The present case concerns the compatibility of Article 3(2) of Directive 2009/72, particularly the provision on public service obligations consisting of supplying electricity at a reduced rate to vulnerable consumers and Spanish national law 24/2013. The latter lays down a methodology for allocating the costs of a reduced rate tariff applied to vulnerable consumers to a group of five companies, being the applicant one of them: E.ON, the predecessor-in-law of Viesgo. The common feature of these companies is that they simultaneously carry on electricity production, distribution, and retail activities. This case is particular of interest since it gave the Court the opportunity to return on the settled-case law issue of the conditions of Member States to intervene in fixing electricity prices, more precisely the requirements of non-discrimination and proportionality, and interpret them in line with the financial mechanisms used to finance the reduced tariff rate of vulnerable consumers.
In the first place, the Court examines whether the national measure at issue amounts to a public service obligation within the meaning of Article 3(2) of the Directive 2009/72 from two perspectives: one is the regulation of a reduced tariff for vulnerable consumers, the other is the financial contribution intent to cover its cost. First, the Court has held that the concept of ‘public service obligations’ corresponds to public intervention measures in the electricity market’s functioning to pursue a general economic interest. Therefore, an obligation falling on the retail undertaking to supply electricity to certain vulnerable consumers corresponds to a public service obligation. Second, the Spanish national law imposes an atemporal obligation on a group of companies to pay a financial contribution to cover the costs of the regulated discount, meaning the difference between the value of the voluntary price of electricity intended for lower usage the reduced rate vulnerable consumers. Considering these contributions are allocated exclusively to financing the regulated discount, the Court argues there is an inextricably link between the financial contribution and the notion of public service obligation (para 40).
In the second place, the Court recalls that Article 106 TFEU allows the Member to impose on undertakings operating in the electricity sector public service obligations, which may relate to the price of supplies. Although State intervention in the fixing of electricity prices constitutes an obstacle to the achievement of a competitive electricity market, the Court refers to its judgements in ANODE (judgment of 7 September 2016, C‑121/15, EU:C:2016:637) and Оvergas Mrezhi and Balgarska gazova asotsiatsia (judgment of 30 April 2020, C‑5/19, EU:C:2020:34) that establishes three conditions of acceptability of the State intervention on prices within the framework of Directive 2009/72. The public service obligation must first be an objective of general economic interest; second, comply with the principle of proportionality; third, be clearly defined, transparent, non-discriminatory and verifiable, and guarantee equality of access for EU electricity undertakings to national consumers.
According to the latter condition, public service obligations must not be discriminatory, which is not the case in Spain. The financial contribution is imposed on a group of vertically integrated companies operating electricity production, distribution, and retail activities simultaneously. The national measure excludes others that might have the financial capacity of bearing the costs of the reduced tariff for vulnerable consumers, but it is not doing so for operating at the retail level only, for instance.
The Court argues that it is to the national Court to decide whether the differentiation made between undertakings about the burden of covering the costs of vulnerable consumers is objectively justified (para 46). Nevertheless, the Court also anticipate by saying that it is apparent from the order for reference and the national legislature that the differentiation criterion chosen by national law is not objectively justified and, therefore, seems incompatible with Article 3(2) of the Directive 2009/72.
By its second question, the Court was also asked whether Article 3(2) of Directive 2009/72 could preclude a national system that finances the reduced rate of vulnerable consumers without any temporal limit and compensatory measure.
The judgment analyses, first, whether the absence of any temporal limitation on such public services obligations infringes the principle of proportionality. On the one hand, the Court recalls that Federulity and Others (judgment of 20 April 2010, C‑265/08, EU:C:2010:205) establishes that national measures could intervene in electricity prices only if it is necessary to achieve the objective of general economic interest and, consequently, for a period that is necessarily limited in time. On the other hand, the measure at stake is not about the price intervention directly, but the system for financing the reduced tariff price for vulnerable consumers. Therefore, the Court concludes that the periodic review obligations relate to the system of financing the regulated discount of vulnerable consumers (para 57).
Regarding the absence of the compensatory measure, the Court finally noted that Article 3(2) of the Directive makes no mention of a possible obligation to pay compensation where the Member States impose public service obligations on undertakings in the electricity sector (para 59). Consequently, the absence of such compensation under that system for financing a public service obligation is not in itself contrary to Directive 2009/72.
