CYIL vol. 15 (2024)

EVELYNE AMEYE The European Commission concluded that Czechia’s planned aid to Dukovany II was necessary to achieve the project’s objectives. 28 The Commission then turned to the planned aid’s proportionality. 29 When checking the proportionality of the envisaged aid to Dukovany II, the European Commission examined three aspects of the aid package: its duration, its intensity, and its beneficiary. The Commission found that the duration of the power purchase agreement was particularly long (60 years), especially when combined with a low-interest state loan. It would also mean that the predetermined price of Dukovany II’ s electricity would be based on relatively uncertain energy price forecasts over a 60-year timespan. Even though the operational lifetime of Hinkley Point C and PAKS II also amounted to 60 years, the off-take contract for Hinkley Point C was concluded for 35 years, and the state loan repayment period for PAKS II was only 21 years (and not accompanied by operating aid). The Commission also expressed doubts on the intensity of the planned aid. It questioned whether a combination of all three support measures set the level of aid at a minimum required to attain its objectives. Indeed, investment, construction, and operational risks would be considerably reduced by the proposed three-fold aid package. Finally, the Commission considered that the designation as project promoter of the incumbent utility ČEZ, which is 70% state-owned, without any selection, tender, or open call for interest, raised proportionality concerns. The European Commission concluded that it had concerns as to whether Czechia’s planned aid to Dukovany II was proportionate to the project’s objectives. Once the European Commission had evaluated the positive condition in its assessment of the compatibility of the envisaged aid for Dukovany II with the TFEU, it turned to assess the corollary negative condition. 30 It, therefore, verified whether the aid could unduly distort competition or trade between EU Member States on the relevant markets, i.e., the electricity market in Czechia and in the interconnected Core Region. 31 In so doing, the Commission examined the combined impact on competition caused by choosing the incumbent ČEZ as the project promoter and using a special purpose vehicle for the power purchase agreement. The Commission was concerned because it could not compare ČEZ’s Dukovany II project with potential alternatives, given that competitors had not been allowed to express their interest in the development of Dukovany II . The Commission also found that the power purchase agreement would allow ČEZ to manipulate electricity prices and withhold capacity, e.g., by reducing Dukovany II’ s output when market prices would exceed the fixed power purchase price. The Commission also expressed doubts as to whether the fully state-owned special purpose vehicle with which Elektrárna Dukovany II would conclude the power purchase 28 European Commission’s Invitation to submit comments pursuant to Article 108(2) of the TFEU, “State Aid – CzechiaState aid SA.58207 (2021/N) – Support for the construction and operation of a new nuclear power plant at the Dukovany site” (2022/C 299/02); https://eur-lex.europa.eu/legal-content/EN/TXT/ PDF/?uri=CELEX:52022XC0805(04), OJ of 5.8.2022, C 299/5, recitals (186) to (209). 29 Idem, recitals (162) to (164) and (178) to (185). 30 Idem, recitals (210) to (225). 31 The Core Region is one of the eight Capacity Calculation Regions in the EU in which transmission system operators coordinate the capacity calculation and other processes on a regional basis. It comprises more than 10 EU Member States and includes the Czech Republic.

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