Constitutional Court rejects two energy service provider complaints

Issues

The Constitutional Court has rejected two complaints related to the costs of energy service providers submitted at the end of 2013. Publication of the decisions on the court’s official website yesterday shows that in one submission, four companies requested annulment of certain provisions of the 2007 law on electricity. The provisions in question state that costs of the energy service providers related to relocation or reconstruction of connection equipment and connection points and replacement of free cables with ground cables are not taken into account by the Hungarian Energy Regulatory Office (MEKH) in pricing.

The companies concerned said that these provisions infringe the right to ownership as excluding certain justified costs of the distributor companies from pricing restricts their right to utilize assets. They said the legislator forces the companies to operate at a loss. 

The Constitutional Court said that no infringement could be established as the MEKH had not exercised its power concerned by the complaint at the time of the submission of the complaint. The Court also said the provisions in question relate to ad hoc obligations and not to the provision of continuous services.

In second complaint, three companies asked the court to declare the unconstitutionality and the annulment of certain details of decrees related to the gas network utilization fees.

The regulations in question exclude the financial transaction duty, the special energy sector tax, the special public utility pipeline tax and the difference between the network volume and the measured volume from justified costs.

The companies said the provisions in question violate the requirement of legal security because they infringe acquired rights, they are contrary to the right to ownership as their application reduces the assets of the companies concerned and they are contrary to the European integration clause of the Basic Law because they do not comply with the requirement of cost-based pricing, mandatory in European Union law.

The submission said these provisions “introduced substantial new costs for energy providers in the business year 2013 which resulted not from market-related causes but from arbitrary political measures and which the distributor companies could not have reckoned with in their business plans for 2013.”

The Constitutional Court ruled that some of the provisions in question fulfil provisions of the 2008 law on gas supply and a complaint against the law was earlier rejected by the court for due to lack of competence. Other parts of the complaints raise constitutionality issues that the court had already rejected in an earlier decision.

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