Supreme court strikes down parts of electricity act over 'unfair deadline'
The Riigikogu has amended legislation introducing a requirement for applicants wanting to join the electricity grid under production-oriented contracts to pay a deposit to the network operator.
The deposit would be waived if an applicant had already paid at least 70 percent of the connection fee.
Applicants who had already submitted applications or signed contracts had been required to pay the deposit within 60 days of the law entering into force.
The Supreme Court had ruled the aspect of the Electricity Market Act dealing with the deadline as unconstitutional, citing its unfair impact on businesses due to it being unreasonably short.
The Supreme Court has however acknowledged the state's legitimate goal of transitioning to renewable energy by 2030, to reduce CO2 emissions and ensure energy security.
It has recognized that the legislation aimed to achieve these goals, particularly by enabling the generation of affordable, sustainable energy.
However, the top court also pointed out that the regulations in place when the complainants signed their contracts had created a reasonable expectation that their business projects could proceed according to the terms outlined in those contracts.
Two firms which had connected to the network before the amendment as a result legally challenged the new law.
The Supreme Court's constitutional review chamber ruled that the deposit requirement the obligation to pay it for those who had already submitted applications or signed contracts, was in and of itself constitutional.
However, the court found an issue with the deadline for making the deposit, which it found to be too short.
The court argued that imposing a significant new obligation on these businesses over that short a timescale could severely disrupt their operations.
"The plaintiffs could not have been expected to have the resources to fulfill a potential future additional obligation in the millions of euros," the Supreme Court stated.
The court also concluded that a slightly longer deadline for the deposit payment would not have undermined the stated aims of reducing CO2 emissions or ensuring energy security.
The court noted that extending the deadline to nine months instead of two would have been constitutionally acceptable.
Ultimately, the Supreme Court declared this portion of the Electricity Market Act as counter to the Constitution and invalid, as it unfairly impacted businesses based on an unreasonably short deadline.
The aim of the amendment was to accelerate the transition to renewable energy by freeing up reserved network capacity from so-called "phantom connections" — applicants who had reserved capacity but were not generating energy.
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Editor: Andrew Whyte, Merili Nael