1 C-718/18 Commission v Germany: Critical Reflections on the Independence of National Regulatory Authorities in EU Energy Law
Kaisa Huhta
Abstract EU energy law requires that national regulatory authorities (NRAs), which carry out key tasks in the energy sector, be independent. Such independence is considered essential to ensure that NRAs’ performance of their tasks is protected from short-term political pressure, enabling the achievement of the EU’s long-term objectives in the energy sector. However, it also means that there is less oversight over what the NRAs do and how they perform their tasks, which underlines the need for a robust legal framework to ensure their legitimacy and accountability. This article critically assesses the NRAs’ independence requirement in the light of the Court of Justice of the European Union’s recent ruling in C-718/18 Commission v Germany and utilizes the NRAs’ power to fix or approve energy network tariffs or tariff methodologies as an illustrative example of the powers they enjoy in EU Member States.
Keywords EU energy law, national regulatory authority, independence, network tariffs, electricity, Electricity Directive, Electricity Regulation, legal reasoning
1 Introduction
EU energy law requires that national regulatory authorities (NRAs), which carry out key tasks in the energy sector, be independent.1 They must be able to exercise their powers impartially and without interference by public or private entities or any government.2 The objective of this requirement is worthy: it is to ensure that the NRAs’ performance of their tasks is protected from short-term political pressure, thereby improving the stability of investment conditions in the energy markets and, more broadly, enabling the achievement of the EU’s objectives in the energy sector.3 However, it also means that there is less oversight over what the NRAs do and how they perform their tasks, which underlines the need for a robust legal framework to ensure their legitimacy and accountability. This article critically assesses the NRAs’ independence requirement in the light of the recent ruling of the Court of Justice of the European Union (hereinafter the ‘CJEU’ or the ‘Court’) in C-718/18 Commission v Germany4 and outlines the problematic legal implications of this case for consumers and network operators.5
* Dr Kaisa Huhta is a senior researcher and an Academy of Finland Postdoctoral Fellow at the University of Eastern Finland and at the Centre for Climate Change, Energy and Environmental Law (CCEEL). She can be contacted via kaisa.huhta@uef.fi. This research was supported by the Academy of Finland (project 340998).
1 Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market for electricity and amending Directive 2012/27/EU [2019] OJ L 158/125 (hereinafter the
‘Electricity Directive’) art 57; and Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC [2009] OJ L 211/94 (hereinafter the ‘Natural Gas Directive’) art 39. Together, these directives are referred to as
‘internal energy market directives’.
2 Electricity Directive art 57.
3 Anatole Boute, ‘Regulatory Stability under Russian and EU Energy Law’ (2015) 22 Maastricht Journal of European and Comparative Law 506-529, 522; Commission Staff Working Paper, ‘Interpretative Note on Directive 2009/72/EC Concerning Common Rules for the Internal Market in Electricity – The Regulatory Authorities’ (22 January 2010) 6.
4 C-718/18 Commission v Germany, ECLI:EU:C:2021:20.
5 A network operator is a natural or legal person who is responsible for operating, ensuring the maintenance of and, if necessary, developing the energy transmission or distribution network in a given area (Electricity Directive art 2).
2 The independence requirement applicable to NRAs has been included in EU energy law in one form or another since the second energy package in 2003.6 To ensure that the independence requirement is met, the internal energy market directives include an extensive list of tasks that the NRAs must be allowed to carry out.7 These include the power and duty ‘to fix or approve, in accordance with transparent criteria, transmission or distribution tariffs or their methodologies’,8 which means that NRAs have a key role in terms of autonomously determining how much or how little consumers and other final customers pay for energy transmission and distribution.
The independence requirement has been discussed in EU legal scholarship both in the context of general institutional law9 and energy law specifically.10 Discussions in respect of energy law have rightly highlighted the importance of ensuring the NRAs’ independence and have accordingly focused on the positive contribution made by the independence requirement to the achievement of the EU’s objectives in the energy sector.11 However, the potential blind spots or pitfalls of the independence requirement remain underexplored in EU energy law scholarship. This article aims to address that gap. This discussion is all the more timely, as the CJEU gave a ruling on the NRAs’ independence requirement in September 2021 in Commission v Germany, which is the most recent ruling in a case cluster on the NRAs’
independence requirement in the energy sector.12 The implications of this ruling for the Member States’ ability to govern the affordability of energy is also topical when assessed together with the increasing emphasis on energy poverty, energy consumers and consumer rights in the 2018-2019 Clean Energy Package.13
This article argues that the Court’s reasoning in relation to the NRAs’ independence requirement in Commission v Germany omitted important issues that undermine the persuasiveness of the ruling. Finland, in this respect, offers an interesting and topical
6 Directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in electricity and repealing Directive 96/92/EC [2003] OJ L 176/37, art 23; and Directive 2003/55/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in natural gas and repealing Directive 98/30/EC [2003] OJ L 176/57 art 25.
7 Electricity Directive art 59; and Natural Gas Directive art 41.
8 ibid. In simple terms, network tariffs are regulated prices paid by the customers of the networks to finance the cost of operating and maintaining the energy network. The tariff methodologies are the means or the procedures through which the tariffs are calculated. For example, tariff methodologies can include methods to calculate the network operators’ profit or the means to value the network operators’ assets.
9 Stéphanie De Somer, ‘The Powers of National Regulatory Authorities as Agents of EU Law’ (2018) 18 ERA Forum 581-595; Annetje Ottow, ‘Europeanization of the Supervision of Competitive Markets’ (2012) 18(1) European Public Law 191-221; Merijn Chamon, ‘The Institutional Balance, an Ill-Fated Principle of EU Law?’
(2015) 21(2) European Public Law 371-391; David Levi-Faur, ‘Regulatory Networks and Regulatory Agencification: Towards a Single European Regulatory Space’ (2011) 18(6) Journal of European Public Policy, 810-829.
10 Angus Johnston and Guy Block, EU Energy Law (OUP 2012) 125-143; Saskia Lavrijssen and Annetje Ottow,
‘Independent Supervisory Authorities: A Fragile Concept, Legal Issues of Economic Integration’ (2012) 39(4) Legal Issues of Economic Integration 419-445.
11 This author has also underlined the importance of the independence requirement for investment stability and legal certainty. See Kaisa Huhta, ‘Anchoring the Energy Transition with Legal Certainty in EU Law’ (2020) Maastricht Journal of European and Comparative Law.
