caps for the company. The 
decisions were drawn up consistently to cover all the congestion revenues which 
the company acquired during each period. BCAB has shown Ei how the company 
intends to use the revenues. Ei subsequently, without further decision or other 
explicit confirmation, accepted that BCAB used the revenues accordingly. The 
decision which is now being contested constitutes a drastic and unexpected 
departure from how the authority has acted previously. BCAB had legitimate 
reason to rely on the fact that the conditions governing its activity would not be 
completely altered retrospectively in the way which Ei’s decision entails. Against 
this background, the decision is contrary to the EU-law principle of legitimate 
expectations. 
23 Ei’s order imposing a penalty payment is also contrary to the principle of 
proportionality. Firstly, the decision is not intended to promote the public interest 
pursued by the EU electricity regulation, that is to say the development of the 
common market in electricity and specifically that interconnection capacity 
between [Or.10] national transmission networks be maintained and used 
effectively. On the contrary, in relation to those objectives Ei’s order against 
BCAB appears to be directly counter-productive as it threatens Baltic Cable’s 
operation and availability to market operators. Ei appears not to have considered 
how the decision relates to the objectives of the Electricity Market Regulation. 
Ei’s statement instead indicates that the authority regards the application of 
Article 16(6) as an end in itself. Such a view is inconsistent with the proper 
application of the principle of proportionality. Secondly, the decision is not 
necessary to classify BCAB’s use of the congestion revenues pursuant to the 
Electricity Regulation. There are considerably less restrictive means of meeting 
the public interest underlying the rules (for example, the possibility of Ei 
approving alternative uses of the congestions revenues pursuant to the second 
subparagraph of Article 16(6)). Thirdly, the decision entails such extensive 
interference and has such far-reaching consequences for BCAB that its possible 
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advantages cannot be regarded as outweighing its harmful effects. Ei’s decision is 
therefore disproportionate in any event and is therefore not permitted. 
24 Ei acknowledges that application of the Electricity Market Regulation results in 
unreasonable and ‘partly’ disproportionate consequences for BCAB. The decision 
is disproportionate per se and thus breaches Article 22 of the Electricity 
Regulation. 
An exception under the second subparagraph of Article 16(6) should be permitted 
25 In the alternative, BCAB requested approval under the second subparagraph of 
Article 16(6). The request for approval assumes that Article 16(6) of the 
Electricity Regulation is applicable to the company’s activity, that the requested 
use of the congestion revenues is not already permitted under the first paragraph 
thereof, and that the use has not previously been approved by the Ei. [Or.11] 
26 BCAB has no possibility of using the congestion revenues effectively under the 
first subparagraph of Article 16(6) of the Electricity Regulation to a greater extent 
than it already does. Ei laid down the methodology for calculating tariffs for the 
company which cover all its congestion revenues. Therefore, there are possible 
ways of approving the use of congestion revenues pursuant to the second 
subparagraph of Article 16(6). 
27 The requested use of the congestion revenues concerns measures which are 
necessary to maintain the Baltic Cable and market coupling, including a return on 
the capital required by the activity. 
28 Ei’s decision to refuse BCAB’s request for approval is based on the fact that, in 
the view of the authority, it is a requirement for approval that the applicant also 
has customers and network charges (tariffs) which can be reduced. That is a false 
assumption which is not supported by the wording of the legislation. No exclusive 
objective of reducing charges follows from the wording of the second 
subparagraph of Article 16(6). 
29 Ei further contends, with reference to the purported aims of the Electricity 
Regulation, that only use to reduce charges can be approved with respect to these 
aims. BCAB notes that Article 1 of the Electricity Regulation states that its aims 
are to promote fair rules for cross-border exchanges in electricity and enhance 
competition within the internal market in electricity and a high level of security of 
supply in electricity. Recitals 21 to 23 of the preamble to the Electricity 
Regulation refer to rules on revenues resulting from congestion management and 
inter alia the prioritisation of investment in new infrastructure. None of those aims 
or recitals supports the contention that congestion revenues not used to remove 
congestion be used exclusively to reduce network charges. 
