2007/580/EC: Commission Decision of 24 April 2007 on the State aid scheme implemented by Slovenia in the framework of its legislation on qualified energy producers — Case No C 7/2005 (notified under document number C(2007) 1181) (Text with EEA relevance )
Date: 2007-04-24
Institutions: European Commission
Subjects: Slovenia, State aid, electrical industry, environmental protection, investment cost, power plant, production cost, renewable energy

24.8.2007

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Official Journal of the European Union

L 219/9

(Acts adopted under the EC Treaty/Euratom Treaty whose publication is not obligatory)

II

DECISIONS

COMMISSION

COMMISSION DECISION

of 24 April 2007

on the State aid scheme implemented by Slovenia in the framework of its legislation on qualified
energy producers — Case No C 7/2005

(notified under document number C(2007) 1181)

(Only the Slovenian version is authentic)

(Text with EEA relevance)

(2007/580/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty
establishing the European
Community, and in particular the first subparagraph of Article
88(2) thereof,

Having regard to the Agreement on the European Economic
Area, and in particular Article 62(1)(a) thereof,

Having called on interested parties to submit their comments
pursuant to the provisions cited above (1),

Whereas:

(2)

(3)

1. PROCEDURE

(1)

By letter registered as received by the Commission on 1
October 2003, Slovenia submitted the ‘Programme for
in electricity generation
recovery of

stranded costs

plants in the Republic of Slovenia’ under the interim
procedure referred to in Annex IV, paragraph 3, subpara-
the Czech
to the Treaty of Accession of
graph 1(c)
Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary,
Malta, Poland, Slovenia and Slovakia to the European
Union. This notification was registered under State aid
case number SI 7/03.

In the course of the exchange of letters that followed, it
appeared that two power plants mentioned in the back-
ground description of
the notified measure benefited
from another state support scheme. This other State aid
scheme (hereinafter
registered as
received on 6 December 2004 by the Commission
under State aid case number NN 80/04.

‘the scheme’) was

Based on the information at its disposal, the Commission
had doubts as to the compatibility of certain parts of the
scheme with the common market. Thus, on 2 February
investi-
it adopted a decision to open a formal
2005,
gation under Article 88(2) of the EC Treaty (hereinafter
‘the decision to open proceedings’) and called on Slovenia
to submit
comments. The decision to open
proceedings was published on 15 March 2005 in the
interested
Official
parties were invited to submit their comments within
one month of the date of publication.

the European Union (2). All

Journal of

its

(1) OJ C 46, 22.2.2005, p. 3.

(2) OJ C 63, 15.3.2005, p. 2.

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(4)

further

questions

By letter dated 11 March 2005, registered as received on
14 March 2005, Slovenia submitted its comments with
regard to the doubts raised in the decision to open
proceedings. On 25 April 2005, 11 July 2005, 23
November 2005 and 22 June 2006 the Commission
sent
Slovenia, which were
to
answered respectively by letters dated 14 June 2005,
registered as received by the Commission on the same
day, 20 September 2005, registered as received by the
same day, 31 January 2006,
Commission on the
registered as received by the Commission on the same
day and 7 July 2006, registered as received by the
Commission on 14 July 2006.

municipal heating stations of more than 10 MW
capacity and industrial heating stations of more
than 1 MW capacity;

‘the Trbovlje plant’),

(iii) the Trbovlje Thermoelectric Power Station (here-
inafter
its
production that uses up to 15 % of the domestic
primary energy necessary to cover the consumption
of electricity in Slovenia.

that part of

for

(5)

The Commission did not receive any comments from
other interested parties.

(10)

In 2003, qualified producers had a share of approxi-
mately 11,2 % of the electricity generation market
in
Slovenia. After excluding the Trbovlje plant and the
combined heat and power station at Ljubljana,
this
share drops to around 2,7 %.

(6)

(7)

A technical meeting between the Commission and the
Slovenian authorities was held on 25 October 2006
and as a result Slovenia provided the Commission with
additional
information by letter dated 23 November
2006, registered as received by the Commission on
24 November 2006.

2. DESCRIPTION OF THE SCHEME

The scheme was introduced in 2001 in order to support
the generation of electricity from renewable sources and
combined heat and power generation in Slovenia and to
secure a reliable supply of energy from indigenous
sources.

(8)

In order to benefit from the scheme, a generator must be
designated as a ‘qualified producer’ by the Ministry of
Environment, Spatial Planning and Energy (1).

(9)

The status of qualified producer can be attributed to
three types of electricity generators:

(i) power stations generating electricity from renewable
sources of energy, except hydro power plants of
more than 10 MW capacity;

(11) Qualified producers have the right to have their whole
production purchased by the network operator to which
they are connected, at a price that is fixed and adjusted
every year by the State. This price is higher than the
market price. Qualified producers can also choose to
sell
in which
case they are entitled to receive from the State a
premium payment equal to the difference between the
revenues they would have received should they have
chosen to sell their electricity to their network operator
and the revenue they received from the market.

their electricity directly on the market,

(12) Network operators recover the losses they incur from the
from a fund
purchase obligation through payments
established by law. Monies from the fund are also used
to pay the premiums
to qualified producers which
choose to sell their electricity on the market. The fund
is fed by the proceeds of a parafiscal
levy on the
consumption of electricity which is imposed on all elec-
tricity consumers in Slovenia.

3. DOUBTS EXPRESSED IN THE DECISION TO OPEN
PROCEEDINGS

(13) After the analysis of

information at

the
Commission came to the preliminary conclusion that
the support was State aid within the meaning of
Article 87(1) of the EC Treaty since it met the four
cumulative criteria of the relevant definition.

its disposal,

(ii) generators

power
combined
production with an above-average efficiency, except

using

heat

and

(1) Ordinance relating to the conditions for obtaining the status of
qualified producer of electricity (Official Gazette of Slovenia Nos
29/01 and 99/01).

(14)

The Commission also doubted whether the scheme could
be considered compatible with the common market.

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Official Journal of the European Union

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(15)

(16)

(17)

Firstly, the Commission analysed the aid in the light of
the Community guidelines on State aid for environmental
protection (1) (hereinafter ‘the environmental guidelines’).
This analysis led to doubts as to the compatibility of the
in particular as
aid with the environmental guidelines,
the definition of producers using renewable
regards
and
energy
power
and
generation, and as
the aid as
compared to the
costs borne by the
producers.

regards
real

the level of

combined

efficient

excess

heat

(hereinafter

it analysed the aid in the light of

Secondly,
the
Commission Communication relating to the metho-
dology for analysing State aid linked to stranded
‘the methodology’). This analysis
costs (2)
the scheme
led to doubts as to the compatibility of
the Commission
with the methodology.
was not
the aid had
been calculated in a way that was sufficiently precise to
enable the power plant by power plant calculation that is
necessary under this methodology.

in a position to conclude that

In particular,

Thirdly, it analysed the aid as compensation for charges
linked to services of general economic interest. This
analysis led to doubts as to the compatibility of the aid
since, for most of the beneficiaries, the Commission was
not in a position to define a sufficiently precise service of
general economic interest with which they would have
been entrusted and, for the only beneficiary for which
this service could have been precisely defined, it was not
in a position to assess the proportionality of the compen-
sation.