12 C-718/18 Commission v Germany, ECLI:EU:C:2021:20. Other cases on this topic include C-274/08 Commission v Sweden, ECLI:EU:C:2009:673; C-474/08 Commission v Belgium, ECLI:EU:C:2009:681; and C- 771/18 Commission v Hungary, ECLI:EU:C:2020:584.
13 The Clean Energy Package entered into force in 2018-2019 and includes eight new or amended legal instruments. Its emphasis on consumer rights is visible, for example, in arts 1, 3, 28 and 29 of the Electricity Directive.
3 example.14 In 2016, several Finnish electricity distribution system operators (DSOs) announced increases in their average prices of up to 30%,15 which were entirely in line with the Finnish NRA’s tariff methodology in force at the time.16 However, increases in final consumers’ energy bills of this magnitude unsurprisingly led to public calls for regulatory intervention, leading to extensive discussion in the media and a citizens’ initiative that reached the Finnish Parliament.17 The public backlash was all the stronger because consumers were unable to switch to more affordable service providers, given that DSOs are natural monopolies not subject to competitive pressure to lower their prices.18 Addressing these natural monopolies’ significant price increases gained broad political approval, but the suggested legislative changes were partially watered down by the requirement under EU law for NRAs to be independent. This effect was not mitigated by legal experts’ concerns over the DSOs’
right to property guaranteed in the Finnish Constitution.19 According to settled interpretations, regulating the prices charged by natural monopolies is sometimes justified even though it restricts these network owners’ right to property.20 However, as a clear restriction of a fundamental right, such limitations can be justified only if the pricing criteria are provided for in law.21 Nevertheless, the NRAs’ independence requirement was interpreted to prevent the inclusion of general pricing criteria in national legislation. Instead, the task of determining tariffs and, as a result, the scope of network operators’ right to property is delegated to a regulatory authority with little political or democratic oversight in Member States.22 Similar concerns over the legitimacy and accountability of the broad discretionary powers given to independent NRAs have also been voiced in other Member States and beyond energy law scholarship.23
14 The author has been consulted by the Association of Energy Users in Finland (ELFi), the Finnish Home Owners’
Association and the Finnish Parliament’s commerce and constitutional law committees as a legal expert in the legislative process concerning EU law, network tariffs and the independence requirement.
15 Caruna, ‘Siirtohintamme nousevat 1.3.2016 alkaen’, 18 January 2016, available at www.caruna.fi/ajankohtaista/siirtohintamme-nousevat-132016-alkaen (accessed 8 September 2021).
16 Energiavirasto, ‘Valvontamenetelmät neljännellä 1.1.2016 – 31.12.2019 ja viidennellä 1.1.2020–31.12.2023
valvontajaksolla’, available at https://energiavirasto.fi/documents/11120570/12766832/Valvontamenetelm%C3%A4t-
s%C3%A4hk%C3%B6njakelu-2016-2023.pdf/72eac45f-4fe0-6b0a-d5f7-
e89ee97b89fc/Valvontamenetelm%C3%A4t-s%C3%A4hk%C3%B6njakelu-2016-2023.pdf (accessed 8 September 2021).
17 Citizens’ intitiatives, ‘Kansalaisaloite laiksi sähkömarkkinalain sekä sähkö- ja maakaasumarkkinoiden valvonnasta annetun lain muuttamisesta’, 7 October 2020, available at www.kansalaisaloite.fi/fi/aloite/7383 (accessed 8 September 2021).
18 Christopher Jones (eds), EU Energy Law: The Internal Energy Market (3rd edn, Claeys&Casteels 2010) 9-11;
Peter D Cameron, Competition in Energy Markets: Law and Regulation in the European Union (2nd edn, OUP 2007) 463-465.
19 Professor Olli Mäenpää and Dr Kaisa Huhta. The expert statements are publicly available at www.eduskunta.fi/FI/vaski/KasittelytiedotValtiopaivaasia/Sivut/HE_265+2020_asiantuntijalausunnot.aspx (accessed 8 September 2021). The right to property is laid down in Section 15 of the Finnish Constitution (Suomen Perustuslaki 731/1999).
20 Charter of Fundamental Rights of the European Union, OJ C 326, 26.10.2012, p. 391–407, arts 17 and 52; C- 686/18 Adusbef and others, ECLI:EU:C:2020:567 para 85; and in literature Florian Becker, ‘Market Regulation and the ‘Right to Property’ in the European Economic Constitution’ (2007) 26(1) Yearbook of European Law 255-296, 255-256; Anatole Boute, Energy Security along the New Silk Road: Energy Law and Geopolitics in Central Asia (Cambridge University Press 2019) 134-151.
21 Charter of Fundamental Rights of the European Union art 17.
22 De Somer (n 9) 581-595, 588.
23 Marek Szydło, ‘Independent Discretion or Democratic Legitimisation? The Relations between National Regulatory Authorities and National Parliaments under EU Regulatory Framework for Network-Bound Sectors’, 18(6) European Law Journal (2012), 793-820; Saskia Lavrijssen, ‘Independence, Regulatory Competences and the Accountability of National Regulatory Authorities in the EU’ (2019) 17(1) OGEL.
4 This article critically analyses the NRAs’ independence in EU energy law. It uses the NRAs’
power to fix or approve network tariffs or their methodologies as an example of the implications of their independence, as this task is particularly illustrative of the issues that emerge in the context of granting an independent authority broad discretionary power. The analysis focuses on electricity, although it should be noted that the vast majority of the discussion applies mutatis mutandis to natural gas. The article begins by outlining the legal framework on the independence requirement in EU energy law (Section 2). With a view to highlighting the challenging aspects of this framework, it then focuses on Commission v Germany by critically assessing the Court’s reasoning and argumentation (Section 3). The article then moves on to explore the implications of the Court’s reasoning and argumentation for network operators and consumers (Section 4), before offering conclusions (Section 5).