30 The aims of the Electricity Regulation cannot be compatible with such uniquely 
unfair economic rules for certain operators that they run the risk of being 
BALTIC CABLE 
 
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eliminated, [Or.12] which Ei now appears to accept. The authority relies on 
reasons relating to aims to justify a decision whose consequences do not promote 
the aims of that decision or the Electricity Regulation. 
31 The possibility for BCAB to have control over its congestion revenues is essential 
for the company to be able to maintain Baltic Cable and provide interconnection 
for electricity market operators. As long as BCAB is able to continue its activity, 
network customers and the owners of neighbouring networks can take advantage 
free of charge of the increased cross-border exchange which Baltic Cable makes 
possible. The activity therefore benefits network customers and promotes the aims 
pursued by Article 16(6) and the Electricity Regulation as a whole. On the other 
hand, if BCAB may not use its congestion revenues, the company’s possibility of 
maintaining Baltic Cable and providing transmission services is taken away. In 
such a situation the possibility of covering costs and making a return on operating 
the cable, as well as BCAB’s incentive to provide transmission services in 
general, is also eliminated. 
Energimarknadsinspektionen 
BCAB is covered by Article 16(6) of the Electricity Regulation 
32 Article 16(6) of the Electricity Regulation is directed at all those that have 
congestion revenues. It is common ground that the Baltic Cable is an 
interconnector as defined by Article 2(1) of the Electricity Regulation. It is also 
common ground that BCAB obtains revenues resulting from the allocation of 
interconnection since the company operates Baltic Cable. The company is 
therefore obliged to comply with Article 16(6) of the Electricity Regulation on the 
use of congestion revenues. 
33 The obligation on BCAB to use the congestion revenues in a certain way and to 
place them on a separate account line follows directly from the Electricity 
Regulation. This is true regardless of whether or not Ei issues an order. [Or.13] 
An order with or without a penalty payment is the only measure which Ei has at 
its disposal to ensure compliance with the Electricity Regulation. 
BCAB is a transmission system operator (TSO) 
34 Even if it were held that Article 16(6) of the Electricity Regulation applies only to 
transmission system operators, BCAB is covered by the provision. That is because 
BCAB is a transmission system operator. This follows directly from the definition 
set out in Article 2(4) of the Electricity Market Directive. Ei’s assessment is also 
shared by the Commission and Ei’s sister authority in Germany. In a judgment of 
March 2017, the highest court in Germany, the Bundesgerichtshof, ruled that 
BCAB is a transmission system operator. Ei does not share BCAB’s view that the 
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court’s judgment stems from how the German rules are worded and that they go 
further than the regulation. 
BCAB did not use the congestion revenues in accordance with Article 16(6) 
35 BCAB has used the congestion revenues inter alia to operate and maintain the 
cable and to distribute profits to the company’s owners. This use is contrary to 
Article 16(6) of the Electricity Regulation. 
36 Since the provision requires that transmission capacity be ‘maintained’ and 
‘increased’, the revenues cannot be used to offset the costs of the original 
investment. The provision assumes that the connection already exists. It is also 
clear that operation and maintenance and profit distribution do not fall within the 
scope of permitted use. Although there may be some scope for different 
interpretations of what can be covered by the concept of network investment, 
there is nothing to indicate that the company’s use of the congestion revenues can 
be considered to some extent as network investment. [Or.14] 
37 There is nothing in the Electricity Regulation to support giving favourable 
treatment to a purely interconnection undertaking when applying Article 16(6). If 
BCAB’s interpretation were to apply to all interconnectors, Article 16(6) of the 
Electricity Regulation would be rendered entirely meaningless since then the 
revenues could be used with complete freedom. The possibility of exception from 
the provision for new interconnectors under Article 17 of the Electricity 
Regulation would also be rendered meaningless. This shows that BCAB’s 
interpretation is unreasonable and is merely a means for the company to 
circumvent the regulation’s requirement so that the owners may dispose of the 
revenues freely. 
38 When the regulation was being drawn up, an exception was proposed for existing 
interconnectors but the proposal was not part of the final version of the regulation. 
