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Press release: 17 June 2019
Environmental lawyers at ClientEarth have alerted the European Commission to millions of Euros in unlawful State aid granted by the Romanian government to incumbent energy company Complexul Energetic Hunedoara (CEH).
The government guarantees payments to CEH’s coal power plants for providing energy during times of high demand, exempting it from the usual bidding process.
ClientEarth estimates that CEH received approximately €8.9 million in State aid between May and December 2018 and payments are expected to continue until at least June 2020.
According to the lawyers, the aid goes against EU law and should never have been granted in the first place.
ClientEarth argues that the aid was granted under the pretence that it was needed to ensure security of energy supply. In reality, Romania has just used this argument to guarantee continuous revenue to CEH and fix its financial difficulties.
ClientEarth energy lawyer Juliette Delarue said: “CEH is being artificially kept afloat with public money despite violating a number of EU rules. The coal CEH’s plants burn is not a reliable, cheap form of energy and Romania’s unlawful attempts to rescue CEH as it grapples with coal’s failing economics make no financial sense.
“Despite claiming to defend EU values while holding the EU Council Presidency, Romanian authorities are blatantly putting industry needs before the country’s obligations to its people and the European Union.”
The government had already granted CEH several ‘rescue and restructuring’ State aid payments in the form of loans to save it from bankruptcy. But under EU law, companies must not receive State aid for providing capacity if they are facing financial difficulties. The Commission found these aids to be unlawful in 2018.
Under EU law, companies are also prohibited from receiving additional aid until old incompatible aid is repaid. That means CEH must first repay these unlawful payments before it can receive additional financial support.
But Romania has yet to comply with the Commission’s order to recover the aid.
The new complaint comes just weeks after ClientEarth submitted a formal complaint to the Commission over the pitiful sanctions Romanian authorities impose on coal plant operators that breach EU industrial pollution laws.
The European Commission may decide to open investigations following ClientEarth’s complaint. If the Commission finds that the aid violates EU law, it may require the Romanian authorities to take measures to suspend future payments and recover the full value of the aid.
Complexul Energetic Hunedoara (CEH) operates Romanian coal-fired thermal power plants Mintia and Paroseni.
In April 2018, the Romanian Emergency Governance Ordinance granted individual State aid to CEH. The Ordinance obliges CEH to provide at least 400MW of capacity into one of the Romanian energy reserves in return for payments at regulated tariffs and exemption from bidding processes to participate to that reserve.
In 2018, the Commission ordered Romania to recover incompatible aid, primarily in the form of loans, granted to CEH for keeping it afloat without meeting the stringent conditions of the Rescue and Restructuring State aid Guidelines.
Insolvency proceedings against CEH are in progress before the Romanian courts.
ClientEarth is a charity that uses the power of the law to protect people and the planet. We are international lawyers finding practical solutions for the world’s biggest environmental challenges. We are fighting climate change, protecting oceans and wildlife, making forest governance stronger, greening energy, making business more responsible and pushing for government transparency. We believe the law is a tool for positive change. From our offices in London, Brussels, Warsaw, Berlin and Beijing, we work on laws throughout their lifetime, from the earliest stages to implementation. And when those laws are broken, we go to court to enforce them.