OPINION OF ADVOCATE GENERAL

STIX-HACKL

delivered on 28 October 2004 ( )

Joined Cases C-128/03 and C-129/03

AEM SpA (C-128/03)

v

Autorità per l'energia elettrica e per il gas(Electricity and Gas Authority)

Ministero delle Attività Produttive

and

Ministero dell’Economia e delle Finanze,

con la intervención de:

ENEL Produzione SpA,

and

AEM Torino SpA (C-129/03)

v

Autorità per l'energia elettrica e per il gas(Electricity and Gas Authority)

Ministero delle Attività Produttive

and

Ministero dell’Economia e delle Finanze,

con la intervención de:

ENEL Produzione SpA

(Reference for a preliminary ruling from the Consiglio di Stato (Italy))

(Internal market in electricity – Imposition of an increase in the amount payable for access to and use of the national transmission system for electricity – Offsetting of general revenue charges within the electricity system as the stated aim of the increased charge – Definition of general revenue charges – Overvaluation of electricity produced by hydroelectric and geothermo-electric generating plants – State aid – Article 87 EC– Recompense for undue cost advantage as preferential treatment? – Connection between financing and aid measures – Articles 7 and 8 of Directive 96/92/EC – Prohibition of discrimination in system access)

I – Introduction

1. Just as in Case C-17/03 ( ) the Court is again being asked to resolve transitional issues in connection with the transposition of Directive 96/92/EC ( ) (hereinafter, ‘Directive 96/92’).

2. The present case concerns the imposition on certain electricity producers of an increased charge for access to and use of the Italian electricity transmission system. According to the information provided by the national court making the reference this increased charge is intended to compensate for undue cost advantages in connection with the liberalisation of the national electricity market as, even following liberalisation of that market and after certain compensation machinery between electricity producers has been discontinued, the undertakings liable to pay the levy would be applying tariffs to distributors which failed to take account of the costs borne by them.

3. The electricity producers liable to pay the increased charge consider the imposition of that increased charge to be discriminatory and open to objection under the law governing aid. They are also claiming that, contrary to the information given in the order for reference, the revenue from that increased charge would serve to finance State aid measures.

4. In so far as cost advantages are actually created in connection with the liberalisation of electricity markets following the transposition of Directive 96/92, the principal question that then arises is whether or not Article 87 EC or the prohibition of discrimination in Articles 7 and 8 of Directive 96/92 preclude the offsetting of the said advantages by the imposition of an increase on certain charges.

II – Legal background

A – Community law

5. Under Article 1 of Directive 96/92 ‘[t]his 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.’

6. Article 7(1) and (5) of Directive 96/92 provide:

‘1. Member States shall designate or shall require undertakings which own transmission systems to designate, for a period of time to be determined by Member States having regard to considerations of efficiency and economic balance, a system operator to be responsible for operating, ensuring the maintenance of, and, if necessary, developing the transmission system in a given area and its interconnectors with other systems, in order to guarantee security of supply.

…

5. The system operator shall not discriminate between system users or classes of system users, particularly in favour of its subsidiaries or shareholders.’

7. Article 8(1) to (3) of Directive 96/92 provides:

‘1. The transmission system operator shall be responsible for dispatching the generating installations in its area and for determining the use of interconnectors with other systems.

2. Without prejudice to the supply of electricity on the basis of contractual obligations, including those which derive from the tendering specifications, the dispatching of generating installations and the use of interconnectors shall be determined on the basis of criteria which may be approved by the Member State and which must be objective, published and applied in a non-discriminatory manner which ensures the proper functioning of the internal market in electricity. They shall take into account the economic precedence of electricity from available generating installations or interconnector transfers and the technical constraints on the system.

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

8. Article 24(1) of Directive 96/92 reads as follows:

‘Those Member States in which commitments or guarantees of operation given before the entry into force of this Directive may not be honoured on account of the provisions of this Directive may apply for a transitional regime which may be granted to them by the Commission, taking into account, amongst other things, the size of the system concerned, the level of interconnection of the system and the structure of its electricity industry. The Commission shall inform the Member States of those applications before it takes a decision, taking into account respect for confidentiality. This decision shall be published in the Official Journal of the European Communities.’

9. However, Article 24(2) of Directive 96/92 clearly states that applications for a transitional regime must be notified to the Commission no later than one year after the entry into force of the Directive.

B – National law

10. The order for reference essentially sets out the position under national law as follows.

11. Under Article 3(10) of Decreto legislativo No 79 of 16 March 1999 (hereinafter ‘Legislative Decree No 79/99’) implementing Directive 96/92/EC concerning common rules for the internal market in electricity ( ) a charge is payable to the network operator for access to and use of the national transmission system; it is determined by AEEG (Autorità per l’energia elettrica e per il gas, the Electricity and Gas Authority) irrespective of the geographical location of the production plants and final customers and on the basis of non-discriminatory criteria.

