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State Aid

PR(07)60: The Municipality of Notodden (Norway) faces State aid investigation over sales of electric power to aluminium foil producer

19.12.2007

Questioning the price level of Notodden municipality’s sale of electric power to the company Becromal Norway AS, the EFTA Surveillance Authority today decided to submit sales from 2001 to 2007 to further scrutiny. If public entities sell electricity to private undertakings below market price, it may be that the buyer receives State aid.

The power volumes sold to Becromal were bought by the municipality under special arrangements, inter alia certain provisions of Norwegian law allowing municipalities where power plants are located to buy power at cost (so-called concession power). Under these special arrangements, the municipality seems to have had very low purchasing costs. The Authority is not questioning municipalities’ right to buy concession power as prescribed by Norwegian law. Problems may, however, arise if this power is sold to third parties at prices below market prices. As the price laid down in the agreement between the municipality and Becromal was linked to the municipality’s cost of buying the power, Becromal also seems to have benefited from very low prices.

The Authority suspects that the price paid by Becromal was in fact below the market price, and has decided to open the formal investigation procedure. A decision to open the formal investigation procedure is without prejudice to the final decision to be adopted by the Authority. The opening decision will be published in the EEA Section of the Official Journal of the European Union and the EEA Supplement thereto, inviting interested parties to comment within one month from the date of publication. The Authority will take its final decision after having reviewed comments from the Norwegian Government and from any other interested parties.    

For further information, please contact:
Mr. Per Andreas Bjørgan
Deputy Director, Legal and Executive Affairs
Tel. (+32)(0)2 286 18 36; or

Ms. Hanne Zimmer
Officer, Competition and State Aid Directorate
Tel. (+32)(0)2 286 18 87

19 December 2007




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