2 The Legal Framework for National Regulatory Authorities’ Independence
Under the Electricity Directive, each EU Member State is obliged to designate a single energy NRA at national level.24 Member States must ensure that, when carrying out its tasks, the authority is legally distinct and functionally independent from other public or private entities, that its staff carry out their tasks independently from any market interest and that it does not seek or take direct instructions from any government or other public or private entity.25 In particular, Member States must ensure that the NRAs are able to take autonomous decisions, independently from any political body, and that they have a separate annual budget as well as autonomy in the implementation of their budget.26 Therefore, the independence requirement is a key concept in the context of NRAs. While there is no specific definition of independence in place, the Court has held it to mean that it refers to a status that ensures that the public body in question ‘is able to act completely freely in relation to those bodies in respect of which its independence is to be ensured, shielded from any instructions or external influence’.27
The Electricity Directive allocates an extensive list of tasks to the NRAs.28 Among other duties, the NRAs have the duty and the power to fix or approve, in accordance with transparent criteria and sufficiently in advance of their entry into force, transmission or distribution tariffs or at least their methodologies, or both.29 This is one of the NRAs’ key tasks in supervising energy network operators’ conduct and the most important task in respect of the regulation of network operators’ tariffs. Those tariffs or methodologies should allow the necessary investments in the networks to be carried out in a manner that ensures the viability of the networks.30 This content requirement is in line with the network operators’ obligation to ensure the system’s long-term ability to meet reasonable demand.31
Network tariffs or tariff methodologies, fixed or approved by the NRAs, must also observe the criteria established in the Electricity Regulation.32 They must be cost-reflective and transparent, increase efficiencies and take into account the need for network security and
24 Electricity Directive art 57(1).
25 ibid art 57(4).
26 ibid art 57(5).
27 C-718/18 Commission v Germany, ECLI:EU:C:2021:662 para 108.
28 Electricity Directive art 59.
29 ibid art 59(1) and (7).
30 ibid art 59(7).
31 ibid arts 31 and 40.
32 Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity [2019] OJ L 158/54 (hereinafter the ‘Electricity Regulation’).
5 flexibility.33 They should reflect actual costs incurred insofar as they correspond to those of an efficient and structurally comparable network operator and are applied in a non-discriminatory manner.34 If necessary, the NRAs have the authority to require network operators to modify tariffs to ensure that they are proportionate and, indeed, applied in a non-discriminatory manner.35
In addition, tariff methodologies applied to DSOs must specifically provide incentives for the most cost-efficient operation and development of their networks.36 Costs incurred in relation to such development should be recognized as eligible costs under the tariff methodology, meaning that they can be subsumed into the prices final consumers are charged. In line with the existing legislation, the Agency for the Cooperation of Energy Regulators (ACER) regularly publishes best practice reports on tariff methodologies to provide guidance.37 These reports are not legally binding on NRAs.
In the light of these independence rules, it is clear that Member States are not entitled to determine the details of network tariffs or their methodologies, but that task falls to the NRAs.
This means, for example, that Member States cannot fix tariff methodologies in a national law or a decree, let alone fix a maximum network tariff level or make the NRAs tariff methodology conditional upon governmental approval.
There are some limitations to the independence requirement. The independence of NRAs should preclude ‘neither judicial review nor parliamentary supervision in accordance with the constitutional laws of the Member States’.38 Furthermore, it should ‘not deprive Member States of the possibility of establishing and issuing their national energy policy’.39 In particular, the prohibition on NRAs seeking or taking direct instructions from any government is without prejudice to general policy guidelines.40 However, those general policy guidelines cannot relate to the specific tasks given to the NRAs, including fixing or approving tariffs or tariff methodologies.41 The Electricity Directive clarifies this by explaining that:
‘[D]epending on a Member State’s constitutional arrangements, it might be within Member State’s competence to determine the policy framework in which the regulatory authorities are to operate, for example concerning security of supply. However, the general energy policy guidelines issued by the Member State should not impinge on the independence or autonomy of the regulatory authorities.’42
These rules could be taken to mean that energy policy cannot generally govern, or take a stand on, the overall approaches to the tasks assigned to NRAs under Article 59 of the Electricity
33 Electricity Regulation art 18.
34 ibid
35 Electricity Directive art 60(1).
36 ibid art 18.
37 In line with Article 18 of the Electricity Regulation. ACER, Report on Distribution Tariff Methodologies in Europe, February 2021, available at https://documents.acer.europa.eu/Media/News/Pages/ACER-reports-on- electricity-distribution-tariff-methodologies-in-Europe-and-recommends-how-to-improve-them.aspx (accessed 10 September 2021).
38 Electricity Directive recital 80.
39 ibid recital 87.
40 ibid art 57(4)(b).
41 ibid
42 Electricity Directive recital 87.
6 Directive, including fixing or approving tariffs or tariff methodologies. This broad interpretation would mean that Member States have no competence, even on a general or a principles-based level, to govern tariff methodologies through law in the interests of consumer protection, for instance. This interpretation is at odds with the overarching theme of the Clean Energy Package, which is to provide a fair deal for consumers.43 The package’s emphasis on consumers and consumer protection can be seen in several entirely new provisions it contains that highlight the importance of protecting poor or vulnerable consumer groups.44
Of course, one could argue that the risk of price increases, even significant ones, is something that must be tolerated in a market-based energy system. Indeed, EU energy law has progressively and vigorously aimed to strengthen market-based price formation in the energy sector and to prevent Member States from capping energy prices, which is known to lead to market distortions.45 However, network operations are not, and cannot be, market-based businesses and because of that they have been deliberately separated from competitive energy activities through well-established unbundling rules.46 Network operators are natural monopolies that have no competitive incentive to make their cost structures more efficient or to lower their prices and are, therefore, at high risk of abusing their dominant position. In fact, the rationale of regulating network operators and the objective behind it is precisely to prevent the abuse of a dominant position.47 Network operators are supposed to be regulated in a way that makes the networks level playing fields for market participants.48
One could also argue that the regulation of network operators under EU energy law already entails all the necessary safeguards to prevent the abuse of a dominant position and that, in terms of fixing or approving network tariffs or tariff methodologies, the Electricity Directive and Electricity Regulation include sufficient guidance to ensure tariff methodologies appropriately balance consumer interests against network operators’ interests. However, close examination of the criteria established in the Electricity Directive and Electricity Regulation reveals that they are broadly worded and abstract requirements that leave a remarkable level of interpretative discretion to the NRAs. For example, the requirement of cost-reflectivity under Article 18 of the Electricity Regulation lacks a well-established definition, let alone a legally binding one. In theory, it could be interpreted to mean that network operators can invest, spend and pay dividends and report these expenditures as costs that can be subsumed in consumer prices without limitation. Even if such interpretations did not occur in practice, the existing legal framework nevertheless enables them because it gives the NRAs the exclusive power to determine the interpretation of cost-reflectivity, as well as the other broadly worded and abstract requirements. Judicial review of such decisions can be an effective legal remedy to address such decisions. However, the reach of judicial review is limited as will be demonstrated in the following sections.