12. Article 3(11) of Legislative Decree No 79/99 provides that the general revenue charges relating to the electricity system, including research expenditure and expenditure incurred in the dismantling of decommissioned nuclear power stations, the closure of the nuclear fuel cycle and related activities, are to be determined by a decree pronounced by the Ministro dell’industria, del commercio e dell’artigianato (Minister for Industry, Commerce and Craft Industries), in consultation with the Ministro del tesoro, del bilancio e della programmazione economica (Minister for the Treasury, the Budget and Economic Planning), and on a proposal by AEEG. It also provides that AEEG is to make provision for the adjustment of the amount of the consideration payable under Article 3(10).

13. Article 2(1) of the decree adopted by the Ministro dell’industria, del commercio e dell’artigianato, in consultation with the Ministro del tesoro, del bilancio e della programmazione economica, and on a proposal by AEEG, of 26 January 2000 determining the general revenue charges relating to the electricity system ( ) (hereinafter, ‘the Ministerial Decree’) essentially determines that ‘the general revenue charges incurred by the electricity system are defined as:

(a) restitution …, under the criteria herein, of the non-recoverable portion, following implementation of Directive 96/92/EC, of the costs incurred in connection with electricity generation;

(b) financial offset for the overvaluation, stemming from implementation of Directive 96/92/EC, of electrical energy produced by hydro-electrical and geothermal electricity generating plants which, as at 19 February 1997, were the property of or were available to producer and supply undertakings;

(c) costs relating to the dismantling of decommissioned nuclear power stations, the closure of the nuclear fuel cycle and related activities;

(d) costs of research and development in the interests of technological innovation of general interest to the electricity system;

(e) application of favourable rates for the supply of electricity provided for in Article 2(4) of AEEG Decision No 70/97 and by the decree of the Minister for Industry, Commerce and Craft Industries of 19 December 1995.’

14. In relation to Article 2(1)(b) it is provided in Article 3(3) of the Ministerial Decree under the heading ‘Charges from the implementation of Directive 96/92’:

‘In order to offset if only in part the general revenue charges incurred by the electricity system the amount of overvaluation of electricity produced by hydro-electrical and geothermal electricity generating plants not benefiting from a contribution under the measures adopted by the inter-ministerial committee on prices of 12 July 1989 (No 15), 14 November 1990 (No 34) and 29 April 1992 (No 6), as subsequently amended and consolidated, shall be recovered for a period of seven years with effect from 1 January 2000 and subject to the detailed rules laid down in Article 5. The provisions hereof do not apply to plants with a nominal power not greater than 3 MW or to hydro-electric pumping stations.’

15. Finally, Article 5(9) of the Ministerial Decree lays down the detailed rules for determining the amount of the overvaluation to be recovered as follows:

‘The amount of the overvaluation to be recovered in respect of the period mentioned in Article 3(3) shall be equal for the year 2000 to the approved variable unit cost of electricity produced by thermal electricity generating plants using commercial fossil fuels, as mentioned in Article 6(5) of AEEG Decision No 70/1997. In subsequent years for each plant and in each two-month period, it shall be equal to a proportion of the difference between the average weighted value of wholesale prices of electricity sold on the national market from time to time during that two-month period, using as weightings the quantities of electricity produced by the plant from time to time during the two-month period, and the average fixed unit costs of the plant as determined by AEEG on an annual basis up to 31 December of the preceding year. For the years 2001 and 2002 such proportion shall be equal to 75%; for the years 2003 and 2004 50% and for the years 2005 and 2006 25%. Subsequently to that date the proportion shall be equal to zero.’

16. Under Article 2(1) and (2) of AEEG Decision No 231/00 of 20 December 2000 concerning determination of the recovery of the overvaluation of electricity produced by hydro-electric and geothermal electricity generating plants for the year 2000 ( ) electricity produced and supplied to the network by non-pumping hydro-electric and geothermal electricity generating plants having a nominal power greater than 3 MW – which, as at 19 February 1997, were the property on were available to undertakings which on that date were engaged in distribution and producing themselves, in whole or in part, the electricity distributed – was to attract an ‘increase in the amount of the consideration payable for use of the system to cover the power services mentioned in Article 8(1)(a) of Decision No 13/99’ in order to offset the overvaluation mentioned in Article 2(1)(b) of the Ministerial Decree of 26 January 2000.

