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Iberdrola, EON Lose EU Court Case Against Windfall Carbon Levy

Iberdrola SA, EON SE and other utilities lost a European Union court challenge against a carbon levy Spain imposed on windfall profits the companies made through free-of-charge emission allowances.

The EU Court of Justice in Luxembourg today ruled that national measures, such as the Spanish tax, are in line with EU law. The court said the levy is not imposed where power plant operators sell the allowances on the secondary market.

The “aim of the rules” in Spain isn’t to impose a fee for the allocation, “but to mitigate the effects of the windfall profits” on the Spanish electricity market, a five-judge panel of the EU court ruled today.

Utilities opposed the levy on windfall profits that included the market value of carbon emissions in the price of their sold electricity. Since EU law allocated allowances to the commercial companies for free they should “be able to retain the return from those allowances,” they said in court documents.

The EU stopped granting western European power stations free allowances this year. Carbon permits for December have plunged 39 percent in the past 12 months as the bloc’s regulators seek to fix a glut in supply.

The cases are: C-566/11, C-567/11, C-580/11, C-591/11, C-620/11, C-640/11.

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