(18)

The Commission also had doubts whether the aid, which
levy imposed on electricity
is financed via a parafiscal
consumers,
is compatible with Articles 25 and 90 of
the EC Treaty.

4. COMMENTS FROM OTHER INTERESTED PARTIES

(19)

the

the
Following
Commission did not receive any comments from other
interested parties.

decision to open proceedings

(1) OJ C 37, 3.2.2001, p. 3.
(2) Adopted by the Commission on 26.7.2001. Available on the
Commission’s Competition Directorate-General’s website at
the
following address: http://ec.europa.eu/comm/competition/state_aid/
legislation/stranded_costs_en.pdf
Communicated to Member States by letter ref. SG(2001) D/290869
of 6.8.2001.

5.

INITIAL COMMENTS OF THE MEMBER STATE

(20)

By letter dated 11 March 2005, registered as received on
14 March 2005, Slovenia submitted its comments with
regard to the doubts raised in the decision to open
referred only to the
proceedings. These comments
problem of the definition of State aid and the notion
of a parafiscal levy.

5.1. Existence of State aid

(21)

(22)

(23)

(24)

that

funds

Slovenia pointed out
the Slovenian distribution
companies are not 100 % State-owned. Slovenia states
that, in fact, the ownership of the operators is divided
between the State (approximately 80 %) and private
(approximately 20 %).
investment
Moreover, for the purposes of the purchase obligation
scheme, Slovenian legislation draws no distinction
between State-owned and privately owned operators.
The Energy Act (3)
the
operator must be State-owned and allows operators to
be privately or State-owned.

imposes no condition that

and others

In Slovenia’s opinion, the fact that a particular entity
involved in the purchase obligation scheme is State-
owned does not mean that, on those grounds alone,
this constitutes State aid. Reference was made to the
judgment by the European Court of
Justice of 13
March 2001 in Case C-379/98.

the

that

Slovenia

system of
argues
Furthermore,
purchasing electricity from qualified producers, as laid
down by Slovenian regulations, is very similar to other
schemes examined by the Commission, e.g. in cases NN
27/2000 and NN 68/2000 (4), where the Commission
concluded that no State aid was involved. According to
Slovenia,
the
Commission found that, since the obligation applied to
both numerous private
and some public network
operators, the laws — or rather the cases in question
— could not be deemed to involve state resources.

in the decisions on those two cases,

the above considerations and taking into
In view of
the system as it stands, Slovenia considered
account
in so far as the funds do not by their nature
that,
the
come
ownership of the entities involved cannot on its own
alter that nature.

the question of

from state

resources,

(3) Official Gazette of Slovenia Nos 79/1999, 51/2004.
(4) OJ C 164, 10.7.2002, p. 3, for both cases.

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(25)

(26)

Furthermore, according to Slovenia, mandatory contri-
butions
received by a public undertaking do not
constitute State aid where the undertaking in question
those
does not have the right
the
funds.
source of
the fee for
network use paid by all electricity users, part of which
is
in separate
accounts for a pre-determined purpose.

to dispose freely of
the purchase obligation,
the scheme is

collected by the network operators

In the case of
financing of

the scheme was designed to contribute to the general
environmental policy objectives:

(i) more efficient energy use;

5.2. Parafiscal levy

(ii) increasing the proportion of

energy
sources
the
Community from 8,8 % in 2001 to 12 % by 2010.

in the primary energy balance of

renewable

Slovenia pointed out that the purchase obligation scheme
is financed from part of the fee for network use paid by
all electricity users under identical conditions that are
the fee for
known in advance. The components of
network use are determined by the Energy Agency
(energy market
the Government.
Differences
covered by a mechanism
whereby the network operators buy electricity at a
the market price. Any loss
fixed price and sell
they incur as a result is covered from part of the fee
for network use. So operators under the purchase obli-
gation receive funds not from the State, but from part of
the fee for network use.

in price are

regulator)

it at

and

(31)

The stated objectives include targets for co-generation
and for renewable sources, both of which fall under
the electricity purchase scheme. These objectives are
consistent with the targets set for Slovenia inter alia by
Directive 2001/77/EC of the European Parliament and of
the Council of 27 September 2001 on the promotion of
electricity produced from renewable energy sources in
the internal electricity market (1). Directive 2001/77/EC
sets indicative targets for individual Member States. For
Slovenia,
electricity
is
consumption coming from renewables of 32,6 % by
2010.

the objective

share of

a

(27)

The operators have to allocate these funds to a special
account. The funds also serve as a source for paying the
additional premium where qualified producers sell part of
their electricity independently or
through an inter-
mediary.

(32)

The total number of power plants from which electricity
is purchased under the scheme is 434, of which 430 are
connected to the distribution network and four to the
the power
transmission network. More than 90 % of
plants connected to the distribution network are hydro-
electric plants,
the remainder being biomass power
plants, solar plants and CHP plants.

(28)

Slovenia claimed that the scheme incorporates neither a
state fund nor any other sort of fund through which the
resources are transited. The resources to fund the scheme
cannot be perceived as stemming from a parafiscal levy
as they do not stem from the State budget and are not
attributable to the State.

(33)

The scheme has been in force since the Decree on the
rules for determining prices and purchasing of electricity
from qualified electricity producers (2) entered into force
on 4 April 2002.

6. FURTHER INFORMATION SUBMITTED BY SLOVENIA

(34)

(29)

further

By
Slovenia
commitments on the scheme.

submitted

correspondence with the Commission,
and

information

additional

The electricity purchase agreements currently in force
between qualified power plants and network or system
operators have been concluded for a period of 10 years.

Renewables

(35)

Slovenia explained that, according to Article 4 of the
1999 Energy Act,
renewable sources of energy are
defined as provided for in Directive 2001/77/EC.

(30)

Slovenia provided new information detailing the environ-
mental protection objectives of the scheme. First of all,

(1) OJ L 283, 27.10.2001, p. 33.
(2) Official Gazette of Slovenia No 25/02.