17. Under Article 2(1) and (2) of AEEG Decision No 232/00 of 20 December 2000 concerning determination of the recovery of the overvaluation of electricity produced by hydro-electric and geothermal electricity generating plants for the years 2001 to 2006 ( ) the electricity stated in Article 3(3) of the Ministerial Decree of 26 January 2000 produced and supplied to the network by non-pumping hydro-electric and geothermal electricity generating plants having a nominal power greater than 3 MW – which, as at 19 February 1997, were the property of or were available to undertakings which on that date were engaged in distribution and producing themselves, in whole or in part, the electricity distributed – attracts an ‘offset in respect of overvaluation as mentioned in Article 2(1)(b) of the Ministerial Decree of 26 January 2000’. Under Article 2(8) of Decision No 232/00 the aforementioned offset in respect of overvaluation is to take the form of an ‘increase in the amount payable for use of the system in order to cover the power services mentioned in Article 8(1)(a) of Decision No 13/99’.

18. Under Article 3(1) of both Decisions the revenue from the increases in the amounts payable stipulated in Article 2 of Decision No 231/00 and Decision No 232/00 is to be transferred by the system operator to Cassa conguaglio per il settore elettrico (equalisation fund for the electricity sector, hereinafter ‘Cassa conguaglio’). Article 3(2) of both of the aforementioned Decisions provides that those transfers are to be credited to the Conto per la gestione della compensazione della maggiore valorizzazione dell’energia elettrica nella transizione (account for the management of the yield from the offset in regard to the overvaluation of electricity during the transitional period). Under Article 3(3) of both of the said Decisions any differences between the amount of the increases and payments made on the account itself are to be transferred to the Conto per nuovi impianti da fonti rinnovabili e assimilate (account for new plants using renewable and assimilated sources).

III – Facts and procedure

19. It is apparent from the orders requesting a preliminary ruling that AEM and AEM Torino issued proceedings in the Tribunale Amministrativo Regionale per la Lombardia (Regional Administrative Court for Lombardy) (Italy) challenging Decisions Nos 231/00 and 232/00 and ‘the preparatory acts on which they were based’ including the Ministerial Decree of 26 January 2000.

20. When those proceedings were dismissed AEM and AEM Torino lodged appeals with the Consiglio di Stato (Council of State) asking for the judgments under appeal to be set aside.

21. The referring court, the Consiglio di Stato, states that the arguments put forward by AEM and AEM Torino can essentially be summarised as follows:

– The increased charge in question comes entirely under the heading of aid for the functioning of certain undertakings or production financed by levies on supplies by undertakings in the sector, amounting to State aid within the meaning of Article 87(1) EC, which was granted in the present case in disregard of the procedure laid down in the Treaty itself.

– The provision for a dissimilar charge for access to the transmission network in terms of a heavier imposition on certain undertakings constitutes an infringement of one of the fundamental principles of Directive 96/92 guaranteeing universal access without discrimination to the transmission network;

– The imposition of a compensatory levy on the production of geothermal electricity in favour of the production of thermo-electric undertakings whose revenues are threatened by prices prevailing on the open competitive market constitutes a measure likely artificially to distort price formation on the open market;

– In the final analysis a distortion of competition arises either as between undertakings operating on the same market (undertakings producing electricity) or as between undertakings characterised by the same type of production (production of electricity and geothermal energy) or, finally, in terms of commercial relations between the States, Italy being the only State providing for a compulsory levy on certain hydroelectric production in order to finance the charges attendant on implementation of the Directive.

22. The Consiglio di Stato considers that an examination of the Decisions challenged shows that the increased charge at issue is based on the need to offset the undue advantages and to counter the competitive imbalances arising in the first period of liberalisation of the electricity market (from 2000 to 2006) attendant upon implementation of Directive 96/92.

The national court making the reference considers it necessary, in the first place, to clarify whether the rule in question constitutes State aid governed by the rules laid down in Article 87 et seq. EC.

It is inclined to answer that question in the negative. This is because the revenue from the proportionate increased charge for use of the network is not used to cross-subsidise certain undertakings or categories of undertakings operating in the market but seeks to offset the general revenue charges of the electricity system to the benefit of users (upon whom the general revenue charges would otherwise fall) and seeks to prevent the additional amounts received in respect of costs not borne by the producer and supply undertakings from penalising users in tariff terms. It is therefore a general measure of economic policy which does not aim to benefit certain undertakings or groups of undertakings but, on the contrary, pursues an interest of a general nature by preventing such financial returns from placing consumers at a disadvantage and distorting the equilibrium and functioning of the market. Indeed, notwithstanding certain indications in the preparatory acts, the contested decisions do not seek to allocate the revenue raised from the increased charge to a specific category of undertakings with a view to covering so-called stranded costs. Instead, in order to offset general revenue charges of the system this revenue is paid into an account for management of the yield from the offset in regard to the overvaluation of electricity during the transitional period (Article 4 of Decision No 53/00). Decisions Nos 231/00 and 232/00 further provide, albeit only as an eventuality, that amounts available in the account in excess of requirements are to be transferred to the account for new generating capacity from renewable or assimilated sources mentioned in Article 5 of Decision No 70/97. In the final analysis, the referring court does not consider that the requirement under the Ministerial Decree of 26 January 2000 may be classed as State aid since it merely provides for those sums to be paid into a single account intended to meet the general revenue charges of the system. Rather it might be the distinct and subsequent determination to direct those sums, henceforth publicly available, in favour of certain undertakings or production within the meaning of Article 87(1) EC which might amount to State aid.

