S.11. State Aid

D.2.2. The Internal Energy Market

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EC opens in-depth investigation into Lithuanian electricity strategic reserve

Monday, June 3, 2019

The EC opened an in-depth investigation to assess whether Lithuanian support to AB Lietuvos Energija through the country’s strategic reserve measure may have unfairly favoured the company and distorted competition in the Single Market, thereby contravening EU State aid rules.

Between 2013 and 2018, the Lithuanian Power Plant (LPP), owned by AB Lietuvos Energija, Lithuania’s state-owned former monopoly, was selected by the government to provide strategic reserve services.

In 2016, the EC received a formal complaint, which asserted that the measure was incompatible with EU State aid rules. The EC has reached the preliminary conclusion that the measure did constitute State aid, and it will now assess the measure retroactively to ensure that it did not unduly distort competition within the Single Market.

More concretely, the EC will examine whether the strategic reserve was necessary to ensure security of electricity supply for the 2015-2018 period, when Lithuania came to benefit from a significant increase in interconnection capacity; whether it was appropriate and proportionate for Lithuania to assign the service directly and exclusively to LPP, without considering other potential capacity providers; and, whether the design of the strategic reserve distorted price formation and undermined investments by other market operators that could have contributed to security of supply.

The EC welcomes comments from the Lithuanian government and third-party stakeholders on the matter.