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(36)

individual qualified power plants

The main aim of the scheme is to ensure appropriate
economic conditions for the development and implemen-
tation of new qualified power plant projects. A cost
analysis of
(with
regard to primary energy source and size) has been
used to work out purchase prices for individual types
of qualified power plants that would guarantee at least
the minimum return
new
investments. The
aid or premium is
the difference between the uniform
determined as
annual purchase price and the average market price of
electricity. If the market price increases, the premiums are
reduced accordingly.

for making

amount of

required

(37)

the
The table below compares production costs of
technology and
qualified producers per power plant
size
categories with the premium offered by the
scheme. The table assumes an average market price of
if
8 SIT/kWh. This value is for reference only since,
market
decreased
accordingly.

premiums

increase,

prices

are

(38)

In all cases, production costs are higher than both the
average market price
and the guaranteed uniform
purchase price under the qualified producers’ scheme.

Comparison of production costs of qualified power plants with the purchase price under the scheme

Table 1

Type of qualified power plant (QPP) by primary energy source

Power

Production
costs

Difference

Premium

Size

[kW]

[SIT/kWh]

[SIT/kWh]

[SIT/kWh]

Hydroelectric plants

up to 1 MW

100

15,53

from 1 MW to 10
MW

3 000

14,33

7,53

6,33

Biomass plants

up to 1 MW

600

24,80

16,80

over 1 MW

1 500

18,18

10,18

Wind plants

up to 1 MW

100

23,28

15,28

Geothermal plants

3 000

14,59

over 1 MW

20 000

15,49

7,49

6,59

6,75

6,23

8,69

8,17

6,55

6,05

6,05

Solar plants

up to 36 kW

36

175,26

167,26

81,67

Other QPPs (biogas)

QPPs or thermal plants using
municipal waste

over 36 kW

up to 1 MW

from 1 MW to 10
MW

122,58

114,58

7,46

30,39

22,39

20,97

100

120

100

13,97

3 000

12,08

5,97

4,08

8,54

6,56

4,74

3,87

5,9

5,38

CHP thermal plants for district
heating

up to 1 MW

700

16,54

from 1 MW to 10
MW

3 000

14,56

CHP industrial thermal plants

up to 1 MW

700

14,95

6,95

4,83

N.B. Assuming a market price of SIT 8/kWh.

(39) On the basis of a cost analysis and an economic calculation for categories of qualified power plant
units, as shown in the table below, it emerges that the net present value (NPV) of the purchase prices
applied under the scheme does not exceed the NPV of all investment costs at any of the qualified
power plants.

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Comparison of NPV of purchase prices with investment costs of individual qualified power plants

Table 2

Type of qualified power plant (QPP) by primary energy
source

Capacity

Projected
annual
sales

Specific
investment
costs

Invest-
ment

Annual
premium

Premium —
investment
costs (NPV)

Size

[kW]

[MWh]

[SIT/kW]

[SIT
million]

[SIT
million/a]

[SIT million]

Hydroelectric plants

up to 1 MW

100

456

480 000

48

2,9

from 1 MW
to 10 MW

3 000 10 656

380 000

1 140

63,1

Biomass plants

up to 1 MW

600

2 725

990 000

594

22,5

over 1 MW

1 500

6 813

660 000

990

52,9

Wind plants

up to 1 MW

100

187

341 000

34

1,2

– 21,0

– 549,1

– 369,3

– 492,1

– 22,2

over 1 MW

20 000 40 800

253 000

5 060

234,5 – 2 802,2

Geothermal plants

3 000 20 736

715 000

2 145

119,2 – 1 029,1

Solar plants

up to 36 kW

36

34 1 430 000

52

2,7

– 26,2

over 36 kW

100

116 1 210 000

121

0,8

– 105,4

Other QPPs (biogas)

120

628

913 000

110

12,5

QPPs or thermal plants using
municipal waste

up to 1 MW

100

624

319 000

32

2,8

– 1,0

– 7,0

from 1 MW
to 10 MW

3 000 19 728

286 000

858

72,5

– 212,0

CHP thermal plants for district
heating

up to 1 MW

700

2 496

198 000

139

16,1

from 1 MW
to 10 MW

3 000 10 698

165 000

495

63,0

CHP industrial thermal plants

up to 1 MW

700

3 135

187 000

131

2,5

– 16,0

– 19,3

– 5,0

N.B. Applying a discount rate of 8 %, a period of 15 years and a decrease in the purchase price or premium of 5 % after five years

and 10 % after ten years, in accordance with the Decree on purchasing.

(40)

The premiums for individual qualified power plants also include the return on capital prescribed by
Slovenian legislation — this amounts to a minimum discount rate of 8 % on investments from public
funds. Non-adjustment of purchase prices and premiums has meant that the current return for all
qualified power plants using renewable energy sources is lower than 8 %, as shown in the table
below. For solar plants the premium allows no return on capital (negative return), particularly in the
case of small and medium-sized plants.

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Table 3

Return on capital for individual qualified power plants

Type of qualified power plant (QPP) by primary energy source

Power

Premium

Return on
capital included
in premium

Size

[kW]

[SIT/kWh]

Hydroelectric plants

up to 1 MW

from 1 MW to 10 MW

Biomass plants

Wind plants

Geothermal plants

Solar plants

Other QPPs (biogas)

up to 1 MW

over 1 MW

up to 1 MW

over 1 MW

up to 36 kW

over 36 kW

QPPs or thermal plants using
municipal waste

up to 1 MW

from 1 MW to 10 MW

CHP thermal plants for district
heating

up to 1 MW

from 1 MW to 10 MW

CHP industrial thermal plants

up to 1 MW

100

3 000

600

1 500

100

20 000

3 000

36

100

120

100

3 000

700

3 000

700

6,75

6,23

8,69

8,17

6,55

6,05

6,05

81,67

7,46

20,97

4,74

3,87

5,9

5,38

4,83

6,95 %

7,90 %

2,30 %

6,00 %

0,40 %

6,35 %

7,30 %

– 1,4 %

– 15,0 %

6,80 %

4,40 %

7,30 %

0,49 %

4,20 %

– 0,1 %

N.B.: Return on capital calculated on investments in QPPs (see Table 2) at the current value of premiums.

Combined heat and power generation

(41)

(42)

(43)

Slovenia explains that new CHP units are equipped mainly with gas turbines, which, during
operation, attain an electrical efficiency of between 37 % and 40 % and an overall efficiency of
over 80 %. New smaller turbines attain an electrical efficiency of over 30 % and again an overall
efficiency of over 80 %. Given that the average electrical efficiency of conventional thermal power
plants in Slovenia is around 31 %, this shows the large primary energy savings (between 15 % and
25 %) made by generating electricity in co-generation units and making beneficial use of heat.