23. The referring court also considers it necessary to seise the Court of an interpretive question concerning the compatibility with Directive 96/92, in light of the general principles of the Treaty concerning competition and free movement in connection with liberalisation of the electricity market, of an administrative measure (imposed by the Ministerial Decree and implemented by Decisions Nos 231/00 and 232/00), laying down for a transitional period of six years (2000 to 2006), otherwise than under the rules provided for in Article 24 of the Directive, an increased charge for access to and use of the transmission network to the detriment of undertakings which benefited from liberalisation either in regard to supplies to the captive market or within the free market.

24. In particular, the Court is asked to clarify, in light of the principles and provisions of Directive 96/92, whether that measure which appears to be discriminatory and to distort competition might be justified by the need, elucidated above and in the Decisions challenged, firstly, to preclude an advantage from accruing to the detriment of thermo-electrical undertakings which bear the cost of fuel, stemming from enjoyment of financial returns dependent on a tariff regime in the course of being superseded and, secondly, to prevent users bearing the burdens of costs not actually incurred by those undertakings from being penalised.

25. The Consiglio di Stato also considers it necessary to refer to the Court the issue of the compatibility of the aforesaid increased charge with Article 7 of Directive 96/92 and the 25th recital in the preamble to that Directive. On this question as well, the referring court tends to favour compatibility with Community law as the Community provision prohibits discrimination of users by the operator, whereas the present case concerns decisions by the Ministry and the AEEG which, though not affecting accessibility to the network, lay down a criterion for the transitional determination of a charge that is not prohibited by Community legislation. That charge is above all not discriminatory since it seeks to remedy imbalances which benefit certain types of user who receive financial returns as a result merely of an altered legislative framework.

26. In the light of the foregoing the national court refers the following questions to the Court of Justice for a preliminary ruling in both sets of proceedings:

1. Can an administrative measure which, on the terms and for the purposes stated in the reasoning, imposes on certain undertakings using the electricity transmission network an increased charge for access and use in order to finance general revenue charges of the electricity system be regarded as State aid for the purposes of Article 87 et seq. of the Treaty?

2. Must the principles established in Directive 96/92 concerning the liberalisation of the internal electricity market and in particular Articles 7 and 8 thereof concerning operation of the electricity transmission network be interpreted as precluding the possibility for the Member States to adopt measures imposing for a transitional period on certain undertakings for access to and use of the transmission network an increased charge in order to offset the overvaluation of hydroelectric and geothermal electricity occasioned, as stated in the reasoning, by the altered legislative framework and to finance general revenue charges of the electricity system?

IV – Legal appraisal

A – Preliminary remarks

27. In its first question the national court making the reference is essentially seeking to establish in which circumstances the imposition of a levy in the form of an increased charge ( ) to offset undue cost advantages caused by liberalisation comes within the concept of State aid under Article 87 EC.

28. In its second question the national court making the reference is essentially seeking to establish whether and to what extent the imposition of that levy is contrary to the prohibitions of discrimination for access to the transmission system under Articles 7 and 8 of Directive 96/92.

29. Since the aid provisions in the Treaty are in principle to be applied alongside other Treaty provisions and since Directive 96/92 is a liberalisation directive, both of the questions referred to the Court have to be considered in succession. It should first be noted in this connection that the referring court has expressly stated that the electricity producers are operating in the same market so that it would appear obvious to infer from any distortion of competition contrary to Article 87 EC that there is also discrimination within the meaning of Directive 96/92.

B – Article 87 EC

1. Preliminary remarks

30. Article 87(1) EC defines State aid governed by the EC Treaty as any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods in so far as it affects trade between Member States. According to settled case-law, ‘the concept of aid within the meaning of that provision is wider than that of a subsidy because it embraces not only positive benefits, such as the subsidies themselves, but also measures which, in various forms, mitigate the normal burdens on the budget of an undertaking’. ( )

31. This general description of the concept of aid shows that even State measures in the field of direct ( ) or indirect ( ) taxation and social security contributions ( ) can, in principle, come within the definition of aid.

