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State Aid

State Aid: Electricity producers to pay market price for using natural resources




Iceland has committed to amend the scheme that allows electricity producers to use public natural resources. The Icelandic authorities will also review existing contracts with electricity producers to ensure that they too pay market price from now on.


This is in line with recommendations made by the EFTA Surveillance Authority (ESA) last year. The measures will ensure the abolishment of the existing system of aid as of
1 January 2017. Therefore, ESA has decided to close its investigation.

These measures will help guarantee fair and effective competition in the Icelandic electricity market”, says Helga Jónsdóttir, a college member at ESA.  

In April last year, ESA asked Icelandic authorities to introduce a legal obligation establishing that any transfer of rights to utilize public natural resources for electricity generation takes place on market terms. Moreover, the Icelandic authorities were to establish a clear methodology to fix the price of the natural resources and review all existing contracts in light of this methodology to ensure that all companies pay a correct market remuneration for the remainder of those contracts.

Having accepted the proposed measures, the Icelandic authorities are now legally bound to implement the required changes in full. They have also committed to provide ESA with reports and updates. Further, Iceland has appointed a working group tasked with proposing a draft reform package, introducing a clear and transparent pricing methodology and reviewing existing contracts.

“ESA welcomes these important measures that will ensure that electricity producers using public natural resources always pay market price for those rights”, says Helga Jónsdóttir.

A non-confidential version of today's decision can be found here.

Relevant documents:

 For further information, please contact:

Ms. Anne Vestbakke
Head of Communications
tel. +32 2 286 18 66
mob. +32 490 57 63 53

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