The operating efficiency of qualified CHP plants are fixed such as to comply with the efficiency
criteria of Directive 2004/8/EC of the European Parliament and of the Council of 11 February 2004
on the promotion of cogeneration based on a useful heat demand in the internal energy market and
amending Directive 92/42/EEC (1).

Slovenia demonstrated that electricity production costs in qualified CHP plants is in all cases higher
than the scheme purchase price, that the NPV of premiums is below investment costs and that the
return on investment is below 4,20 % (see last three lines of all tables above). The calculations take
into account gains from the use of heat.

(1) OJ L 52, 21.2.2004, p. 50.

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Security of supply

(44)

Slovenia has put in place a service of general economic interest in the field of security of electricity
supply. In accordance with Article 11(4) of Directive 2003/54/EC, this service of general economic
interest is based on the generation of electricity using domestic sources of fossil fuel. For this
purpose, 600 000 tonnes a year of Slovenian brown coal is used for electricity generation. Brown
coal is the only source of fossil fuel available in Slovenia. Since brown coal is used to the best effect
at one of the units of Trbovlje (TET2, which is located near a brown coal mine), it falls to Trbovlje to
meet this commitment. It was decided that this amount of electricity may be purchased through the
guaranteed purchase system.

(45)

The corresponding electricity is purchased at a price verified each year by the authorities, and
corresponding to electricity production costs in Trbovlje. No profit element is included in the
purchase price.

(46)

Slovenia provided the following table estimating the amount of support for the company in past
years:

Table 4

Estimated amount of support

Quantity (GWh)

Purchase price (SIT/kWh )

7-12.2001

2002

2003

2004

254,3

17,00

562,2

15,36

563,4

15,34

563,0

16,59

Cost of purchase (SIT thousand)

4 323 943

8 636 245

8 644 855

9 339 836

Sales price (SIT/kWh)

7,13

5,97

7,60

7,71

Cost of energy sold (SIT thousand)

1 813 111

3 357 073

4 281 840

4 340 040

Amount of aid (SIT thousand)

2 510 832

5 279 172

4 363 015

4 999 795

Level of aid (SIT/kWh)

9,87

9,39

7,74

8,88

(47)

is in principle also
The use of domestic brown coal
the Šoštanj power plant, which has five
possible at
units, two of which are more recent and equipped with
flue-gas cleaning equipment and three of which are older
and have no cleaning equipment. These units burn coal
from a nearby colliery and, under certain conditions,
could also burn brown coal. The two newer units are
fully employed in burning lignite from the nearby
colliery. Roughly speaking, the capacity of that colliery
satisfies those two units. Burning brown coal would be
possible only in the three older units, which are not used
to full capacity and still have some operating reserves.
However, this option raises the following difficulties:

(ii) burning the coal would increase SO2 emissions by
30 000 t/year, as units 1, 2 and 3 at Šoštanj do not
have flue-gas cleaning equipment and brown coal
from Slovenia contains between 2,2 % and 2,5 %
sulphur;

thermodynamic

(iii) since units 1, 2 and 3 at Šoštanj have a considerably
lower
than Trbovlje,
burning the same amount of brown coal for elec-
tricity generation in the three units at Šoštanj instead
of at Trbovlje would increase CO2 emissions by
around 15 %.

efficiency

(i) transport by rail of brown coal to Šoštanj would
cost around EUR 5/t; given the planned brown
coal production in the national energy balance
(600 000 t/year),
to EUR 3
million a year.

this would amount

For the above reasons it can be seen that burning brown
coal in the units at Šoštanj cannot be justified from an
economic point of view.

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(48)

The only other possibility for burning brown coal is at
the Ljubljana thermal power and heat plant (TE-TOL),
which used domestic brown coal as its main energy
source until 2000. Since the units at TE-TOL do not
have in-built flue-gas cleaning equipment, they can no
longer burn brown coal
from Slovenia because it
contains between 2,2 and 2,5 % sulphur. TE-TOL
stopped burning domestic brown coal for that reason
and now burns only imported Indonesian coal, which
has a considerably lower sulphur content (< 0,5 %), so
that the plant does not need flue-gas desulphurisation
equipment. Fitting TE-TOL units with flue-gas cleaning
equipment would be uneconomic.

(49)

Slovenia undertook to ensure that no more than 15 % of
the overall primary energy necessary to produce the
energy consumed in Slovenia in any calendar year
receives State support for security of supply.

received any
that, where a qualified producer has
subsidy for the construction of a power plant, the guar-
anteed purchase price is reduced proportionately.

(53)

Pursuant to that Article, a qualified electricity producer
must, on signing an agreement for the purchase of elec-
tricity with the operator of the network to which it is
connected, declare the amount of any subsidy it has
received for
the construction of power plants. The
declared amount is used as a basis for calculating the
reductions in the guaranteed purchase price. On the
basis of the above provisions, the guaranteed purchase
price for power plants (depending on the type of plant
and the rated power) is reduced by 5 % for each 10 % of
amount of
State
investment in the power plant.

aid received compared with the

Overlap

(50)

The purchase obligation scheme provides for only part of
the qualified producer’s depreciation costs to be covered.

(54)

The provisions of the Decree are based on the premise
that the full guaranteed price for electricity from qualified
producers covers the fixed costs and variable costs. The
average ratio between fixed and variable costs is assumed
to be 50:50.

(51)

the

renewable

exploitation of

The Rules on the allocation of funds for the promotion
of
energy resources,
efficient energy use and CHP (1) allowed investment aid
for power plants using renewable sources and CHP
investment aid for such plants has
plants. However,
been abolished under the new Rules on the allocation
of funds for the promotion of efficient use of energy and
utilisation of energy resources (2). Exceptions have been
made for power plants not connected to the public grid
that do not benefit from the scheme, and for plants with
a capacity of up to 10 MW that employ renewable
sources of energy and use new or obsolete technology
in which, because of the high cost price of generating
electricity, the purchase price of electricity is not high
the investment.
enough to ensure the profitability of
The type of
the granting of
technology eligible for
incentives is determined in periodic calls for tenders.

(55)

to adapt

Slovenia has undertaken to refine the reduction rule in
it more precisely to the breakdown
order
between fixed and variable costs depending on tech-
nologies.