32. In answer to the first question referred to the Court it is now necessary to examine whether the factual criteria for State aid in Article 87(1) EC are met.

33. First, the aid must be granted by a MemberState or through State resources.

34. The present case concerns administrative measures which would undoubtedly appear to be attributable to the State. It must be ascertained, with regard to the use of State resources, that the imposition of an increased charge on certain electricity producers – in this case for access to and use of the network – initially leads to an increase in State revenue. ( ) Where an increased charge is levied only on certain undertakings aid could be construed from the fact that other undertakings are not liable to pay the increased charge and the State is therefore relinquishing revenue, which should therefore be equated with the use of State resources. ( )

35. Second, the State aid must be liable to affect trade between Member States. Such an effect is probable, in any event, following the liberalisation of electricity markets and the creation of an internal market in electricity by virtue of Directive 96/92. ( )

36. Third, it must be possible to regard aid as an advantage favouring the recipient undertaking; and fourth, that advantage must distort or threaten to distort competition.

37. As regards distortion of competition, it has already been established that objectively unjustified dissimilar treatment of undertakings that are in competition is liable, in principle, to provoke distortion of competition. It is necessary to establish, with regard to the affording of any advantage, whether there was such objectively unjustified dissimilar treatment in this case.

38. The third condition mentioned above concerns the factual criteria for the selective affording of an advantage. It is necessary here to examine, in particular, the extent to which determination of the group liable to pay the increased charge involves objectively justified differentiation. It is also significant, in relation to the factual criterion of the affording of an advantage, whether the revenue from the increased charge is used to finance aid measures.

39. It is therefore necessary to examine the extent to which the levying of the increased charge in question, in so far as it only relates to certain electricity producers, comes within the definition of aid and the extent to which the use of that revenue is significant.

2. The affording of an advantage and the imposition of an increased charge as State aid

40. Inasmuch as the increased charge in question exceeds the charge payable for access to and use of the network and inasmuch as it is used to fund the general revenue charges of the electricity system it is to be categorised as a parafiscal charge. ( )

41. According to settled case-law, the extent to which a fiscal rule affords selective advantages depends on whether a measure exempts undertakings from financial charges arising from the normal application of the general fiscal system ‘without there being any justification for this exemption on the basis of the nature or general scheme of this system’. ( )

42. The national ‘general’ fiscal system is therefore to be applied as the criterion, although it is then necessary to ascertain precisely what is a ‘general’ fiscal provision. This is undoubtedly an extremely tricky matter requiring comprehensive analysis of national fiscal provisions, at least in relation to direct taxation. ( )

43. An analysis in relation to increased charges of the type in question proves easier in that it is not the whole of the fiscal system concerned that has to be analysed but just the particular regime relating to the charge concerned. It must first be established whether and to what extent any parties favoured are in competition with the parties liable to pay the levy. Advocate General Tizzano states in this respect in his Opinion on the Ferring case ( ) that ‘any new tax imposed on a given category of economic operators may be viewed in theory as an advantage conferred upon all operators who are not subject to that tax but are in more or less close competition with the first category’. Advocate General Tizzano rightly emphasises the importance of analysing the competitive relationships between all of the parties and therefore properly precludes the possibility of a response of general application in relation to the affording of an advantage so that ‘the solution must be sought on a case by case basis, with regard being had to the particular circumstances of the case and, above all, to the competitive relationship between the operators concerned, the reason for the tax and its effects.’ ( )

44. It should be recalled in relation to the case in the main proceedings that, as also expressly stated by the national court making the reference, all of the electricity producers are operating in the same market. Therefore, where the administrative measure at issue discriminates between electricity producers in the imposition of the increased charge the decisive factor is whether there are objective grounds to justify such discrimination.

45. Recompense for undue cost advantages enjoyed by certain market participants could constitute objective justification. It is therefore necessary to examine whether and in what circumstances recompense for undue cost advantages by the imposition of an increased charge can be accepted as objective justification for the discrimination effected by that administrative measure. This would mean that no selective advantage has been afforded to the undertakings not liable to pay the increased charge as a result of imposing the increased charge on the other undertakings that are in competition with them.

46. This question quite unmistakably resembles the problems faced in the cases of Ferring, ( )Altmark Trans ( )and Enirisorse. ( ) Those cases were concerned with the question of whether and to what extent Member States can offset additional costs incurred as a result of being entrusted with services of general economic interest without then being subject to the provisions in the Treaty governing aid. In none of the three judgments did the Court of Justice completely rule out the recompense element. This would logically mean here – subject to the conditions to be more particularly described – that it would, in principle, be possible to allow recompense for certain undue cost advantages without that recompense option being considered a selective advantage within the meaning of the term aid.

