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State Aid

State aid: New rules on state guarantees for publicly-owned electricity utilities in Iceland cleared



Today, the Authority closed its case concerning state guarantees enjoyed by two publicly-owned electricity utilities in Iceland; Landsvirkjun and Orkuveita Reykjavíkur. The closure comes after Iceland changed itsrules on state guarantees for publicly owned electricity utilities.

Before these new rules were put in place, both Landsvirkjun and Orkuveita Reykjavíkur enjoyed unlimited state guarantees. The Authority qualified those state guarantees as state aid which was incompatible with EEA law. It requested that the Icelandic authorities changed the rules concerning state guarantees. The Icelandic authorities agreed to the Authority's suggestions and assured the Authority of their full implementation.

The new organisation of state guarantees to Landsvirkjun and Orkuveita Reykjavíkur includes the following changes:

  • Neither Landsvirkjun nor Orkuveita Reykjavíkur have unlimited state guarantees today.
  • Both companies now pay a state guarantee premium which covers the benefits they enjoy due to the state guarantee. The premium is determined annually by an independent party and the adequacy level of the premiums will be reviewed at least once a year.
  • Neither company can obtain a guarantee which covers more than 80% of either an outstanding loan or financial obligation. If they were to experience financial difficulties they would not be entitled to a state guarantee for their liabilities.
  • Any new power contract entered into by either company will not contain a performance guarantee.

In addition, the Icelandic authorities have ensured the Authority that it has complied with all other conditions laid down in the Authority's State Aid Guidelines on state guarantees.

In light of the above considerations the Authority has decided to close this case.

For further information, please contact:

Mr. Guðlaugur Stefánsson
Deputy Director, Competition and State aid
tel. (+32)(0)2 286 18 50
mob. (+32)(0)491 863 266

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