Public Power Corp SA won a European Union court ruling that allows it to maintain preferential access to cheap fuel for power generation, potentially helping the Greek government in talks with creditors on an economic overhaul needed to qualify for more emergency loans.
The European Commission failed to show Public Power abused its dominant position in the market for lignite, the EU General Court in Luxembourg ruled today. Public Power surged as much as 8.7 percent in Athens trading after the ruling.
Public Power appealed a March 2008 decision by the commission, the EU’s regulator, that said Greece violates EU law by giving the company “quasi-exclusive” access to lignite, a soft, brownish-black coal that is the country’s cheapest available fuel. Public Power depends on lignite, among the most-polluting fuels, to help cover losses on natural-gas generation.
The commission can’t “maintain that it was not required to identify and establish the abuse of a dominant position” from state actions, the court said in today’s ruling.
Public Power shares climbed 3.57 percent to 4.06 euros in Athens. The stock has risen 17.3 percent in the last three days.
The Greek government of Prime Minister Antonis Samaras is working with the so-called troika of officials from the European Commission, the European Central Bank and the International Monetary Fund to find another 2 billion euros ($2.6 billion) of budget cuts, out of a total 11.5 billion-euro package, required to get more funds from international bailout packages, a Greek finance ministry official said yesterday.
The court ruling may give PPC and the government more bargaining power regarding the plan to sell four of the company’s lignite-fired generating plants.
“The judgments of the General Court of the European Union are undoubtedly key milestones for the Greek electricity market and differentiate significantly the terms and the path for the further opening up of the electricity market,” Athens-based PPC said in a statement.
“PPC sticks to its position for the further liberalization of the Greek electricity market, which should be implemented by fully respecting the rule of law and promote healthy competition amongst all participants,” said the company.
If it is accepted “that access to lignite reserves does not provide PPC with an unfair advantage in the wholesale electricity market, then the Troika’s demand for a liberalization of the lignite-generation market will be significantly weakened,” Paris Mantzavras, an analyst at Athens-based Pantelakis Securities, said in a note today.
The court rejected the commission’s reasoning that it’s enough to show a violation of EU law by establishing that a state measure, such as the one by Greece to give PPC quasi-exclusive access to the cheap fuel, creates an inequality of opportunities. To show such a violation, the commission would also have to “identify an abuse of the dominant position,” the court said.
PPC has said its costs are about half as much on lignite as with cleaner gas. Greece trails Germany and Poland among EU lignite producers, according to the European Association for Coal and Lignite.
The Brussels-based commission said it would carefully analyze the judgment. The commission can file an appeal with the EU Court of Justice, the 27-nation bloc’s highest court.
The cases are: T-169/08, T-421/09, DEI v. Commission.