47. The national court making the reference does itself apparently proceed on the basis of the existence of undue cost advantages on the part of those liable to pay the increased charge and states in this context that the Italian electricity producers had not been in comparable situations following the transposition of Directive 96/92: the reason for this is a general tariff regime that is unaltered – at least in relation to captive customers – and that is applied by all electricity producers in their relationships with distribution companies and includes amongst other things a component to cover fuel costs. It immediately makes it clear, however, that not all electricity producers have to bear fuel costs – such as hydroelectric and geothermal electricity producers, for example. Prior to the liberalisation of the electricity market, therefore, there was compensation machinery in place ensuring that electricity producers which did not have to bear fuel costs passed on the revenue from the tariff components concerned to the Cassa conguaglio. Admittedly, during the course of market liberalisation that compensation machinery was abolished – although the tariff regime was not – so that this allegedly ultimately resulted in an undue cost advantage to electricity producers who do not bear fuel costs. According to the national court making the reference this tariff regime is also significant within the liberalised electricity market inasmuch as wholesale prices on the captive market constitute a point of reference for bilateral bargaining on the open market.

48. This information provided by the national court shows that the liberalisation of the Italian electricity market led to undue cost advantages to certain electricity producers the extinction of which by the imposition of an increased charge for a limited period of time ( ) on the undertakings advantaged without good cause – that is to say, the hydroelectric and geothermal electricity producers – in some circumstances should not be considered selective favouring of the other electricity producers not liable to pay the increased charge.

49. In this instance, however, acknowledgement of the recompense approach as objective grounds for justification is conditional, first, on the group of parties liable to pay the increased charge corresponding to that group of undertakings which actually enjoyed undue costs advantages in the course of the liberalisation of the electricity market and, second, on the recompense afforded by levying the increased charge not exceeding what is required in order to extinguish the so-called overvaluation of hydroelectric and geo-thermal electricity. The fact that the increased charge in question was introduced as a transitional measure, with the amount declining as time went on, would certainly support its fulfilment of this second condition. It is nevertheless for the national court to arrive at such conclusions.

3. The affording of an advantage and the financing of State aid measures with the revenue from the increased charge

50. There has also been heated debate as to the extent to which the use of revenue from the increased charge in question is significant to an assessment of the contested administrative measure in the context of the law governing aid.

51. The national court making the reference states that in the final analysis it ‘does not consider that the requirement under the Ministerial Decree of 26 January 2000 may be classed as State aid since it merely provides for those sums to be paid into an account intended to meet the general revenue charges of the system and that it may rather be the distinct and subsequent determination to direct those sums, henceforth publicly available, in favour of certain undertakings or production within the meaning of Article 87(1) EC which may amount to State aid’. This view is essentially shared by the Commission.

52. Importance is to be attached here, first, to the settled case-law of the Court according to which ‘when an aid is financed by taxation of certain undertakings or certain producers, the Commission is required to consider … whether the method by which it is financed … in conjunction with the aid which it services … is compatible with the requirements of Articles [87 EC and 88 EC]’. ( ) The fundamental importance of the method of financing aid was also most recently reaffirmed in the Enirisorse judgment, which referred to earlier judgments:

‘The concept of State aid includes not only certain parafiscal charges, depending on the use to which the revenue from those charges is put (see, inter alia Case C-17/91 Lornoy and Others [1992] ECR I-6523, paragraph 28), but also the collection of a contribution constituting a parafiscal charge (see Case C-72/92 Scharbatke [1993] ECR I-5509, paragraph 20).

One of the Court’s recent decisions also makes it clear that where the method by which aid is financed, particularly by means of compulsory contributions, forms an integral part of the aid measure, consideration of the latter by the Commission must necessarily also take into account that method of financing the aid (Joined Cases C-261/01 and Case C-262/01 Van Calster and Others[2003] ECR I-0000, paragraph 49).’ ( )

53. Case-law has always stressed the requirement for such a connection. ( ) However, the Court has developed the requirement to take the financing of an aid measure into account in the context of charges to be used for a specified purpose, where the charge discernibly serves to finance an aid measure. ( )

54. In the Van Calster judgment ( ) the Court refers to ‘a charge specifically intended to finance aid’ ( ) and later on, in relation to the method by which an aid is financed, to ‘the entire aid scheme that is intended to be financed thereby’. ( ) The Court then states with regard to the obligation to notify that ‘the Member State is required, in order to comply with that obligation, to notify not only the planned aid in the narrow sense, but also the method of financing the aid inasmuch as that method is an integral part of the planned measure’ (emphasis inserted). ( )

55. The Enirisorse case ( ) also concerned a charge the revenue from which was partly intended to finance an aid measure. The Court referred there to the Van Calster judgment in relation to the connection between the imposition of a charge and the use of the revenue.

