EU sues France for preference to existing hydro concession holders

The European Commission announced it will take France to court to challenge a French law that gives existing hydropower concession holders preference when concessions come up for renewal.

The agency of the European Union (EU) said June 5 it would take France before the European Court of Justice because its 1994 Decree 94/894 is incompatible with the EU principle of freedom of establishment that prohibits restrictions on cross-border economic activities.

�Such a system is likely to ensure that existing holders retain their concessions for an indefinite period, and it becomes extremely difficult if not purely theoretical for other operators to bid for such concessions,� the EU said.

The EU said the same type of preference was abolished in Italy as a result of similar infringement proceedings brought by the European Commission against the Italian government.

Norway advances plan to preserve public control of hydro

Meanwhile, in Oslo, the Ministry of Petroleum and Energy presented a white paper to Stortinget, Norway’s parliament, to reinforce public control of Norway’s hydropower production assets.

The Norwegian government proposed the legislation in March, saying public control has been central to Norwegian management of hydropower resources since 1909. (HNN 3/18/08) Norwegian officials said the proposed legislation, which aims to ensure that hydropower remains public property, is an alternative available to Stortinget under the European Economic Area (EEA) agreement.

The legislative amendment became necessary when Norway lost a 2007 case in a European court over its rules on ownership of hydropower concessions.

In June 2007, the European Free Trade Association Court (EFTA Court) said Norway’s rules on ownership of hydropower concessions, which force private owners to relinquish licenses after 60 years, were against EEA rules and discriminated against private owners and potential investors. Norway grants hydro concessions to public owners in perpetuity.

The legislation preserves a system whereby hydropower concessions granted to private companies revert to the state once the concessions expire, while public owners retain their rights to hydropower resources in perpetuity. If concessions to waterfalls and power plants are sold by private owners to public bodies, fixed-term concessions can be converted to perpetual rights, in line with the current system, the ministry said.

A rule allowing private investors to buy up to a third of the shares in a public power company will be retained, but to ensure public control, the limit will not be raised, it said.

The government said it would propose new rules for leasing hydropower production in early 2009.

Municipalities and county councils own about 50 percent of Norway’s power generation capacity and the state, through power company Statkraft, about 37 percent. Private owners, including Norway’s metal producers, own about 13 percent of the total.

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