Finally, it could be argued that if the NRAs did allow absurd costs and an unreasonable profit to be included in the network operators’ tariffs and reflected in consumer prices, such
43 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee, the Committee of the Regions and the European Investment Bank, Clean Energy for All Europeans, COM(2016)860 final, 3.
44 See, for example, Electricity Directive arts 1, 3, 28 and 29.
45 Kaisa Huhta, Capacity Mechanisms in EU Energy Law: Ensuring Security of Supply in the Energy Transition (Kluwer 2019) 16-20.
46 Electricity Directive art 35, and Chapter VI.
47 See, in general, Christopher Jones (ed), EU Energy Law: Volume II, EU Competition Law and Energy Markets (Claeys & Casteels 2016).
48 See C-69/91 Decoster, ECLI:EU:C:1993:853 para 19; and Lavrijssen (n 23) 5.
7 regulatory decisions could be challenged before national courts. This interpretation is supported by Article 60(8) of the Electricity Directive, which obliges Member States to ensure that there are suitable mechanisms in place at national level under which a party affected by a regulatory authority’s decision has a right of appeal. However, if an NRA’s tariff methodology were to be contested, a national court would be somewhat bound by the broad margin of discretion allocated to NRAs under EU law.49 Furthermore, relying on national courts on the issue of tariffs or tariff methodologies creates a power imbalance between network operators and energy consumers. While network operators typically have the right to appeal NRAs’ tariff or tariff methodology decisions, energy consumers might not. In Finland, for example, they do not have standing to challenge tariffs or tariff methodologies even if the methodologies have had a significant impact on the energy prices consumers are charged. In other words, consumer- led concerns over the development of tariff methodologies are unlikely to reach the courts in some Member States, although admittedly ex post judicial review is not the only method through which consumers can challenge tariffs or tariff methodologies. Consumer interests can also be highlighted through ex ante consultation procedures for example. However, not all Member States oblige the NRAs to conduct public consultations.50
Against this background, the broad margin of discretion granted to NRAs raises questions of accountability and legitimacy. Do we have an authority so independent that its vision of what constitutes cost-reflective and cost-efficient tariffs or tariff methodologies is beyond the reach of both elected national legislators and national courts in some Member States? It seems unlikely that the legislator would have intended such an interpretation. Nevertheless, the CJEU has recently ruled on the extent of the independence requirement applicable to NRAs and seems to have confirmed the broad interpretation. This case is the focus of the next section.
3 The Independence Requirement in C‑718/18 Commission v Germany 3.1 The grounds of the dispute
In Commission v Germany, the Commission sought a ruling that Germany had failed to meet its obligation to ensure the independence of its NRA.51 The case concerned compliance with the independence requirement enshrined in Directive 2009/72/EC52 (no longer in force), the wording of which as to NRA independence was materially identical to that of the Electricity Directive now in force.
49 In literature, see Jan Zglinski, ‘The rise of deference: The margin of appreciation and decentralized judicial review in EU free movement law’, 55(5) Common Market Law Review (2018), 1341-1385; Silvère Lefèvre and Miro Prek, ‘”Administrative Discretion”, “Power Of Appraisal” And “Margin Of Appraisal” In Judicial Review Proceedings Before The General Court’, 56(2) Common Market Law Review (2019), 339-380; Catherine Banet,
‘Electricity Network Tariffs Regulation and Distributive Energy Justice: Balancing the Need for New Investments and a Fair Energy Transition’, in Iñigo del Guayo et al (eds), Energy Justice and Energy Law (OUP 2020), 83- 102; Saskia Lavrijssen and Maartje de Visser, ‘Independent administrative authorities and the standard of judicial review’, Utrecht Law Review (2006), 111-135.
50 Such as in Sweden. See ACER, ‘Report on Distribution Tariff Methodologies in Europe’, February 2021, available at https://documents.acer.europa.eu/Media/News/Pages/ACER-reports-on-electricity-distribution- tariff-methodologies-in-Europe-and-recommends-how-to-improve-them.aspx (accessed 10 September 2021), at 6. 51 C-718/18 Commission v Germany, ECLI:EU:C:2021:662.
52 Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC [2009] OJ L 211/55 (hereinafter the
‘2009 Electricity Directive’).
8 Under the German Energiewirtschaftsgesetz (Energy Industry Act), the Federal Government was empowered to (1) determine the conditions for network access and to establish the methodologies used to determine such conditions and the methodologies for fixing the tariffs for network access; (2) regulate in which cases and on what conditions the regulatory authority may define these conditions and methodologies or approve them at the request of the system operator; and (3) regulate in which special cases of network use and on what conditions the regulatory authority may authorize or withhold authorization for individual tariffs for network access.53 In other words, these provisions of German law reserve the right to fix or approve tariff methodologies to the Federal Government rather than the NRA, as required by EU law.
It was never likely that the Court would have found such a broad reservation of NRA competence to a governmental body acceptable. Unsurprisingly, therefore, the Court declared that Germany had failed to correctly transpose the independence requirement. Given that the German Energy Industry Act withheld one of the NRAs’ key tasks to be governed by the Federal Government, the Court’s conclusion can be considered justified in the light of the provisions of the Electricity Directive.54
Although the Court’s conclusion itself accurately reflects the obligations of the Electricity Directive, it is the Court’s reasoning and argumentation relating to the NRAs’ independence that undermine the strength of the ruling and invite critical questions. The following subsections analyse the Court’s reasoning and argumentation by classifying and analysing its key contentions used to support its ruling. Each subsection below has been given a title that reflects the Court’s own line of reasoning. The analysis in each subsection outlines what the Court argued and explains why that argumentation and reasoning is problematic.
3.2 EU-level rules to guide NRAs are sufficiently precise
To support its national legislative choice, Germany argued that the substantive requirements on network tariffs or tariff methodologies in EU law were not sufficiently precise for the NRAs to exercise their regulatory powers. To ensure the correct transposition of EU law, Germany had therefore opted to specify additional criteria within which the NRAs may operate.55
The Court dismissed Germany’s argument and ruled that the opposite was true. It outlined the relevant EU rules that governed the substance of tariffs or tariff methodologies in support of its conclusion. It held that the rules required the tariffs or their methodologies to be fixed in accordance with transparent criteria and to allow necessary investments to be made in the networks to ensure their viability.56 Furthermore, they must be proportionate, applied in a non- discriminatory manner and entail the grant appropriate incentives, in the short and long term, to increase efficiencies, foster market integration and security of supply and support the related research activities.57
Admittedly, these rules do set out substantive criteria as to how the NRAs should fix or approve network tariffs or tariff methodologies. Furthermore, since the start of the dispute, the Electricity Regulation has entered into force and established additional substance requirements such as those as to cost-reflectivity, as identified in Section 2 above.