Commitments of the Member State

(56)

Slovenia undertook to prepare amendments to the regu-
lations on electricity from renewable energy sources and
CHP in order to change the current financing system of
the scheme. These amendments will be introduced in
order to make the support scheme compatible with
Articles 25 and 90 of the EC Treaty:

(52)

To prevent excessive aid overlap, Article 14 of the Decree
on the rules for determining prices and purchasing of
states
electricity from qualified electricity producers

(1) Official Gazette of Slovenia No 74/01.
(2) Official Gazette of Slovenia No 49/03.

(i) the mode of collection of the support funds will be
changed to lump-sum payments on connection, irre-
spective of the amount and source of the electricity
consumed. When determining the amount of
the
lump sum payment, account will be taken of the
power of
the connection (fuse rating) and the
voltage level at which a particular consumer and
consumer group is connected;

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(ii) for the period from Slovenia’s accession to the Union
until the time when the new mode of collection of
funds is put
in place, Slovenia will ensure that
importers of green electricity can apply for reimbur-
sement of the levy financing the aid to renewables in
the scheme, provided that they can prove that their
imports are indeed of green origin. The conditions on
documentation to prove the green origin of imported
electricity are primarily based on the Community
system of guarantees of origin. Where necessary, in
order to prevent artificially high declarations against
which the Community system of guarantees of origin
does not afford sufficient protection, limits will be set
on the amounts to be reimbursed per distributor. A
similar system will be put in place for CHP electricity,
based on the Community system of guarantees of
origin for CHP.

from renewable energy sources in conformity with the
national
indicative targets referred to in paragraph 2.
These steps must be in proportion to the objective to
be attained.

2.
Not later than 27 October 2002 and every five
years thereafter, Member States shall adopt and publish
a report setting national
indicative targets for future
consumption of electricity produced from renewable
energy sources in terms of a percentage of electricity
consumption for the next ten years. The report shall
also outline the measures taken or planned, at national
level, to achieve these national indicative targets. To set
these targets until the year 2010, the Member States
shall:

7. ASSESSMENT

7.1. Existing Community Directives

concerning

— take account of the reference values in the Annex,

electricity generation

(57)

Electricity generation is subject
several Community Directives,
Directives 2003/54/EC, 2001/77/EC and 2004/8/EC.

to the provisions of
including in particular

(58) Article 3(2) of Directive 2003/54/EC provides as follows:
‘Having full regard to the relevant provisions of
the
Treaty,
in particular Article 86, Member States may
impose on undertakings operating in the electricity
in the general economic interest, public service
sector,
obligations which may relate to security,
including
security of
regularity, quality and price of
supplies and environmental protection, including energy
efficiency and climate protection.’

supply,

(59) Article 11(4) of Directive 2003/54/EC reads: ‘A Member
State may, for reasons of security of supply, direct that
priority be given to the dispatch of generating instal-
lations using indigenous primary energy fuel sources, to
an extent not exceeding in any calendar year 15 % of the
overall primary energy necessary to produce the elec-
tricity consumed in the Member State concerned.’

(60) Directive 2001/77/EC sets out national indicative targets
for the consumption of electricity from renewable energy
sources. Article 3 of that Directive provides as follows:

‘1. Member States
to
encourage greater consumption of electricity produced

take appropriate steps

shall

— ensure that

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

(61)

The Annex to Directive 2001/77/EC, as amended by the
Act of Accession, stipulates a national target of 33,6 %
for Slovenia.

7.2. Assessment of the support for green electricity
and combined heat and power producers

7.2.1. Existence of aid within the meaning of Article
87(1) of the EC Treaty

(62)

For a measure to be State aid within the meaning of
Article 87(1) of the EC Treaty, it must give a competitive
advantage in a specific way, it must affect or threaten to
affect competition and trade between Member States, and
it must involve state resources.

(63)

It is clear that the scheme is specific, as it targets only
certain power plants. It is also evident that it confers an
advantage to those power plants, as the very purpose of
the system is to allow such plants to sell their electricity
at a price which is higher than the market price.

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(64)

Electricity is exchanged between Member States. Directive
2003/54/EC completes the creation of an internal market
in electricity that was initiated by Directive 96/92/EC.
Slovenia’s network is connected in particular with those
of Austria and Italy. Slovenia exchanges electricity with
its neighbours. For instance, in 2004 Slovenia imported
6 314 GWh of electricity and exported 7 094 GWh (1).
The measure therefore has an impact on trade between
Member States.

(70)

In its judgment in Pearle (5), the Court declared that the
proceeds of a parafiscal levy imposed on its members by
a publicly controlled board could not be viewed as state
resources. The levy was decided by the professional board
in the optics sector and imposed on all of its members. It
was used for
financing advertising
campaigns for the benefit of the sector, that is, of the
contributors themselves.

the purpose of

(65)

The Commission also notes
that Slovenia did not
question the fulfilment of any of the three criteria above.

(71)

The Court ruled that the measure did not constitute State
aid because the decision to set up the levy was not
attributable to the State and the proceeds of the levy
were not state resources.

(66) On the

the

fourth criterion,

the Commission does not

state
resources,
concur with
Slovenia's argument that the system is equivalent to the
one examined by the Court of Justice in the PreussenE-
lektra case.

involvement of

(67)

(68)

(69)

The two systems differ in their financing mechanisms. In
PreussenElektra,
the feed-in tariff was financed directly
from private electricity supply undertakings, which had
to purchase electricity at a price above the market price
from renewable electricity producers. In the present case,
the costs created through the feed-in tariff are financed
through a parafiscal levy.

In this respect, the Commission takes note of the fact
that the scheme is financed via the proceeds of a levy
which is imposed by the State. The proceeds of the levy
are then transferred to an account managed by the public
authorities, unlike in the PreussenElektra case. The public
authorities
account
according to a distribution scheme determined by the
law.

resources

in the

allocate

the

is

line with the Court’s

The constant practice of the Commission is to consider
that the proceeds of such levies are state resources (2).
This practice
law,
according to which the proceeds of levies imposed by
the State, transferred to funds designated by the State and
used for the purpose of advantaging certain companies,
are deemed to be state resources. (See for instance the
Court’s decisions in Cases C-173/73 (3) and C 78/79 (4).)

case

(1) Source:

International Energy Agency. http://www.iea.org/Textbase/

stats/electricitydata.asp?COUNTRY_CODE=SI

(2) See for instance Case N 161/04 — Portugal (OJ C 250, 8.10.2005,

p. 9).

(3) Judgment of 2.7.1974 in case C 173/73, Italy v Commission.
(4) Judgment of 22.3.1997 in case C-78/79, Steinike v Federal Republic of

Germany.

(72) Unlike in the system studied by the Court, the responsi-
bility of the State is very clear in the case under consid-
eration here, since the State creates the levy itself by a
law.

