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EU probes Germany energy price breaks for business

EU probes Germany energy price breaks for business

wind farm - Photo EC

(BRUSSELS) - The European Commission opened a probe Wednesday into German help for large companies amid its green energy shift, sparking a warning from Chancellor Angela Merkel that Berlin would fight back.

Germany, to support wind, solar and other renewables under its nuclear phase-out, imposes a surcharge on electricity bills but reduces this levy for energy-intensive companies that face international competition.

The European Commission said it had launched an enquiry following "numerous complaints ... from consumers and competitors" to assess whether the discount amounts to state aid and an unfair advantage for some companies.

Merkel, speaking to parliament on Wednesday, denied that the rebate distorts competition and warned that scrapping it would hurt German businesses and cost jobs in Europe's largest economy.

"As long as there are European countries where industrial-use electricity is cheaper than in Germany, I can't see how we are contributing to a distortion of competition," Merkel said.

She said Berlin would work closely with the Commission on the issue but stressed that it would "make clear that Europe will not be made stronger by threatening jobs in Germany".

The Commission said in a statement that "the surcharge reduction for energy intensive companies appears to be financed from a state resource".

Furthermore, the "reductions seem to give the beneficiaries a selective advantage that is likely to distort competition within the EU internal market".

The Commission would therefore "carefully examine" whether the reductions can be justified and "whether they are proportionate and do not unduly distort competition".

The EU executive said it also had concerns over the lower surcharges offered to German energy suppliers sourcing 50 percent of their electricity from domestic sources, saying this may discriminate against imported electricity.

The opening of an in-depth enquiry allows third parties to comment but it does not prejudge the outcome of the investigation.

The Commission launched a first enquiry earlier this year into the green energy law from 1998 that was revised last year after Germany decided to abandon nuclear energy in the wake of the 2011 Fukushima disaster.

Merkel, who started a third term Tuesday at the head of a coalition with the Social Democrats, has vowed broad reforms to the green energy law to cap the rising cost of the German energy transition.

Germany's newly combined economy and energy ministry also said that the green energy law and its exemptions "do not constitute state aid and are compatible with EU law".

The ministry said the share of renewables in Germany's gross electricity consumption reached almost 23 percent last year -- and was set to grow to 40-45 percent by 2025 and to 55-60 percent by 2035.

Vice Chancellor Sigmar Gabriel, the new head of the ministry, vowed German companies would not have to pay back money they saved through the discounts, saying: "There will be no back-payments, of that I am firmly convinced."

German Industry Federation president Ulrich Grillo warned that "the abolition of the relief for energy-intensive companies would mean the sudden end for many businesses and for thousands of jobs".

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