53 C-718/18 Commission v Germany, ECLI:EU:C:2021:662 para 13.
54 ibid paras 14-16.
55 ibid para 94.
56 ibid paras 120-121.
57 ibid paras 120-121.
9 However, on examination of the wording of these substance requirements, it appears questionable whether they considerably reduce the scope of NRAs’ discretion. In other words, they do not seem as precise and detailed as the Court held them to be. The requirement of proportionality alone is so open to interpretation that it has given rise to a significant body of CJEU case-law and debate in legal scholarship.58 With specific regard to the energy sector, the rules require tariffs or their methodologies to grant incentives to foster security of supply. It is well known that security of supply is a broad concept and its definition is certainly not free of political nuances. In fact, the relevant scholarship on security of supply has highlighted the concept as multidimensional,59 blurred,60 slippery,61 fuzzy,62 context-specific63 and elusive,64 which mean that the NRAs are faced with a task in deciding what should be regarded as included in the objective of security of supply. Does it only include elements of availability and access or do notions of affordability also play a role? If so, NRAs’ decision-making would emphasize the consumers’ role, whereas if questions of affordability are excluded, the NRAs’
tariff decisions can facilitate investment in security of supply with less concern as to how much it will cost final consumers.
For these reasons, it is highly questionable whether EU-level rules are sufficiently precise or
‘detailed’65 as the Court regarded them as being. The broad margin of discretion allowed certainly does not guarantee that the NRAs’ decision-making is conducted on the basis of ‘a uniform criteria’, even though the Court highlighted it as doing so.66
3.3 EU Member States are still allowed to give general guidance
Aligned with the Member States’ right to establish and issue national energy policy despite the NRAs’ independence requirement,67 both Advocate General Pitruzzella and the Court acknowledged that the relevant EU rules allowed Member States to lay down general policy guidelines.68 However, the ruling also stressed that those guidelines may not concern the tasks or regulatory powers specifically assigned to the NRAs.69 Advocate General Pitruzzella highlighted this distinction by stating that
58 For an overview in literature, see Robert Schütze and Takis Tridimas, Oxford Principles of European Union Law: Volume I: The European Union Legal Order (OUP 2018) 243-264; and Tor-Inge Harbo, The Function of Proportionality Analysis in European Law (Brill 2015).
59 Francesco Gracceva and Peter Zeniewskit, ‘A systemic approach to assessing energy security in a low-carbon EU energy system’ (2014) 123 Applied Energy 335-348.
60 Andreas Löschel, Ulf Mosöemer and Dirk T G Rübbelke, ‘Indicators of energy security in industrialised countries’ (2010) 38(4) Energy Policy 1665-1671, 1665.
61 Lynne Chester, ‘Conceptualising Energy Security and Making Explicit its Polysemic Nature’ (2010) 38(2) Energy Policy 887-895.
62 Scott Victor Valentine, ‘The Fuzzy Nature of Energy Security’, in Benjamin K. Sovacool (ed), The Routledge Handbook of Energy Security (Routledge 2011) 56-73.
63 Paula Kivimaa and Marja Sivonen, ‘Interplay between low-carbon energy transitions and national security: An analysis of policy integration and coherence in Estonia, Finland and Scotland’ (2021) 75 Energy Research &
Social Science 1-18, 2.
64 Gracceva and Zeniewskit (n 59) 335-348, 336.
65 C-718/18 Commission v Germany, ECLI:EU:C:2021:662 para 123.
66 ibid
67 Electricity Directive recital 87.
68 C-718/18 Commission v Germany, ECLI:EU:C:2021:662 para 110; C-718/18 Commission v Germany, ECLI:EU:C:2021:20, Opinion of Advocate General Pitruzzella para 121-125.
69 C-718/18 Commission v Germany, ECLI:EU:C:2021:662 para 110.
10
‘while the Member States, and thus parliaments and governments, certainly retain powers in the field of energy policy, as is confirmed by Article 194 TFEU, the fact remains that the general policy guidelines address matters other than those covered by the reservation of regulatory powers to NRAs.’70
The core of the independence requirement is, indeed, clear in this respect. Member States may not reserve the right to fix or approve tariffs or tariff methodologies to themselves, nor can they determine the details of the tariff methodologies in laws or decrees. For example, they cannot set a profit margin71 or prevent NRAs from fixing or approving tariffs or tariff methodologies in advance of their entry into force.72 In Commission v Germany, the German government had used its power to prescribe matters such as the methods of amortization and indexation to be used.73 The German rules therefore sought to confer on the government powers that should clearly fall within the NRAs’ competences under the electricity market rules.
However, the Court’s reasoning does not, unfortunately, take a stand on the broad interpretive space between outlining general energy policy guidelines and setting rules on detailed issues such as amortization or indexation. Member States would certainly have welcomed guidance on the types of act that constitute general guidelines and those that infringe upon the NRAs’
fields of competence. This issue was identified in earlier legal scholarship, which highlighted the extreme practical difficulty involved in drawing a distinction between the making and the implementing of general policy.74 Indeed, no national energy policy can avoid taking a stand on energy prices and energy pricing, as a consequence of which energy policy guidelines are highly likely to affect the conditions under which tariffs or tariff methodologies can be set. So where is the line to be drawn? For example, if a Member State’s law requires that network pricing be ‘reasonable’, does that count as a general policy guideline or a criterion that restricts the NRA’s independence contrary to the Electricity Directive? Earlier legal scholarship argued that a reasonable interpretation of the distinction would be to allow legislation that does ‘not result in evident controversies between different market players and do not have direct economic consequences for the different parties involved’.75 This line of interpretation would allow the legislator to require that NRAs’ decisions on tariffs or tariff methodologies facilitate environmental and climate objectives or take into account reasonable costs for consumers, for example.76
The Court held – thus further obscuring the demarcation between a general policy guideline and matters that fall exclusively within the competence of the NRAs – that the NRAs must take their ‘decisions autonomously and solely in the public interest’.77 However, it is well settled that Member States, not regulatory authorities, enjoy a broad margin of discretion in
70 C-718/18 Commission v Germany, ECLI:EU:C:2021:20, Opinion of Advocate General Pitruzzella para 122.
71 C-474/08 Commission v Belgium, ECLI:EU:C:2009:681.
72 C-274/08 Commission v Sweden, ECLI:EU:C:2009:673 para 34.
73 C-718/18 Commission v Germany, ECLI:EU:C:2021:662 para 86.
74 Chris Hanretty, Pierre Larouche and Andreas Reindl, ‘Independence, accountability and perceived quality of regulators’ (A CERRE study, 2012), 14; Lavrijssen (n 23) 7-8.
