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ENERGY : COMMISSION PROBES ESTONIAN STATE SUPPORT TO POWER PLANTS.

The European Commission opened an in-depth investigation, on 23 March, into an Estonian plan to grant aid of up to 1.5 billion over 20 years to the operators of two oil-shale power plants.

No competitive tender is foreseen by Estonia in its proposed measure, and therefore the Commission said the aid could result in "discouraging investment into alternative technologies [...] and crowding out competitors who would have to operate without such aid".

The aid would most likely be granted to Eesti Energia, a company which already enjoys a dominant position on the electricity market since it is involved in all stages of the value chain, from mining to distribution. Eesti Energia holds shares in more than 75% of these activities in Estonia.

The only requirement of the Estonian measure is that the plants receiving aid must use oil-shale as their main fuel. The duration of the scheme would be from 2013 at the earliest until 2032 at the latest.

The Commission has acknowledged the importance of securing energy supplies, but it is concerned that the proposed Estonian measure will achieve this objective via distortion of the market.

"While the Commission recognises the special circumstances of the electricity market in Estonia, the specific design of this measure has the potential to seriously disturb competition and could discourage investment in other technologies in Estonia and neighbouring member states."

By opening an in-depth investigation into the Estonian measure, the Commission aims to give interested third parties the opportunity to comment on the proposal - without prejudicing the outcome of the procedure.

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Comment:ENERGY : COMMISSION PROBES ESTONIAN STATE SUPPORT TO POWER PLANTS.
Publication:Europe Environment
Geographic Code:4EXES
Date:Mar 31, 2011
Words:257
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