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EU to probe German renewable energy discounts -draft letter

Source: Reuters - Fri, 13 Dec 2013 19:14 GMT
Author: Reuters
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* Industrial users given discounts on renewable energy surcharges

* EU to probe whether this constitutes state aid

* New govt has pledged to reform renewables law by Easter

* Commission may demand repayment of aid (Adds background, detail)

By Markus Wacket

BERLIN, Dec 13 (Reuters) - The European Commission is opening an investigation into the discounts German industries get on renewable energy surcharges, according to a draft letter sent to Berlin, which could lead to higher costs for thousands of firms in Europe's biggest economy.

Germany collects surcharges from power consumers to help fund operators of wind and solar power plants. Heavy electricity users such as cement, steel and chemical plants are exempt from the surcharge to keep them from being priced out of the global market.

A draft letter from competition Commissioner Joaquin Almunia to Berlin said the Commission would open a probe into whether Germany's policy distorts competition.

Some 2,300 companies are in the exemption scheme.

Angela Merkel is on the verge of securing a third term as chancellor, should grass roots Social Democrats give a green light to forming a coalition government with her conservatives in a poll.

One of the new government's top priorities will be a reform of renewable energy law, which has sent households energy bills soaring.

A probe by Brussels has loomed for some time, and German politicians had warned firms to set aside provisions. The Commission can ask governments to recover aid granted to companies if this is found to have breached EU rules.

Hans Juergen Kerkhoff, president of Germany's Steel Association, said the discounts did not constitute state aid but merely served to balance out distortion in global competition. (Writing by Alexandra Hudson; editing by Jane Baird)

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