75 Lavrijssen (n 23) 7-8. See also Hanretty, Larouche and Reindl (n 74) 14.
76 See the Austrian legislative choice described a study carried out for the European Commission by Spark Legal Network, Trinomics and University of Groningen, ‘Assessing the independence and effectiveness of National Regulatory Authorities in the field of energy’ (2019), available at https://op.europa.eu/en/publication-detail/- /publication/e5f886d6-917d-11e9-9369-01aa75ed71a1/language-en (accessed 14 September 2021) 92-93. The Austrian model, although it sets out general criteria for tariff methodologies in national law, has not so far been challenged by the Commission.
77 C-718/18 Commission v Germany, ECLI:EU:C:2021:662 para 109.
11 determining what constitutes a public interest.78 The Court’s reasoning, in this respect, leaves unanswered questions.
3.4 The existing rules comply with the requirements established in 9/56 Meroni v High Authority
In its assessment of the legality of the German energy legislation, the Court made reference to the seminal Meroni v High Authority ruling, which established the conditions under which EU institutions can delegate tasks to EU agencies.79 It argued that the existing rules on NRAs’
independence and the rules on tariff setting comply with the requirements established in Meroni. This subsection explores whether and how this argument can withstand scrutiny.
During the proceedings, Germany submitted that the principles established in Meroni were also applicable ‘where the EU legislature entrusts powers to independent national authorities’80 and that, in the light of the Meroni ruling, conferral of powers on NRAs in the energy sector ‘is possible only if the EU legislature has first adopted sufficiently precise provisions on the tasks and powers of such authorities’.81 Without taking a stand on whether the principles established in Meroni applied to regulatory authorities in the first place, the Court stated that its interpretation was nevertheless in line with that case-law.82
The Court confirmed the settled case-law to the effect that it is prohibited to delegate to administrative bodies a margin of discretion which enables ‘political decisions in the true sense, by substituting the choices of the delegator by those of the delegatee, and thus bring about an
“actual transfer of responsibility”’.83 It held that a delegation of clearly defined executive powers is permitted because only then can the use of those delegated powers ‘be subject to strict review in the light of objective criteria determined by the delegating authority’.84 The Court considered these criteria fulfilled by the rules established in the 2009 Electricity Directive. The Court went as far as to argue that ‘[t]he powers reserved to the NRAs are executive powers that are based on the technical and specialist assessment of factual realities’85 and that ‘in the exercise of those powers, NRAs are subject to principles and rules established by an equally detailed legislative framework at EU level, which limit their discretion and prevent them from making political choices’.86
This line of reasoning is unconvincing. As demonstrated in the analysis in subsections 3.2 and 3.3 above, the EU rules are not very detailed in this respect, and are in fact based on a brief list of broadly worded and abstract substantive requirements, which leave ample room for interpretation. Therefore, the powers of the NRAs are much more than mere ‘technical and specialist assessment of factual realities’.87 The argument to this effect seems to be based on the assumption that regulatory matters can be ‘split neatly between policymaking and
78 In terms of services in the general economic interest see, for instance, C-265/08 Federutility, ECLI:EU:C:2010:205 para 29; and C-67/96 Albany, ECLI:EU:C:1999:430 para 104.
79 9/56 Meroni v High Authority, ECLI:EU:C:1958:7.
80 C-718/18 Commission v Germany, ECLI:EU:C:2021:662 para 96.
81 ibid para 96.
82 ibid para 131.
83 ibid para 131.
84 ibid para 131.
85 ibid para 132.
86 ibid para 132.
87 ibid para 132.
12 implementation’,88 even though this is known not to be the case and that policy choices are in fact continuously being made.89 The risks associated with this type of misconception are all the more exacerbated as the tariffs may be approved based on a proposal from the network operators themselves, who have an incentive to maximize their profit.90 This is the case even though the independence requirement should apply to public entities and economic actors alike.91
It has been aptly argued that ‘the mere fact that a decision is technical does not mean that it is not political’.92 This is a key point: the fact that tariffs and tariff methodologies often look technical and may contain mathematical formula rather than discussion of policy choices does not mean that the NRAs are incapable of making policy choices or value decisions through those methodologies. This distinction and its implications for the powers of non-legislative institutions has been widely discussed in the aftermath of Meroni and of C‑270/12 United Kingdom v Parliament and Council (Short Selling)93 on agencification in the EU,94 but they went unacknowledged by the Court in terms of the NRAs’ power to fix or approve tariffs and tariff methodologies.
3.5 The existing rules ensure democratic legitimacy and judicial review
Germany defended its national legislation by arguing that ‘the principle of legality and the reservation of statutory powers, corollaries of the rule of law’,95 require that the exercise of NRA’s ‘power be “structured in advance” so as to ensure [in accordance with the German constitution], that the chain of democratic legitimacy is not broken’.96
The Court dismissed this argument by reference to the value of democracy and the principle of representative democracy enshrined in primary EU law.97 It highlighted that the principle was
88 Pierre Larouche and Maartje De Visser, ‘The Triangular Relationship between the Commission, NRAs and National Courts Revisited’ (2006) 64 Communications & Strategies 125-145.
89 Hanretty, Larouche and Reindl (n 74) 14.
90 Electricity Directive recital 81.
91 C-718/18 Commission v Germany, ECLI:EU:C:2021:662 para 112.
92 Heinrich Kühnert, Philipp Böhler and Stephan Polster, ‘A Tale of Delegation and Power: ACER and the Dichotomy of the Non-Delegation Doctrine and the Creation of a Genuine Internal Market in Electricity’ (2017) 1(1) European Competition and Regulatory law Review 47-55.
93 C‑270/12 United Kingdom of Great Britain and Northern Ireland v European Parliament and Council of the European Union, ECLI:EU:C:2014:18.
