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Oct 21, 2019

The Court of Justice of the European Union has delivered judgment on the preliminary reference procedure in Case C-31/18, in which “Georgiev, Todorov & Co.” Law Offices is the procedural representative

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The Preliminary Reference Procedure was initiated by Administrative Court, Sofia City for reference under art. 267 TFEU, on the interpretation of Directive 2009/72/EC regarding the common rules for the internal market in electricity. Subject-matter of the appeal before the national court is an administrative act, issued by the Energy and Water Regulatory Commission under Art. 22 of the Energy Act which resolves a dispute for connection to the network. In the legal dispute, “Georgiev, Todorov & Co.” Law Offices defends the rights of the concessionaire at the Bourgas East 2 and Burgas West port terminals – “BMF Port Burgas”.

At a hearing held before the ECJ on February 6, 2019, our lawyer Miglena Peneva pledged that it is permissible for national legislation to allow business consumers to connect directly to the electricity grid in the presence of an objective and non-discriminatory criteria. The presented thesis before the court was that the requirement for operators to have effective rights over the electricity grid is in accordance with the aim of Directive 2009/72/EC and also encourages the internal electricity market.

On 16th of May 2019 the Advocate General delivered his Opinion. The Advocate General recommended that the ECJ accept that, under Directive 2009/72, Member States are free to determine to which grid they are part of the points of interconnection between the transmission and distribution grids, including the substations for the transformation of electricity. The Advocate General also submitted that a consumer must be considered as a customer of the transmission system operator when connected to an electrical substation forming part of the transmission network.

On 17th of October 2019 the ECJ delivered its decision which upheld the legal argument put forward by “Georgiev, Todorov & Co.” Law Offices both before the national court and before the European Court of Justice. The ECJ held that connecting a consumer to the electricity transmission network, such as it is in the national case, shall be considered based on objective and non-discriminatory considerations since this user is connected to an electrical substation which, under Directive 2009/72 and national law, falls within the scope of this transmission system.

The judgment of the Court of Justice is essential for the regulation of the relationship between operators and consumers in the internal market in electricity, as it is interpreting the principles of Directive 2009/72 /EC. The decision affirms the discretion enjoyed by the Member States in the application of Article 2 (3) and (5) of Directive 2009/72, in particular when defining the types of grids – electricity distribution and electricity transmission in terms of voltage level. In particular, the European Court of Justice accepts that Bulgarian legislation such as the one at this case, which provides for the transformation of electricity into an electrical substation in order to allow a high to medium voltage transition, falls within the scope of the transmission system’s activity and is in accordance with Directive 2009/72/EC.

The Court of Justice also upheld that property rights cannot be the sole criterion for determining the type of network, but also the voltage level to which Member States have a certain margin of discretion has to be taken into account, as stated above, as well as the purpose of the electrical grid. However, the Court states that a legal framework (such as the Bulgarian and French ones) under which the independent transmission system operator must own that electrical grid and, on the other hand, the right of Member States to impose on the distribution system operator the obligation to own the grid, is admissible.

The decision can be found on the website of the Court of Justice of the European Union.