Therefore, the legislature deliberately chose not to exempt existing 
interconnectors, such as Baltic Cable, from the provisions governing how 
congestion revenues may be used. It did so despite the fact that the consequences 
of the rules were well known. 
Ei did not approve BCAB’s use of the congestion revenues 
39 Ei can take a specific decision on other use of revenues resulting from the 
allocation of interconnection solely at the request of the person who expects to 
receive such revenues. Ei’s decision on the revenue cap for the company does not 
constitute such a decision on other use, as BCAB claims. 
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A preliminary ruling from the Court of Justice of the European Union must be 
obtained 
40 BCAB considers that the principle of proportionality should be applied when 
interpreting Article 16(6) of the Electricity Regulation in such a way that in 
practice the provision has no relevance to the company’s use of the congestion 
revenues. That is not possible. The only possibility of achieving the effect sought 
by the company is to completely disregard the provision. This can be equated with 
so-called ‘indirect application for annulment’ and requires [Or.15] a preliminary 
ruling from the Court of Justice of the European Union. A Swedish authority or 
court cannot annul an EU regulation. 
41 Ei broadly agrees with BCAB’s description of the consequences for the company 
of compliance with the order, that is to say that the company’s congestion charges 
are reserved for measures which it has neither the possibility of taking or reason to 
take. In practice this means a complete absence of profit for the company and that 
the congestion revenues may not be used for the necessary costs, such as operating 
and maintaining the cable. These are the consequences of the rules as such and not 
Ei’s order. 
42 Ei’s assessment is that applying Article 16(6) of the Electricity Regulation to the 
company to some extent gives rise to consequences which can be considered to be 
disproportionate. BCAB has a network concession and thus an obligation to 
transmit electricity. This entails certain costs. The cable is required and it is 
questionable whether the fact that the revenues may not be used for operation and 
maintenance is compatible with the principle of proportionality. As regards other 
uses, Ei considers that the fact that use is not permitted in accordance with the 
wording of the regulation is both proportionate and compatible with the aim 
pursued. 
43 To allow BCAB to use the congestion revenues for operation and maintenance Ei 
has to deviate from the Electricity Regulation in a manner which is not permitted. 
The Court of Justice of the European Union alone can set aside a rule of EU law. 
In other words, Ei therefore has no formal possibility of disregarding the rule. It is 
thus very important for the Förvaltningsrätten to obtain a preliminary ruling from 
the Court of Justice of the European Union. 
An exception under the second subparagraph of Article 16(6) of the Electricity 
Regulation cannot be permitted 
44 The purpose of Article 16(6) is to ensure that congestion revenues are used 
precisely to manage congestion. [Or.16] 
If the congestion revenues cannot be used for that purpose, they should still 
benefit consumers by reducing tariffs. 
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45 The significance of the fact that the congestion revenues are to be counted as 
revenue when Ei establishes a revenue cap is that customers’ tariffs are to be 
reduced by the same amount. Therefore, the total revenue cap should not be 
affected by the fact that the congestion revenues are taken into account, but the 
revenues are affected. Some of the revenues will instead be made up of congestion 
revenues and the rest will be made up of charges on customers. However, for all 
this to happen there must be revenues from customers, otherwise no such 
redistribution can take place. 
46 The company has neither network customers nor network tariffs. Therefore, the 
requirements for approving the use of the congestion revenues to reduce tariffs are 
not satisfied. All that remains is for the company to place the revenues on a 
separate internal account line until such time as it is possible to use the revenues 
for the purposes referred to in points (a) and/or (b) of the first subparagraph of 
Article 16(6). 
47 The fact that the company now obtains its income from congestion revenues 
cannot be compared with such a reduction in network tariffs which can be taken 
into account when Ei decides on the revenue cap, since BCAB has no customers 
who can obtain reduced network tariffs. 
RELEVANT PROVISIONS OF EU LAW 
48 Article 5(4) of the Treaty on European Union: 
Under the principle of proportionality, the content and form of Union action shall 
not exceed what is necessary to achieve the objectives of the Treaties. [Or.17] 
49 Article 17(1) of the EU Charter of Fundamental Rights 
Everyone has the right to own, use, dispose of and bequeath his or her lawfully 
acquired possessions. No one may be deprived of his or her possessions, except in 
the public interest and in the cases and under the conditions provided for by law, 
subject to fair compensation being paid in good time for their loss. The use of 
property may be regulated by law in so far as is necessary for the general interest. 
