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Assured Energy Outlook: Issue 29 – February 2019

European Commission to appeal Capacity Market suspension

The European Commission (EC) has lodged an appeal against the decision to suspend payments under the Capacity Market (CM).

The CM is a scheme introduced to help guarantee the UK’s future security of supply. The date that the appeal was lodged is listed as 25 January, which was the deadline for appeals.

The decision to suspend the CM was made by the General Court of the European Court of Justice (ECJ) in November 2018 on the grounds that the EC had failed to properly investigate the CM when it was originally cleared for State Aid approval back in 2014.

In response to the EC lodging an appeal, the company that originally brought the case to the ECJ, Tempus Energy, said the EC was “trying to further set back a better energy future as it attempts to have coal subsidies reinstated”.

According to commodities analysts S&P Global Platts, this appeal does not automatically suspend the ruling, but the EC can ask the ECJ to consider lifting the suspension until the appeal is decided. If successful, the appeal would lead to the ruling being overturned and the CM and payments restarting.

Brexit could also have an impact on these proceedings because, depending on the manner of the UK’s withdrawal process, the UK may no longer be subject to EU State Aid rules after exit and the CM could therefore fall entirely under UK jurisdiction.

Last month, the government was criticised by MPs for not providing a plan B in the event of the CM not being reinstated. The BEIS Committee of MPs urged for a plan B on the CM “so that businesses and investors can ensure the UK’s electricity system is prepared for next winter, whatever the Commission’s ruling”.


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