94 Marta Simoncini, ‘Paradigms for EU Law and the Limits of Delegation: The Case of EU Agencies’ (2017) 9(2) Perspectives on Federalism; Merijn Chamon, ‘EU agencies between Meroni and Romano or the devil and the deep blue sea’ (2011) 48(4) Common Market Law Review 1055-1075; Merijn Chamon, ‘The Empowerment of Agencies under the Meroni Doctrine and art. 114 TFEU: Comment on United Kingdom v Parliament and Council (Short-selling) and the Proposed Single Resolution Mechanism’ (2014) 39(3) European Law Review 380-403;
Stefan Griller and Andreas Orator, ‘Everything under control? The “way forward” for European agencies in the footsteps of the Meroni doctrine’ (2010) (35)(1) European Law Review 3-35; Merijn Chamon, EU Agencies:
Legal and Political Limits to the Transformation of the EU Administration (OUP 2016); Herwig Hoffmann and Alessandro Morini, ‘Constitutional Aspects of the Pluralisation of the EU Executive through “Agencification”’
(2012) 37(4) European Law Review 419-443; Mark Thatcher, ‘The creation of European regulatory agencies and its limits: a comparative analysis of European delegation’ (2011) 18(6) Journal of European Public Policy 790- 809; Carlo Tovo, ‘Delegation of Legislative Powers in the EU: How EU Institutions Have Eluded the Lisbon Reform’ (2017) 42(5) European Law Review 677-705; Pieter Van Cleynenbreugel, ‘Meroni Circumvented?
Article 114 TFEU and EU Regulatory Agencies’ (2014) 21(1) Maastricht Journal of European and Comparative Law, 64-88; De Somer (n 9) 581-595, 592.
95 C-718/18 Commission v Germany, ECLI:EU:C:2021:662 para 92.
96 ibid para 92.
97 ibid para 124.
13 fully reflected in the legislative procedure through which the 2009 Electricity Directive was adopted and that it should be taken into consideration when interpreting EU directives.98 Most importantly, the Court confirmed that
‘the principle of democracy does not preclude the existence of public authorities outside the classic hierarchical administration and more or less independent of the government, which often exercise regulatory functions or carry out tasks which must be free from political influence, whilst still being required to comply with the law subject to the review of the competent courts. Conferring on NRAs a status independent of the general administration does not in itself deprive those authorities of their democratic legitimacy, in so far as they are not shielded from all parliamentary influence’99
The Court took the view that NRAs are not be shielded from all parliamentary influence because Member States are entitled to appoint their directors and because, in accordance with the 2009 Electricity Directive, NRAs are subject to parliamentary scrutiny in accordance with Member States’ constitutional laws.100 Furthermore, the Court highlighted the Member States’
obligation to establish appropriate mechanisms at national level under which a party affected by an NRA’s decision can bring proceedings before a body independent of the parties involved and of any government.101 The Court considered fulfilment of this obligation to be an important element of ensuring effective judicial protection.102 In the light of these arguments, the Court dismissed Germany’s pleas relating to democratic legitimacy and judicial review. However, this reasoning fails to take into account the limitations involved in challenging the NRAs’ broad discretionary powers through judicial review. The consumers’ lack of procedural rights to influence tariffs or tariff methodologies in some Member States means that it is mainly the network operators who could challenge NRAs’ decisions regarding network tariffs or tariff methodologies.
4 Exploring Consumers and Network Operators’ Perspectives 4.1 Symbiotic yet conflicting interests
The design and content of the regulation of network tariffs in the electricity sector has profound consequences for both network operators and final consumers. While these two affected groups are in a symbiotic relationship, as each needs the other, their fundamental interests deeply diverge. Consumers want to pay as little as possible for the provision of the highest quality energy services possible. Network operators are companies, and therefore aim to maximize their profits. As a monopoly activity with no natural competitors, network operators are always dominant players, which creates the risk of abuse of such dominance.
Network tariff regulation falls into this space between consumers and network operators’
interests. In an ideal situation, it would be constructed in such a way as to protect consumers from potential and actual abuse of a dominant position while allowing network operators to invest in the networks to ensure their viability, enjoy a reasonable profit and recover the cost of such investment through tariffs. However, it is well known that regulatory decisions such as
98 ibid para 125.
99 ibid para 126.
100 ibid para 127.
101 ibid para 128. This requirement is now included in Article 60(8) of the Electricity Directive.
102 ibid
14 NRAs’ tariff decisions involve trade-offs between mutually conflicting interests.103 It has been aptly pointed out that ‘short-term gains in consumer welfare from lower prices and increased competition routinely have to be weighed against longer-term gains from investments in new technologies and increased dynamic efficiency’.104 In this context, the following subsections address the balance between these two interests in the light of fundamental rights and the Court’s ruling in Commission v Germany.
4.2 Network operators’ right to their property
Regulating network operators’ tariffs limits the freedom of their economic activities and their right to property, which are protected in the constitutional traditions of Member States and in the EU Charter of Fundamental Rights.105 The right to property necessitates that tariffs are not set so low as to prevent network operators’ from recovering their operating costs.106 This is all the more relevant as network operators are legally obliged to ensure the long-term ability of the system to meet reasonable demands and to operate, maintain and develop efficient energy networks.107 Network operators must be allowed to factor the cost of fulfilling these legal obligations into their prices and recover a fair compensation for their services.108
Because of the fundamental right to property, the regulation of network tariffs is not without boundaries. As with many other fundamental rights, however, the right to property is not absolute but can be regulated if it is necessary in the general interest or to protect the rights and freedoms of others.109 One of these interests and other rights is consumer protection. According to settled case-law, limitations on the right to property must be proportional and respect the essence of those rights and freedoms.110
Furthermore, limiting the right to property requires that both the specific cases in which limitations may be imposed and the conditions for limiting the right to property are laid down in law.111 In other words, network operators should be able to assess the kinds of limitations that will be imposed on their rights on the basis of a legal instrument as opposed to a regulatory or administrative decision, for example. This requirement has been confirmed by the CJEU.112 A question then emerges as to whether network operators are able, under the existing legal framework for the setting of network tariffs and tariff methodologies, to predict the limitations on their right to property with sufficient precision. As argued above in sections 2 and 3.2, the existing EU rules are not precise but leave the NRAs a significant margin of discretion in
103 Larouche and De Visser (n 888) 125-145, 127.
104 ibid
105 Charter of Fundamental Rights of the European Union, art 17; Adi Ayal, ‘Is Monopoly Really Unfair?’ (2014) 5(6) Journal of European Competition Law & Practice 386-392; and for energy specifically Boute (n 20) 134- 151.