50 Article 52 of the EU Charter of Fundamental Rights: 
Any limitation on the exercise of the rights and freedoms recognised by this 
Charter must be provided for by law and respect the essence of those rights and 
freedoms. Subject to the principle of proportionality, limitations may be made 
only if they are necessary and genuinely meet objectives of general interest 
recognised by the Union or the need to protect the rights and freedoms of others. 
51 Article 2(4) of the Electricity Market Directive: 
For the purposes of this Directive, the following definitions apply 
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… 
3. ‘transmission’ means the transport of electricity on the extra high-voltage and 
high-voltage interconnected system with a view to its delivery to final customers 
or to distributors, but does not include supply; 
4. ‘transmission system operator’ means a natural or legal person responsible for 
operating, ensuring the maintenance of and, if necessary, developing the 
transmission system in a given area and, where applicable, its interconnections 
with other systems, and for ensuring the long-term ability of the system to meet 
reasonable demands for the transmission of electricity; 
… 
13. ‘interconnector’ means equipment used to link electricity systems. [Or.18] 
14. ‘interconnected system’ means a number of transmission and distribution 
systems linked together by means of one or more interconnectors. 
52 Article 2(1) of the Electricity Regulation: 
For the purpose of this Regulation, the definitions contained in Article 2 of [the 
Electricity Market Directive] apply, with the exception of the definition of 
‘interconnector’ which shall be replaced by the following: 
- ‘interconnector’ means a transmission line which crosses or spans a border 
between Member States and which connects the national transmission systems of 
the Member States. 
53 Article 16(6) of the Electricity Regulation: 
Any revenues resulting from the allocation of interconnection shall be used for the 
following purposes: 
(a) guaranteeing the actual availability of the allocated capacity; and/or 
(b) maintaining or increasing interconnection capacities through network 
investments, in particular in new interconnectors. 
If the revenues cannot be efficiently used for the purposes set out in points (a) 
and/or (b) of the first subparagraph, they may be used, subject to approval by the 
regulatory authorities of the Member States concerned, up to a maximum amount 
to be decided by those regulatory authorities, as income to be taken into account 
by the regulatory authorities when approving the methodology for calculating 
network tariffs and/or fixing network tariffs. 
The rest of revenues shall be placed on a separate internal account line until such 
time as it can be spent on the purposes set out in points (a) and/or (b) of the first 
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subparagraph. The regulatory authority shall inform the Agency of the approval 
referred to in the second subparagraph. [Or.19] 
54 Article 22(1) of the Electricity Regulation: 
Without prejudice to paragraph 2, the Member States shall lay down rules on 
penalties applicable to infringements of the provisions of this Regulation and shall 
take all measures necessary to ensure that those provisions are implemented. The 
penalties provided for must be effective, proportionate and dissuasive. 
THE NEED FOR A PRELIMINARY RULING 
55 The present case solely concerns the interpretation and application of the 
Electricity Market Directive, the Electricity Regulation and the principles of EU 
law. 
56 The Förvaltningsrätten considers that the wording of Article 16(6) of the 
Electricity Regulation does not restrict the application thereof solely to 
transmission system operators. There is much to suggest that BCAB’s revenues 
resulting from interconnection are covered by the provision. However, there are 
certain factors which could militate in favour of a more limited scope. 
57 If Article 16(6) of the Electricity Regulation is to apply only to transmission 
system operators, the question arises as to whether an undertaking which merely 
operates an interconnector and is not responsible for operating, ensuring the 
maintenance of and, if necessary, developing the transmission system in a given 
area (hereinafter referred to as ‘an undertaking which merely operates an 
interconnector’) can be a transmission system operator. There are several factors, 
including the wording of Article 2(4) of the Electricity Market Directive, which 
support such a conclusion. It may also be noted that the Bundesgerichtshof in 
Germany ruled that BCAB is a transmission system operator. However, there are 
also certain elements which could support a contrary assessment. [Or.20] 
58 The Förvaltningsrätten further considers that it is clear from points (a) and (b) of 
the first subparagraph of Article 16(6) of the Electricity Regulation that an 
undertaking which operates an interconnector may not use its revenues from 
allocation of interconnection to make a return. As regards operation and 
maintenance, only a broad interpretation would permit such a use. 
