Hogan Lovells obtains key annulment decision against European Agency of Energy Regulators before General Court of the European Union

The CRE challenged the method used to allocate the costs of congestion on electricity transmission networks at interconnections between Member States of the European Union. In accordance with the ‘polluter pays’ principle, these costs must include the consequences that congestion in one country may have on the smooth operation of the network in another neighboring country.

In its decision, the Court of First Instance held firstly that ACER did not have the power to set a provisional tolerance level for physical cross-border electricity flows in the absence of a joint analysis by the transmission system operators and in the absence of approval of this level by the regulators of the Member States.

It then held that ACER had disregarded Article 16 of Regulation 2019/943 of 5 June 2019 by setting a single, common tolerance level for all bidding zones in the CORE region.

Lastly, the Court found that the tolerance level for physical cross-border electricity flows constituted ‘a central element of the methodology for allocating the contested costs’ and that it was therefore ‘unable to annul the contested decision in part’. It also declined to limit the temporal effects of its judgment on the grounds that the implementation of the methodology was not expected to take place before 4 June 2025 and could therefore be postponed.

The Hogan Lovells team comprised Christine Le Bihan-Graf (partner), Laure Rosenblieh (partner) and Maxime Gardellin (senior associate).