(73) As regards the origin of the funds, the Commission notes
that it is different from the origin of the funds involved
in the aforementioned judgment, since the monies are
collected not
from contributions by the undertakings
that benefit from the measure, but from all customers
that purchase electricity, whether they be beneficiaries of
the scheme or their competitors. Such a mechanism
could not be achieved by an association of undertakings
like the one that was considered in the Court's judgment.
This reveals the very fiscal nature of the scheme, which is
made possible only by the powers of the State.

(74)

The Commission considers that this difference is enough
for it to conclude that State aid exists in the case in
question.

7.2.2. Legality of the aid

(75)

in place before Slovenia’s
The aid scheme was put
accession to the European Union. The primary legal
basis for the scheme is the 1999 Energy Act. The defi-
nition of qualified producers benefiting from the scheme
was set out in 2001 by the Ordinance relating to the
conditions for obtaining the status of qualified producer
of electricity (6).

(5) Judgment of Court of Justice of 15.7.2004 in case C-345/02.
(6) Official Gazette of Slovenia, Nos 29/01 and 99/01.

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(76)

The State’s financial exposure due to the scheme was not
fixed at the time of accession. The scheme does not have
a limited or predefined number of beneficiaries. Any
power plant that meets the technical requirements laid
out in the aforementioned Ordinance can receive the aid.
This includes in particular any new qualified power plant
connected to the network after the accession of Slovenia.
Even for each individual aid measure granted under the
the State’s exposure cannot be known in
scheme,
advance, because it depends on the difference between
purchase price fixed by the State for the plant and the
average market price, which fluctuates in an unfore-
seeable manner. Slovenia has underlined that the actual
burden of the scheme for the State can only been known
ex post at the end of each year in which the scheme is
applied.

(77)

In view of the above, the Commission considers that the
scheme is still applicable after Slovenia’s accession to the
European Union.

(78)

The Commission notes that the above line of reasoning
was already laid out in the decision to open proceedings
and that Slovenia did not contest it in its comments.

(79)

Latvia,

Lithuania, Hungary, Malta,

The Act of Accession of the Czech Republic, Estonia,
Cyprus,
Poland,
Slovenia and Slovakia to the European Union (hereinafter
‘Act of Accession’) lists the categories of aid which, upon
accession, are regarded as existing aid within the meaning
of Article 88(1) of the EC Treaty:

(80)

(81)

(82)

considered as new aid upon accession for the purpose of
the application of Article 88(3) of the EC Treaty.

The scheme falls into none of the three categories listed
above. Therefore, it must be regarded as new aid upon
accession for the purpose of the application of Article
88(3) of the EC Treaty. This aid was not notified to the
Commission and hence constitutes unlawful aid within
the meaning of Article 1(f) of Council Regulation (EC)
No 659/1999 of 22 March 1999 laying down detailed
rules
the EC
the application of Article 93 of
for
Treaty (1).

7.2.3. Compatibility of the aid with the EC Treaty

the first

In the case of

The Commission notes that the scheme consists of three
parts as it provides aid for three different groups of
beneficiaries.
two groups,
namely green electricity producers and efficient cogen-
eration plants, Slovenia’s objective is environmental
protection. The aid provided for the third group of bene-
ficiaries, namely the Trbovlje power plant, is earmarked
for maintaining a certain level of security of electricity
supply.

Taking into account
measures,
assessed separately.

the different parts of

the different objectives of

the
the scheme will be

— aid measures put

into effect before 10 December
1994. The scheme was put into effect in 2001 and
therefore does not fall within this category;

— aid measures listed in the Appendix to Annex IV to
the Act of Accession. The scheme is not part of this
list and therefore does not fall within this category;

Compatibility with the environmental guidelines of the aid to
green electricity producers

(83)

The Commission assessed the compliance of the support
mechanism for green electricity producers’ plants in the
light of the environmental guidelines, particularly points
58 et seq. thereof, and finds as follows.

— aid measures which, after a specific procedure usually
known as ‘the interim procedure’, have not been
objected to by the Commission.

(84)

The Commission notes that the definition of renewable
sources of energy in the scheme is in line with the defi-
nition of Directive 2001/77/EC. Therefore, the scheme is
in compliance with point 6, eighth subparagraph, of the
environmental guidelines and points 58 et seq. can be
applied.

All aid still applicable after the date of accession and
which does not fulfil the conditions set out above is

(1) OJ L 83, 27.3.1999, p. 1.

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the

between

difference

production

(85) As stated in point 59, 1st subparagraph, of the environ-
mental guidelines, Member States may compensate for
the
of
renewable energy and the market price of the form of
power concerned. Thus, such compensation can relate
only to the extra production costs for environmentally
friendly electricity production as
compared to the
production costs
for energy based on conventional
energy sources. Any support must however only cover
plant depreciation and, if Member States can show that
this is indispensable, a fair return on capital.

cost

(86)

(87)

for

(feed-in tariffs)

Slovenia calculated the compensation in form of fixed
tariffs
the energy supported, as
described above. The law sets out objective methods of
calculating the levels of aid. According to the information
mentioned above, the support will not exceed the depre-
ciation plus a fair return on capital. The aid will be
granted only over a period of 10 years, as that is the
duration of the agreements signed between the network
operators and green electricity producers. This period is
below the typical 15-year depreciation period for such
plants. The Commission notes positively that in all cases
the cost production price of a qualified power plant is
higher than both the average market price and the guar-
anteed purchase price. Thus, the difference between the
market price and production costs of green electricity is
higher than the premium for all power plants.

Furthermore, point 59, 2nd subparagraph, of the envir-
onmental guidelines stipulates that,
in determining the
amount of operating aid, account should be taken of
any investment aid granted to the firm in question in
respect of the new plant. Following the decision to open
proceedings, Slovenia informed the Commission that
only
electricity
producers benefited from investment aid in addition to
the operating aid in question. Slovenia implemented
investment aid to
legislation obliging beneficiaries of
declare the amount of aid granted before feeding their
electricity to the network at fixed prices.

renewable

number

limited

of

a

(89)

For the future application of the scheme, Slovenia has
undertaken to adapt where necessary the proportionate
reduction in such a way that no overcompensation takes
place in compliance with point 59, 2nd subparagraph, of
the environmental guidelines.

(90)

So, in the Commission’s view, Slovenia has demonstrated
the support granted under the measure will not
that
exceed the extra production costs of
the renewable
energy sources supported by the measure. Accordingly,
the measure is compatible with points 58 et seq. of the
environmental aid guidelines.

Compatibility with the environmental guidelines of the aid to
combined heat and power producers

(91)

The Commission assessed the compliance of the support
mechanism for efficient cogeneration plants with the
environmental guidelines, particularly points 66 and 67
thereof, and finds as follows.