56. This all shows that the method of financing an aid measure is relevant in the context of the law governing aid where it forms an integral part of the planned measure. However, there is no such connection in the main proceedings. At the date on which the increased charge in question was imposed, at least, only the general revenue charges of the electricity system were to be financed. As the financing of general revenue charges cannot by definition constitute the selective affording of an advantage it was, however, initially uncertain whether aid measures would eventually be brought in here – to finance ‘stranded costs’ or to promote renewable energy sources, for instance. Developments of this kind within the national legislative framework cannot, in the guise of the financing of aid measures, create an ex post facto link between the imposition of an increased charge and the use of the revenue from that increased charge, so that they are of no significance here.

57. It is therefore found that in the present cases the use of the revenue from the increased charge in question has not been absolutely established. All that can be said is that the revenue from the increased charge in question, after being transferred by the system operator, is undoubtedly credited to a special account managed by the Cassa conguaglio. ( ) The general revenue charges of the network, as defined in Article 2(1) of the Ministerial Decree of 26 January 2000, are to be financed from that account, with any amounts available in that account in excess of requirements being transferred to the account for new plants using renewable and assimilated sources mentioned in Article 5 of Decision No 70/97.

58. Admittedly, the claimants are stressing what in their opinion is the unmistakable link between the revenue from the increased charge in question and the use to which it is put. In doing so, however, they are simply attempting to prove according to the case-law cited that the imposition of the increased charge in question also comes within the definition of aid inasmuch as the revenue from it is used to finance aid measures.

59. This argument by the claimants is not convincing.

60. Admittedly, it cannot be denied that there might be a certain link between the increased charge in question and the financing of any aid measures. However, there is no need here to decide whether the revenue from the increased charge in question is to be used to finance general revenue charges pursuant to the Ministerial Decree of 26 January 2000 ( ) or to also finance possible aid measures, for instance to promote renewable energy sources. ( ) Indeed, such enquiries into the actual use of the revenue from the increased charge in question are the responsibility of the national court. Notwithstanding the ultimate use of the revenue concerned, however, in my opinion there is no connection between the imposition process and the use of the funds that is sufficiently certain in the light of the case-law cited.

61. It is therefore recommended that the first question referred to the Court should be answered as follows: Under Article 87(1) EC a rule such as that at issue in the main proceedings, which imposes on certain electricity producers an increased charge for access to and use of the electricity transmission network in order to finance general revenue charges of the electricity system, cannot be regarded as State aid in so far as

– the group of electricity producers who are liable to pay an increased charge corresponds to that group of producers who have proceeded to enjoy undue cost advantages as a result of changes to the national legislative framework;

– the increased charge is measured in such a way that the amount does not exceed what is required in order to extinguish the undue cost advantage received by the producers concerned.

C – Directive 96/92

62. It is apparent that the national court making the reference considers that the imposition of the increased charge in question raises questions of two kinds with regard to Directive 96/92. First, no recourse has been had, with regard to the national provision at issue, to the rule in Article 24 of the Directive regarding the financing of stranded costs; second, the increased charge could prove problematical inasmuch as it is associated with dissimilar treatment of electricity producers regarding access to the transmission network.

63. Both questions will now be gone into in succession.

1. The connection between ‘stranded costs’ and the present proceedings

64. Under Article 24 of the Directive those Member States in which commitments or guarantees of operation given before the entry into force of the Directive may not be honoured on account of the provisions of the Directive ‘may apply for a transitional regime which may be granted to them by the Commission, taking into account, amongst other things, the size of the system concerned, the level of interconnection of the system and the structure of its electricity industry’.

65. This provision enables so-called ‘stranded costs’ to be financed under the control of the Commission; these are costs resulting from investment that has not yet been recovered and which was made in the past in reliance upon long-term usage but can no longer be earned due to the opening-up of the market.

66. The question of a link between the national rule at issue and the problem of ‘stranded costs’ arises because the financing of ‘stranded costs’ in Italy is still the subject of aid proceedings pending before the Commission ( ) and bears a close regulatory connection with the provisions at issue regarding recompense for the overvaluation of electricity produced by hydroelectric and geothermo-electric plants.

67. The Ministerial Decree of 26 January 2000 is concerned with the financing of the general revenue charges of the electricity system. Article 2(1) of the Ministerial Decree defines as general revenue charges both the financial offset for the overvaluation of hydroelectric and geothermal electricity and the restitution of the portion of the general revenue charges for electricity costs that cannot be recovered following implementation of Directive 96/92 – in other words ‘stranded costs’. The same legal basis was therefore taken in this Ministerial Decree for the financing of these two elements.

