The EU’s top court has dismissed a legal action by wind farm owners in Ireland against the European Commission over its refusal to conduct a formal investigation into allegations fossil fuel electricity generators are being granted illegal State aid.
The Court of Justice of the EU (CJECU) ruled against the application by the Irish Wind Farmers’ Association (IWFA).
The IWFA had claimed the different methods used by the Irish authorities for assessing commercial rates gives an unfair tax advantage to oil, gas, and peat energy producers.
Request for inquiry rejected
The IWFA request for the commission to carry out a formal inquiry into their claims was dismissed in 2019 by the Commissioner, Margrethe Vestager.
The IWFA and three of its members, Carrons Windfarm, Briska, Co Limerick; Foyle Windfarm, Courtstown, Co Kilkenny; and Greenoge Windfarm, Ravenswood, Co Carlow initiated proceedings at the court in Luxembourg.
They claimed the method used by the Valuation Office to calculate commercial rates meant fossil fuel generators pay less than wind farms, whose rates bills are calculated using a different method.
The Government has rejected the suggestion that there is an element of State aid in relation to commercial rates.
IWFA cited contrasting rates
The IWFA highlighted that the North Wall gas power station in Dublin is charged commercial rates that equate to €8,019 per megawatt (MW) of electricity generated in contrast to €17,055 per MW for a wind farm in Athea, Co Limerick.
In its ruling, the Luxembourg court dismissed claims by the IWFA that the Commission had not correctly identified the issue in its preliminary examination.
Based on the evidence, the CJEU also said it could not be argued that the application of one method for calculating commercial rates over another would result in widely differing results.
CJEU: Rates are a tax on property
The court said it had not been established that applying different methods of calculating rates for different types of properties was unfair. The CJECU said commercial rates were a tax on the value of property, and not a tax on production.
It said the fact that the tax, based on the quantity of electricity produced annually, was higher for wind farms than for fossil fuel producers was “irrelevant.”
It also noted the Valuation Office has used the same method for calculating rates for all types of electricity producers. The CJEU ruled that both parties should bear their own costs.