(92)

the environmental guidelines,

in compliance
First of all, the Commission notes that,
with point 66 of
the
operating efficiency of the CHP units benefiting from
the scheme exceeds the reference values set out
in
Directive 2004/8/EC. Slovenia will update the reference
values in accordance with the Directive. The combined
heat and power plants covered by the scheme therefore
fulfil the eligibility requirements set out in point 31 of
the environmental guidelines.

(93) As

evident

from the

information submitted by
is
Slovenia,
the average cost of producing electricity in
CHP plants is in all cases higher than the guaranteed
purchase price (1). The
into
account revenue from the production and sale of heat.
The Commission therefore takes
the
amount of aid is calculated in accordance with point
66 of the environmental guidelines.

the view that

calculations

also take

(88) When investment aid has been granted, the feed-in price
is reduced. The reduction is proportionate to half of the
investment aid granted. Although that fixed proportion
may in theory result in the possibility of overcompen-
sation for
technologies with small operating costs,
Slovenia has demonstrated that, in practice, in the very
rare cases where investment aid has been combined with
the aid scheme in the past, no overcompensation has
taken place. This is due to the fact that for the time
being Slovenia does not have renewable power plants
with low operating costs, such as wind plants.

(94)

Slovenia informed the Commission that the aid for CHP
plants is granted under the same rules as for the green
electricity producers. As these rules were proved to be
the
compatible with the
scheme
Commission finds
component providing aid for
is
compatible with point 66 of
environmental
guidelines.

environmental guidelines,

the CHP plants

consequently,

that,

the

the

(1) See last three lines of the tables above.

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(95)

(96)

(97)

Compliance with Articles 25 and 90 EC of
mechanism of
power producers.

the financing
the aid to green and combined heat and

The Commission notes that the imposing of a levy on
both domestically produced and imported green elec-
tricity to the benefit of domestically produced green elec-
tricity may have led in the past to discrimination against
imported green electricity. However,
Slovenia has
undertaken to introduce the possibility of reimbursing
the levy on imported green electricity. The Commission
notes that the reimbursement will be based primarily on
the Community system of guarantees of origin. By
applying additional requirements, the Member State will
artificially high import
the
protect
system against
In assessing the proportionality of
declarations.
the
the Commission considered the risk of
requirements,
artificial declarations
the
small
in which such artificial declarations
Slovenian market
impact on the system of
could have a significant
support. The Commission therefore
that
Slovenia has undertaken to establish an appropriate
instrument
to remedy any discrimination which may
have occurred in the past.

considers

size of

and

the

The Commission notes that Slovenia has undertaken to
implement the new financing mechanism based on a
from the
connection fee which will be independent
actual
or
imported green electricity. This new mechanism will
not discriminate against imported green electricity.

consumption of

domestically

produced

Conclusion on aid to green electricity and combined heat and
power producers

In view of the above, the aid to both green electricity
plants and combined heat and power plants fulfils the
the environmental guidelines. Since this is
criteria of
sufficient
aid compatible with the
to declare
common market,
the Commission sees no need to
analyse whether the aid could be declared compatible
even though it
in the
considered those provisions in its decision to open
proceedings.

light of other provisions,

the

the principle of the prohibition of State aid. In certain
cases, such compensation may not even be State aid
within the meaning of Article 87(1) of the EC Treaty.
(hereinafter ‘the
in Case C-280/00 (1)
In its judgment
four
set
Justice
Altmark
conditions for state support aimed at compensating for
costs of a service of general economic interest not to be
State aid within the meaning of Article 87(1) of the EC
Treaty.

the Court of

judgment’),

(100) The Commission analysed the support to Trbovlje in the

light of these four conditions.

(101) First condition: ‘the recipient undertaking must actually
have public service obligations to discharge, and the obli-
gations must be clearly defined’.

(102) The Commission notes that Slovenian law entrusts the
Trbovlje plant with a security of supply obligation,
making a direct reference to Directive 2003/54/EC, and
in particular its Articles 3(2) and 11(4), cited above.

(103) The Commission has already found in several decisions
read in
that Article 11(4) of Directive 2003/54/EC,
conjunction with Article 3(2) of
the same Directive,
could be interpreted as providing the basis for public
service obligations in the field of security of supply (2).
The Article mentions a maximum of 15 % of the overall
primary energy necessary to produce the electricity
consumed in the Member State concerned. Slovenia
undertook to restrict the scope of the support to the
respected, even
Trbovlje plant
this
taking into account
the same
purpose outside
review in this
the
decision. The obligation is also limited in time to 2009.

limit
support granted for
scheme under

so that

is

7.3. Assessment of

the support

to the Trbovlje

power plant

(98)

Slovenia considers the support to the Trbovlje power
plant as compensation for the costs of a service of
general economic interest in the field of security of elec-
tricity supply.

(104) The Commission therefore
condition is fulfilled.

considers

that

the

first

(105) Second condition: ‘parameters on the basis of which the
established in

compensation is
advance in an objective and transparent manner’.

calculated must be

(99)

Compensation for
economic interest may benefit

the costs of a service of general
from an exception to

(2) See Commission Decisions in Cases N 34/99 (OJ C 5, 8.1.2002,
p. 2), NN 49/99 (OJ C 268, 22.9.2001, p. 7), and N 6/A/2001 (OJ C
77, 28.3.2002, p. 26).

(1) Judgment of

the Court of

C-280/2000, Altmark
Magdeburg v Nahverkehrsgesellschaft Altmark GmbH.

trans GmbH and

Justice dated 24.7.2003 in case
Regierungspräsidium

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(106)

In the case under consideration the support takes the
fixed purchase price. Every year,
form of
the
a
Government
issues a published decision fixing the
amount of electricity covered by the purchase obligation,
and the purchase price for this electricity. The price-fixing
follows a transparent methodology with a list of eligible
costs, which cover only the plant’s generation costs.

(107) The Commission therefore considers that

the second

condition is fulfilled.

(108) Third condition: ‘the compensation cannot exceed what
is necessary to cover all or part of the costs incurred in
the discharge of public service obligations, taking into
account
the relevant receipts and a reasonable profit
for discharging those obligations’.

(109) The purchase price is established with a view to covering
no more than the cost of generating the expected
amount of electricity.
include any profit
element.

It does not

(110) The Commission therefore considers

that

the third

condition is fulfilled.

