WRITTEN QUESTION E-1060/98

by Elisabeth Schroedter (V) to the Commission

(6 April 1998)

Subject: Unjustified subsidization of the power station at Frankfurt an der Oder to encourage the use of domestic brown coal

The Commission has failed to answer my specific Written Question No P-3142/97(1) as to whether it gave notice of this subsidization.

This compels me to put more detailed supplementary questions:

1. Why does the Commission assume that the subsidization of the power station at Frankfurt an der Oder is not solely in the interests of the brown coal industry, when it results in the natural gas sector losing 63 % of its secure supply share to brown coal?

2. Does the Commission agree with the government of the Land of Brandenburg that the power station at Frankfurt an der Oder was not subsidized since the money was paid once and not on an ongoing basis, even though, taken annually, the subsidization amounts to almost half of the price of brown coal?

3. Does the Commission agree with the argument advanced by the government of the land of Brandenburg to justify the subsidy, that this brown-coal-dust- and gas-fired power station incorporates the latest technology, although it is known from the power station builder that comparable plants are in operation in Thailand and Malaysia?

4. What is the Commission's position on the view of the government of the Land of Brandenburg that this power station variant is economically the most appropriate, when specialized institutes consider a gas-fired power station more advantageous on cost, price and competition grounds?

Answer given by Mr Van Miert on behalf of the Commission

(2 June 1998)

Firstly, it should be noted that aid monitoring procedures under Article 93 of the EC Treaty do not require the Commission to take the initiative in identifying state aid measures. Rather, the Member State concerned is obliged, under Article 93(3) of the EC Treaty, to notify the Commission of such plans in sufficient time to enable it to submit its comments. It is only where a Member State fails to meet this obligation and the Commission is nonetheless informed of the plans or state of affairs in question that it takes the first step by requesting information from the Member State concerned.

In the case in question, the German authorities were informed that the Commission departments had assumed, on the basis of the information provided by the German Government at the time, that the measures in question did not include aid. They believed that the grant for the building of the thermal power station in Frankfurt an der Oder would not affect the internal market. Since the contracts for the construction of the plant had been awarded after a public call for tender, the Commission departments believed there was no reason to fear any distortion of competition on the plant construction market.

The following paragraphs are responses to the individual questions asked by the Honourable Member:

1. Steps were taken to ascertain whether the grant awarded by the Land of Brandenburg benefited one particular energy source only, thereby affecting competition within the Community on the energy market. This was not true of the thermal power station in Frankfurt an der Oder, which runs on both brown coal and gas.

2. Under Article 92 of the EC Treaty, which contains a definition of the concept of state aid, 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 is incompatible with the common market, in so far as it affects trade between Member States. Whether a measure takes the form of a one-off or an ongoing payment does not, therefore, have any bearing on whether it is classed as a subsidy.

3. In its 1995 notification, the German Government made no reference to the argument mentioned in the written question. The question has not, therefore, been examined further, as it did not affect the assessment of the compatibility of aid with EU competition law in the remainder of the procedure.

4. The German Government's 1995 notification includes a comparison of the various options open to Frankfurt an der Oder which were discussed before it was decided to opt for a combination of gas and brown coal. The principal issue was that the new power station's main purpose was to provide district heating for Frankfurt an der Oder. With this in mind, the following options were examined: a gas- and steam-turbine plant, a gas-turbine and waste-heat-boiler plant, a brown-coal-dust and steam-turbine plant and a brown-coal-dust and gas composite plant.

In comparing the relative merits and disadvantages of these options, the German Government established that a gas-fired power station did not always represent the best possible choice in the light of the specific needs of Frankfurt an der Oder, and that the combined option which was ultimately selected met the city's needs best.

(1) OJ C 117, 16.4.1998, p. 154.