and to love the bomb or: The Obstacle is the Way

"Our actions maybe impeded but there can be no impeding our intentions or dispositions. Because we can accomodate and adapt. The mind adapts and converts to its own purposes the obstacle to our acting."

A few words from Marcus Aurelius to continue my post of last week. For a start I promised to explain the title of that post, put it together with this one and your guess is confirmed: it refers to a famous Kubrick movie. During a follow-up conference call after our meeting at DG FISMA in Brussels this month, already mentioned in last week's post, a fellow Attorney at Law from Germany explained that the referred to the "Nuclear Option" when discussing the State Aid issue in the context of reshuffled costs in the electricity sector during and following the Preussen Elektra case.

In this respect "Nuclear Option" refers in two ways to State Aid: some say that nuclear power is a by product of the cold war, and as such largely financed and funded by Nation States and not by private corporations. Its cost is not internalized in the electricity system. Also interesting to read one of the latest IMF fossil fuel studies in that context. Another reading would be "Nuclear Option" as in Kubrick's movie: nuclear escalation, but of course only in metphorical sense.If we applied a wide public means criterion, as sketched for example in the vent de colère case, in an intellectually rigorous fashion to the Electricity Sectors of the EU then such analisis would escalate in its totality meaning that it would encompass the entirity of the EU Electricity sector.

For Spain practically all its fixed costs are estimated and at any rate can be considered to be reshuffled costs. The market part of of the Spanish electricity sector hardly deserves to be called so: highly intervened by regulators (CNMC and Industry Ministry) and very imperfect competition with propostrous windfall profits. As a matter of fact the European Commission pointed out that these were by large the cause of the Spanish electricity cost deficit in a report published by it in 2010. Not to mention the capacity mechanisms currently under scrutinity by Commisioner Verstagen. And the "Costes de Transición a Competencia" (CTC): grossly overcompensated stranded costs for the initial transition of compettition of the Spanish electricity sector in the late nineties os the last millenium. And, and, and - but let's stay focussed on the issue at stake.

The Marcus Aurelius quote I read in an entertaining book called "The Obstacle is the Way", combine this with the previous paragraph and there's the explanation of the title. The "bomb" of State Aid investigation of renewable energy support schemes is not a threat but a chance. Where Dr. Strangelove (Merkwürdigliebe) becomes excited by the idea of sitting in a bunker to pass nuclear winter, in the meanwhile entertaining himself with nice female specimens of the human race, as he puts it, we think more in terms of possibilities this Obstacle offers for policies on an EU Level towards a EU "Energiewende". 

The Spanish Administration also thinks in terms of obstacles and ways: It is trying to use the preliminary investigation triggered by itself to stall the litigations initiated against itself for the scheme it notified after its entry into force, in a clear attempt of Abuse of Law against the Estoppel principle. This is what I was referring to in my previous post when I said that the compatibility or not with State Aid guidelines was not the point of the excercise. Apart from the fact that the European Commission has not initiated a formal investigation against Spain yet, and is only still in a preliminary phase, even if it where we do not think that such investigation would be a legitimation to halt litigation over the support scheme. We have strong signals from Spanish Supreme Court circles that this "obstacle is the way" strategy of our Administration is in vain and litigation will not be put on hold pending this preliminary investigation.  

Following Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 108 of the treaty on the functioning of the European Union, the TFEU and Case C6/12, it is reiterated case law of the CJEU that it is the role of the European Commission to adopt a decision as defined in article 108 paragraph 1, and as long as such decision has not been adopted there is no legal foundation to halt litigation.

Besides this we have pointed out to the Spanish Supreme Court that much of our litigation bears no direct relationship to whether of not the support scheme in question maybe considered State Aid, compatible or not. Think, for example, of priority of dispatch for renewable energy in the electricity system, for example. This priority is at stake in our litigation and exists at the margin of the retribution of that energy.