59 Ei is of the opinion that the national authority may not apply the second 
subparagraph of Article 16(6) of the Electricity Regulation to approve the use, by 
an undertaking which merely operates an interconnector, of revenues from the 
allocation of interconnection for a purpose other than that referred to in the first 
subparagraph of Article 16(6), where the undertaking has a methodology for 
fixing tariffs but does not have customers making direct payments with network 
charges (tariffs) which can be reduced. Although there are factors which support 
such a conclusion, it does not follow directly from the wording of the provision 
that it is to be applied in this manner. 
BALTIC CABLE 
 
15 
60 Finally, the Förvaltningsrätten notes that the parties ‒ although they differ as to 
the scope ‒ agree that an application of Article 16(6) of the Electricity Regulation 
such as that effected by Ei in the contested decision brings about consequences 
which can be regarded as disproportionate. The Förvaltningsrätten considers that 
there are no grounds for making a different assessment. It is therefore 
questionable whether Article 16(6) of the Electricity Regulation is valid in relation 
to the principle of proportionality when applied to an undertaking which merely 
operates an interconnector. 
61 The validity of an act adopted by an EU institution can only by examined by the 
Court of Justice of the European Union. 
62 In the light of the above considerations, the Förvaltningsrätten considers that it is 
necessary to obtain a preliminary ruling from the Court of Justice of the European 
Union [Or.21] and therefore decides to stay proceedings and to refer the following 
questions to the Court of Justice. 
1. Is Article 16(6) of the Electricity Regulation to apply in all cases 
where a person obtains revenues resulting from the allocation of 
interconnection, regardless of his circumstances, or is it to apply only 
where the person who receives the revenues is a transmission system 
operator, as defined in Article 2(4) of the Electricity Market Directive? 
2. If the answer to Question 1 is that Article 16(6) of the Electricity 
Regulation is to apply only to transmission system operators, is an 
undertaking which merely operates an interconnector a transmission 
system operator? 
3. If the answer to Question 1 or 2 means that Article 16(6) of the 
Electricity Regulation is to apply to an undertaking which merely 
operates an interconnector, can the costs relating to the operation and 
maintenance of an interconnector in any event be regarded as network 
investments to maintain or increase transmission capacities, as referred 
to in point (b) of first subparagraph of Article 16(6)? 
4. If the answer to Question 1 or 2 means that Article 16(6) of the 
Electricity Regulation is to apply to an undertaking which merely 
operates an interconnector, can the regulatory authority, pursuant to 
the second subparagraph of Article 16(6) of the Electricity Regulation, 
approve that an undertaking which merely operates an interconnector, 
which has a methodology for fixing tariffs but does not have customers 
making direct payments with network charges (tariffs) which can be 
reduced, may use revenues from the allocation of interconnection to 
make [Or.22] a return or, if the answer to Question 3 is in the negative, 
to operate and maintain? 
5. If the answer to Question 1 or 2 means that Article 16(6) of the 
Electricity Regulation is to apply to an undertaking which merely 
REQUEST FOR A PRELIMINARY RULING OF 5. 7. 2018 — CASE C-454/18 
 
16  
operates an interconnector, and the answer to Question 3 and 4 means 
either that the company may not use revenues resulting from the 
allocation of interconnection to operate or maintain or to make a 
return, or that the undertaking may use the revenues to operate or 
maintain, but not to make a return, is application of Article 16(6) of the 
Electricity Regulation to an undertaking which merely operates an 
interconnector contrary to the EU-law principle of proportionality or 
any other applicable principle? 
The decision to request a preliminary ruling is not subject to appeal. A final 
judgment will be made when the Court of Justice of the European Union has 
answered the questions referred for a preliminary ruling. 
[omissis]