The European Justice rules that the social bonus of electricity companies is discriminatory

The social bonus for electricity companies is discriminatory

as it is being applied and contrary to European legislation, but the lack of a time limit and the absence of compensatory measures that characterize it is in accordance with the law.

This has been estimated this Thursday by the Court of Justice of the EU responding to a series of preliminary questions sent by the Spanish Supreme Court.

In December 2014,

(currently Viesgo Infraestructuras Energéticas)

that sets the distribution percentages of the bankable amounts of the social bond, which is the compensatory discount at which they can access the most vulnerable households, for social or economic reasons, in the electricity bill.

The Supreme Court upheld the appeal considering that it was incompatible with the European Directive, but the General State Administration filed another appeal for protection before the Constitutional Court, which in turn upheld it, annulling the sentence for violating the right to a trial with all the guarantees, since the Supreme Court had not consulted with the CJEU regarding possible doubts and incompatibilities of law.

The main question is whether, with the European directive in hand, it is legal for the financing of the social bond to fall only on some agents of the electricity system ("the parent companies of the groups of companies or, where appropriate, companies that develop simultaneously the activities of production, distribution and commercialization of electrical energy ") when" some of those obliged subjects have very little specific weight in the sector as a whole, while instead other entities or business groups that may be better off are exempted from said burden. conditions of assuming this cost, either due to their volume of business, or due to their relative importance in one of the sectors of activity or because two of those activities are carried out simultaneously and in an integrated manner ".

Financing cost

And indeed the CJEU, in its judgment today, declares that the Community Directive is contrary to the fact that the cost of financing the social bond is made to fall only on the parent companies of the groups of companies or the companies that develop at the same time the production, distribution and commercialization of electrical energy, since this criterion

chosen by the national legislator, "leads to a difference in treatment between the different

companies operating in that market that is not objectively justified

The judgment recalls that Community legislation empowers the States to impose on electricity companies, "in the interests of the general economic interest", public service obligations of various kinds, and the CJEU specifically confirms that the obligation to partially finance the cost The social bond

But there can be no blatant discrimination.

"This obligation consists of two inseparably linked elements: on the one hand,

and, on the other hand, the financial contribution to cover the cost of this discount. Thus, the contribution controversial mandatory financial system, as it is an integral part of the public service obligation related to the social bond, is included in the scope of the Directive ", say the European judges.

Investments

The second issue is extremely topical because it affects the intervention of national governments in setting the price of electricity.

The judgment recalls that different types of intervention can be admitted if, among others, "the requirement that the public service obligations established must not be discriminatory is met. Thus, the Directive allows the imposition of public service obligations in a general manner. "To the electricity companies" and not to some specific companies.

Therefore, the designation system for companies in charge of public service obligations cannot

exclude

any of the companies operating in the electricity sector.

Consequently, any possible difference in treatment must be objectively justified. "

The thesis of the State in this matter is that in fact the social bond has been imposed on all electricity companies that commercialize electricity in the Spanish market, but the CJEU agrees that "the financial burden of this obligation, which is intended to cover the costs of the discount in the price of electricity provided for by the social bond, does not affect all these electricity companies ", so it urges the Supreme Court to verify" whether the differentiation made between the companies that must bear the weight of said load and those that are exempt from it are objectively justified "since it understands that

, because it considers that all companies that develop at least one of the activities mentioned above should contribute to financing it.

The Court of Justice emphasizes that, "if, as indicated by the Spanish Government, the financing scheme for the social bond results in transferring more than 99% of the cost of said bond to the five most important operators in the Spanish electricity market, The criterion chosen by the national legislator to distinguish between the companies that must assume, to a greater or lesser degree, this cost and those that are totally exempted from doing so leads to a difference in treatment between the different companies that operate in that market that is not objectively justified ".

In the second preliminary ruling question sent by the Supreme Court, the high community court considers, however, that the European directive does not oppose the establishment of the social bond financing regime without a time limit and without compensatory measure, since

a public service obligation" and there is also no requirement in the rules to set any compensation when it comes to public service obligations.

According to the criteria of The Trust Project

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