68. The Italian Government nevertheless recognised ( ) that recompense for the overvaluation of hydroelectric and geothermal electricity does not have any connection with ‘stranded costs’ inasmuch as the imposition of the increased charge in question is not based on Article 24 of Directive 96/92 and the issue of the use of the revenue from the increased charge represents a separate issue from the reason ( ) for the provisions relating to the imposition of that increased charge. It is apparent that the Commission also takes this view inasmuch as it excluded the said recompense from the scope of its examination. Hence, the question of the compatibility of the increased charge in question, particularly with the provisions of the Directive relating to access to the transmission network, is raised without an interpretation of Article 24 of Directive 96/92 being required.

2. Interpretation of Articles 7 and 8 of Directive 96/92

69. Article 7 of the Directive contains general principles relating to transmission system operation. Its operation is to be entrusted to a system operator; Article 7(5) compels the latter to refrain from any discrimination between system users or classes of system users. Article 8 of Directive 96/92 essentially stipulates the criteria to be applied to dispatching the generating installations and determining the use of interconnectors with other systems.

70. It should be stated, first, that the applicability of the prohibition of discrimination under Article 7(5) is dependent upon the answer to a question that has been referred to the Court for a preliminary ruling in Case C-17/03, ( ) which is currently pending. In that case the Court is being asked to clarify, in particular, whether or not the prohibition of discrimination in Article 7(5) is confined to technical rules. The administrative measure regarding the imposition of the particular increased charge at issue here clearly does not constitute any such technical rule. In accordance with my recommended answer in Case C-17/03 it is my opinion that it should also be concluded here that Article 7(5) of Directive 96/92 is not confined to technical rules.

71. The Commission also expresses doubts as to the applicability of Articles 7 and 8 of Directive 96/92 because the increased charge in question is ultimately not a charge that takes the form of remuneration – such as consideration for access to and use of the transmission network – but a charge for a specified purpose, ( ) of which the system operator at least does not receive the benefit. ( )

72. Although these remarks are quite correct they do not lead to the conclusion that the charge in question should not be measured against the criterion of the prohibition of discrimination in Article 7(5) of Directive 96/92. As already shown in the context of the law on aid, ( ) it must also be assumed, in relation to system access, that dissimilar treatment of electricity producers – consisting here of the selective imposition of an increased charge – is open to objection unless it is objectively justified. Such discrimination is liable per se to impede access to and use of the transmission network or, in any event, to make it less attractive, which is contrary to the clear open market objectives of Directive 96/92.

73. Reference can therefore be made to the statements set out above ( ) with regard to such objective justification. It must be concluded from those statements that, in so far as a change in the national legislative framework leads to an undue cost advantage to certain electricity producers, the extinction of that advantage should not, in principle, be considered an advantage of relevance to the law governing aid so that the dissimilar treatment can ultimately appear to be objectively justified in the circumstances stated there. There is no need to determine in this context whether the selective imposition of the increased charge in question constitutes dissimilar treatment of electricity producers that are not comparable ( ) or the objectively justified dissimilar treatment of comparable electricity producers.

74. It is therefore recommended that the second question referred to the Court should be answered as follows: Article 7(5) of Directive 96/92 does not preclude the Member States from adopting measures by which, in order to offset the overvaluation of hydroelectric and geothermal electricity occasioned by altered legislative framework, an increased charge is imposed on certain undertakings for a transitional period for access to and use of the transmission network the purpose of which is to finance general revenue charges of the electricity system. However, this is subject to the proviso that undue cost advantages have actually arisen over the transitional period.

V – Conclusion

75. In the light of the foregoing it is recommended that the questions referred to the Court should be answered as follows:

(1) Under Article 87(1) EC a rule such as that at issue in the main proceedings, which imposes on certain electricity producers an increased charge for access to and use of the electricity transmission network in order to finance general revenue charges of the electricity system, cannot be regarded as State aid in so far as

– the group of electricity producers who are liable to pay an increased charge corresponds to that group of producers who have proceeded to enjoy undue cost advantages as a result of changes to the national legislative framework;

– the increased charge is measured in such a way that the amount does not exceed what is required in order to extinguish the undue cost advantage received by the producers concerned.

(2) Article 7(5) of Directive 96/92 does not preclude the Member States from adopting measures by which, in order to offset the overvaluation of hydroelectric and geothermal electricity, an increased charge is imposed on certain undertakings for a transitional period for access to and use of the transmission network the purpose of which is to finance general revenue charges of the electricity system, provided that this overvaluation demonstrably corresponds to the undue cost advantages benefiting such undertakings as a result of an altered national legislative framework.