106 Charter of Fundamental Rights of the European Union art 17.
107 Electricity Directive arts 31 and 40.
108 Charter of Fundamental Rights of the European Union art 17.
109 ibid arts 17 and 52; C-686/18 Adusbef and others, ECLI:EU:C:2020:567 para 85; Florian Becker, ‘Market Regulation and the ‘Right to Property’ in the European Economic Constitution’ (2007) 26(1) Yearbook of European Law 255-296, 255-256.
110 C-686/18 Adusbef and others, ECLI:EU:C:2020:567 para 86; C‑8/15 P Ledra Advertising v Commission and ECB, EU:C:2016:701 paras 69-70; C-548/09 P Bank Melli Iran v Council, ECLI:EU:C:2011:735 paras 113-114 and the case-law cited therein.
111 Charter of Fundamental Rights of the European Union art 17.
112 C-686/18 Adusbef and others, ECLI:EU:C:2020:567 paras 85-86; C‑8/15 P Ledra Advertising v Commission and ECB, ECLI:EU:C:2016:701 paras 69-70.
15 determining their interpretation. Furthermore, central elements of the legal framework are included in the Electricity Directive, which is binding on Member States only as to the result to be achieved but leave the choice of form and methods to them.113 This adds further uncertainty as to the level of precision with which the network operators are governed by national laws. If the independence requirement is given a broad interpretation, as the Court’s reasoning in Commission v Germany suggests, Member States would not be allowed even to give general legislative guidance on the conditions for limiting the right to property. This kind of constitutional friction may partly explain some Member States’ reluctance to give the NRAs full independence,114 and further highlights that the Court should have acknowledged the politically delicate nuances involved in giving NRAs such broad discretionary powers.
4.3 Consumer protection
Customers that use energy networks – and final consumers in particular – are the group that shoulder the costs of using the services provided by network operators. Because the network operators are natural monopolies, consumers do not have the option of switching suppliers.
Consequently, consumers are directly affected by how network tariffs are set and the level at which they are set.
Consumer protection is enshrined in the European Charter of Fundamental Rights115 and is one of the central themes of the Electricity Directive. Chapter III of the Electricity Directive is entirely dedicated to consumer empowerment and protection and includes provisions on basic contractual rights,116 specific consumer rights,117 the activation of consumers and their communities in the energy market,118 bills and billing,119 dispute settlement,120 universal service,121 vulnerable consumers122 and energy poverty.123 In fact, the overarching theme of the Clean Energy Package is providing a fair deal for consumers.124
However, the specific provisions for tariffs or tariff methodologies do not explicitly include consumer interests as their objective.125 As identified above, the rules require that tariffs be cost-reflective, transparent, increase efficiencies and take into account the need for network security and flexibility.126 They should reflect actual costs incurred insofar as they correspond to those of an efficient and structurally comparable network operator and are applied in a non-
113 Consolidated version of the Treaty on the Functioning of the European Union, OJ C 326, 26.10.2012, p. 47- 390 (hereinafter ‘TFEU’) art 288.
114 Lavrijssen (n 23) 3.
115 European Charter of Fundamental Rights art 38.
116 Electricity Directive art 10.
117 ibid arts 11-14.
118 ibid arts 15-17.
119 ibid arts 18.
120 ibid arts 26.
121 ibid art 27.
122 ibid art 28.
123 ibid art 29.
124 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee, the Committee of the Regions and the European Investment Bank, Clean Energy for All Europeans, COM(2016)860 final p. 3.
125 With the exception of Article 18(2) of the Electricity Regulation, which states that tariff methodologies should facilitate innovation ‘in interest of consumers in areas such as digitalisation, flexibility services and interconnection’.
126 Electricity Regulation art 18.
16 discriminatory manner.127 These obligations inherently include balancing network operators interests against those of consumers. As these provisions are included in a regulation, they have general application, and the NRAs are expected to apply them directly without the need for transposition by the Member States.128 Furthermore, the Electricity Directive requires Member States to create mechanisms for regulation, control and transparency so as to avoid any abuse of a dominant position, in particular to the detriment of consumers.129
This legal framework brings the analysis back to consumers’ participatory rights in the NRAs’
decision-making processes. Even though Member States should ensure that suitable mechanisms are in place to allow a party affected by an NRA’s decision to appeal,130 consumers do not necessarily have the procedural right to challenge a NRA’s tariff methodology decision directly ex post or they may not have the ex ante participatory rights as outlined above. Even if they did, a national court’s assessment of the legality of the NRA’s decision would be limited because of the margin of discretion left to independent NRAs. In fact, the Court has confirmed that, in assessing the legality of an independent NRA’s decision, a national court may conduct a proportionality review but is not allowed to require that NRAs demonstrate that the tariff obligations actually attain the objectives set out in EU law.131 The overall implications of these rules invite critical questions as to accountability. Ensuring accountability in the power relationships in energy governance is considered an element of energy justice,132 which the EU itself has declared that it wishes to promote.133 It remains to be seen whether the EU legislators consider it appropriate to address these issues in EU energy law by facilitating more participatory roles for consumers. In the context of distribution network tariffs, ACER has already come out as a strong supporter of public consultations with stakeholders to ensure public acceptance of network tariffs.134
5 Conclusions
This article has critically examined the independence requirement applicable to the NRAs in the light of recent CJEU case-law. It has used the NRAs’ power to fix or approve electricity network tariffs or their methodologies as an illustrative example of the potential issues associated with the broad discretionary powers NRAs enjoy in EU Member States. It has explored the implications of the Court’s ruling in Commission v Germany for the two interest groups that are most affected by the interpretation of the legal framework: network operators and consumers.
127 ibid
128 TFEU art 288.
129 Electricity Directive art 60.
130 ibid
131 C-28/15 Koninklijke KPN and Others, ECLI:EU:C:2016:692, particularly at para 58. In literature, see De Somer (n 9) 581-595, 591-592.
132 Benjamin K Sovacool and others, ‘Energy decisions reframed as justice and ethical concerns’ (2016) 1 Nature Energy.
133 Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions, The European Green Deal, COM(2019)640 final.
134 ACER, Report on Distribution Tariff Methodologies in Europe, February 2021, available at https://documents.acer.europa.eu/Media/News/Pages/ACER-reports-on-electricity-distribution-tariff-
methodologies-in-Europe-and-recommends-how-to-improve-them.aspx (accessed 10 September 2021), at 6-7.
