WRITTEN QUESTION E-2457/03 by Patricia McKenna (Verts/ALE) to the Commission. Anti-competitive actions of the Irish State in the electricity market.
Date: 2003-07-23
Institutions: European Parliament, Provisional data
Subjects: Ireland, State aid, award of contract, control of State aid, electrical energy, public sector, renewable energy, restriction on competition

20.3.2004

EN

Official Journal of the European Union

C 70 E/101

(2004/C 70 E/102)

WRITTEN QUESTION E-2457/03

by Patricia McKenna (Verts/ALE) to the Commission

(23 July 2003)

Subject: Anti-competitive actions of the Irish State in the electricity market

On 9 July, the Irish State announced the award of renewable energy Power Purchase contracts under the
AER competitive tendering type support scheme, which the Commission previously cleared as State aid.
The main beneficiary is a subsidiary of the national electricity utility ESB. ESB’s Kish Consortium has won
100 % of the offshore wind contracts.

Would the Commission agree that such awards hinder the liberalisation process, when ESB already
controls 88 % of
Irish electricity generation, as well as owning the transmission network, and also
undermines commitments by both the State and ESB to reduce its share to some 60 %?

Would the Commission agree that allowing ESB to allocate large amounts of equity from its balance sheet
to its subsidiaries so that they can undercut commercial entities constitutes a market distortion and
contradicts a true arms-length relationship between these entities, for which the Energy Regulator had
produced apparently inadequate regulations?

Does the Commission consider it proper for the Irish State to provide this kind of support to companies of
which it is the overwhelming majority owner, where additionally, the State proposes to place these
ownerships on the market in due course?

Does this action alter the Commission’s conclusion under its State aid approval that there were no State
aids to ESB?

How does this action accord with the Directive on public procurement, as regards the participation of
public undertakings?

Will the Commission now request the Irish State to immediately halt the implementation of the awards to
ESB and partners while the Commission investigates these questions?

Answer given by Mr Monti on behalf of the Commission

(15 September 2003)

The Commission decision on state aid for the AER scheme (1) does not lay down any requirement as to the
nature of tenderers. It is designed to increase the volume of electricity produced in Ireland using renewable
energy sources and there is no reason why Electricity Supply Board (ESB) subsidiaries should not
participate in this increase provided that they meet the requisite conditions to win tenders. It should also
be noted that Article 9(1)(b) of the Utilities Directive (93/38/EEC (2)) provides for a specific derogation from
the Directive even where energy purchases are concerned and that, in particular, the Directive does not
apply to ‘contracts which the contracting entities (…) award for the supply of energy or of fuels for the
production of energy’. One of the contracting entities listed in that Directive is ESB.

The fact that ESB is boosting its capacity to generate electricity from renewable energy sources is not
incompatible with the fact that its share of total electricity production in Ireland is declining, since this
decline may be due to a reduction in its production capacity from conventional sources.

The Commission takes the view that, as ESB’s majority shareholder, the Irish State is free to manage the
company’s capital as it sees fit, provided that it acts in accordance with the market-economy investor
principle. In the case in point, the Commission does not possess any information suggesting that ESB
subsidiaries have received aid from their parent company in the form of, say, supplies at lower-than-
market prices.

C 70 E/102

Official Journal of the European Union

EN

20.3.2004

The Commission therefore has no intention of amending its above decision so as
ESB subsidiaries from the AER scheme.

to exclude

The aforementioned Commission decision does not exclude the possibility of selected green electricity
producers, including some ESB subsidiaries, receiving state aid. It merely rules out the possibility of ESB,
as the channel for aid and the recipient of state subsidies which it redistributes in full to selected green
electricity producers, itself receiving aid within the meaning of Article 87(1) of the EC Treaty on that basis.
As such, the Commission’s conclusions are not affected by the facts as reported by the Honourable
Member.

Accordingly, the Commission does not intend to intervene in the award of contracts to ESB or its partners.

(1) Commission decision in case N 553/01, OJ C 45, 19.2.2002.
(2) Council Directive 93/38/EEC of 14 June 1993 coordinating the procurement procedures of entities operating in the

water, energy, transport and telecommunications sectors, OJ L 199, 9.8.1993.

(2004/C 70 E/103)

WRITTEN QUESTION E-2463/03

by Professor Sir Neil MacCormick (Verts/ALE) to the Commission

Subject: Under-age EU citizens

(23 July 2003)

Can the Commission comment on the rights of under-age EU citizens in respect of residence within the
Union? If an under-age EU citizen has parents who are not themselves EU citizens, it appears that the
under-age EU citizen has no right of residence within the Union. This is because the rights do not apply to
non-EU parents of EU under-age citizens. Does the Commission consider that this is an accurate statement
of the position, and if so does it not consider that current arrangements are in violation of the Charter of
Fundamental Rights of the European Union, Article 24(3)?

Answer given by Mr Vitorino au nom de la Commission

(25 September 2003)

An under-age Union citizen has the right to reside in another Member State as long as he/she fulfils the
conditions for exercising the right of residence under Community legislation, i.e. being a worker (salaried
or self-employed), a student or somebody with enough financial resources and a medical insurance.

Under Community legislation the right of residence of a Union citizen, except in the case of students,
extends to his/her parents, regardless of their nationality, if they are dependent on the Union citizen. In the
case of an under-age child, this is in general not the case, as usually it is the child who is dependent on the
parents.

Nevertheless, if the under-age child fulfilled the conditions of right of residence recalled above and his/her
parents were financially dependent on him/her, the parents would enjoy a right of residence under
Community law.

However,
in the recent Judgement of the Court of Justice of 17 September 2002 in Case C-413/99
Baumbast and R, the Court of Justice confirmed the principle whereby the provisions of Community law
concerning free movement of persons must be interpreted in the light of the requirement for respect for
family life, provided for by Article 8 of
the Convention on the Protection of Human Rights and
Fundamental Freedoms (ECHR), this respect being one of the basic rights recognised by Community law.