(111) Fourth condition:

‘where the undertaking which is to
discharge public service obligations, in a specific case, is
not chosen pursuant to a public procurement procedure
the tenderer
which would allow for the selection of
capable of providing those services at the least cost to
the community, the level of compensation needed must
be determined on the basis of an analysis of the costs
which a typical undertaking, well run and adequately
provided with means of transport so as to be able to
meet the necessary public service requirements, would
have incurred in discharging those obligations,
taking
into account
receipts and a reasonable
profit for discharging the obligations’.

the relevant

the overall primary energy necessary to produce the elec-
tricity consumed in Slovenia.

(113)

In the current situation, no more than two power plants
in Slovenia could in any event have fulfilled the public
service obligation in question in their current state. These
are the Šoštanj plant and the Trbovlje plant.

(114) Other plants would require the construction of expensive
flue-gas cleaning equipment to be able to use it, which
would make this option uneconomic. The two units of
the Šoštanj plant that can use domestic fuel are already
used to their maximum capacity using domestic lignite. It
would not be economical to increase their maximum
domestic fuel-burning capacity, as this would require an
extension of the plant or the upgrading of some of its
units with flue-gas cleaning equipment. The output of
these two units is taken into account by the Slovenian
authorities when calculating the 15 % limit referred to in
paragraph 112. Therefore, only the Trbovlje plant was in
a position to meet the public service obligation in this
case. The support to Trbovlje covers only the share of the
15 % which cannot be covered by the Šoštanj plant.

(115) Slovenia has

that

the Commission concludes

therefore used the most economically
efficient way to achieve the public service obligation
which consists in producing electricity with domestic
the compensation for the
fuel. Considering also that
include any profit
public service obligation does not
element,
the public
service obligation is fulfilled at the least cost for the
community. A public tendering procedure would not
in the short
have delivered a cheaper solution. Indeed,
term (up to 2009) upgrading existing plants or building
new, more efficient ones
(supposing this would be
possible) would have required high investment costs
and any bidder would have demanded compensation
including at least a reasonable profit by way of return
on the invested capital. The result would therefore have
been an increase in the amount of compensation to be
granted to the operator entrusted with the SGEI obli-
gation.

However,

procedure.

procurement

(112) The Trbovlje plant was not chosen on the basis of a
the
public
Commission notes that Slovenia has demonstrated that,
in the case in question, the choice of Trbovlje was the
one that led to providing the service of general economic
interest at the least cost to the community, having regard
to the specific factual and legal constraints prevailing in
this case. In the present case the public service obligation
consists in ensuring national security of supply up to
2009 by using indigenous primary energy fuel sources,
to an extent not exceeding in any calendar year 15 % of

(116) Furthermore, the Commission notes that there is no indi-
cation that the Trbovlje plant is not operated as a well-
run typical undertaking or is run in a particularly inef-
ficient way. The Commission notes that the company
the
already restructured its activities at
economic transition in Slovenia, in particular by closing
down its older and less efficient units, which were
outdated, and reducing its staff. It is also noted that in
any event the remuneration for the public service obli-
gation does not include any profits.

the time of

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(117) Finally, the Commission notes that the Trbovlje plant will
not be in a position to use the effect of the new round of
the Emission Trading System (ETS) for 2008-2012 to
generate additional revenue or profit as a result of its
specific public service obligation compared to what any
otherwise comparable undertaking would be able to
realise. Indeed, the State imposes on Trbovlje a public
service obligation to generate electricity. Unlike plants
that freely sell their electricity on the market, Trbovlje
therefore not have the alternative of ceasing to
will
generate electricity and selling on the CO2 market the
necessary allowances it received for free without having
to buy an equivalent number of allowances in order to
fulfil its surrender obligations. This is without prejudice
improving efficiency in line with the
to the plant
incentive structure created by the ETS and thereby
freeing spare allowances which it could sell while
respecting its public service obligation to generate a
certain amount of electricity.

(118) The above reasoning is based on the premise that, at
present,
source of
the most
electricity in
domestic
the generation of
Slovenia. The Commission considers that, at present,
and for the short-term future, this is the case.

lignite
fuel

economical

is
for

(119) However, the Commission also notes that certain elec-
tricity generation technologies using renewable sources of
domestic fuel already now have generation costs that are
not very far above lignite generation costs. This is the
case for large biomass plants, for which, according to
Slovenia,
the generation costs are on average 18,18
SIT/MWh, which is slightly more than 10 % above the
costs of Trbovlje.

(120) The Commission therefore notes that the reasoning in
the present Decision is based on the particular factual
background of the present case and in particular the
fact that the obligation imposed on the Trbovlje plant
will end in 2009. In the longer run, when the costs of
renewables have decreased and their total capacity has
increased, the situation may be different.

(121) Furthermore, the Commission takes into account that
this particular public
service obligation has been
entrusted on the basis of a Community instrument —
Directive 2003/54/EC. The special nature of this public
service obligation — ensuring national security of supply
— may be construed as limiting its scope, by definition,
to the national boundaries within which the provider was
to be entrusted.

(122) The Commission therefore considers that

the method
used by Slovenia to fix the amount of compensation
granted to the Trbovlje plant ensures that the SGEI is
provided with the least cost to the community up to
2009. In the specific legal and factual circumstances of
the case, the compensation does not appear to exceed
run undertaking would have
what a typical, well
to carry it out. Therefore the
requested in order
Commission considers
the fourth condition is
fulfilled, bearing in mind that the public service obli-
gation ends at the end 2009. This limitation in time
will also leave scope for Slovenia to consider whether,
as of 2010, it will switch to ‘clean coal’ technologies for
the use of lignite or convert to biomass or other less
polluting fuel, in line with the European Union's energy
policy (1).

that

(123)

In view of the above, the Commission concludes that the
support to the Trbovlje power plant in the above specific
circumstances fulfils the four conditions of the Altmark
judgment and does not constitute aid within the meaning
of Article 87(1) of the EC Treaty,

HAS ADOPTED THIS DECISION:

Article 1

aid granted to qualified electricity producers using
The
renewable
sources of primary energy as defined in the
Slovenian Energy Act is compatible with Article 87(3)(c) of
the EC Treaty.

Article 2

The
aid granted to qualified electricity producers using
combined heat and power plants as defined in the Slovenian
Energy Act is compatible with Article 87(3)(c) of the EC Treaty.

Article 3

The support granted to the Trbovlje power plant as defined in
the Slovenian Energy Act does not constitute State aid within
the meaning of Article 87(1) of the EC Treaty.

Article 4

The present Decision is addressed to the Republic of Slovenia.

Done at Brussels, 24 April 2007.

For the Commission

Neelie KROES
Member of the Commission

(1) See Energy package of January 2007, and in particular COM(2006)

843 final.