European Commission REFIT threat not so scary

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After a flurry of dismayed indignation, the German wind lobby is not taking too seriously the European Commission's threat to force a rethink of the country's Renewable Energy Feed in Tariff (REFIT). "It now looks to us as though competition commissioner Karel van Miert was clearing his desk before making way for the new commission," says Christian Hintsch of wind association Bundesverband Windenergie (BWE). In late July the commission warned Germany that it might have to abolish or revamp its system of subsidising wind power, under which it obliges utilities to buy all power generated from renewable sources at a premium rate. This rate is set at 90% of the selling price of all electricity in Germany. The commission says it is unhappy about the effects of Germany's new ecotax on electricity, introduced in April, which by raising the electricity price also raises the REFIT rate and thus nullifies the effect of falling power prices in the liberalised electricity market. Utilities are introducing power price cuts of up to 30% in a battle to retain customers. The commission is looking into whether the ecotax comprises a new form of subsidy requiring authorisation from Brussels. The tax will raise premium payments to wind by about DEM 0.01/kWh, according to BWE. Association chairman Peter Ahmels says that only a week before the commission's announcement, the director general of the competition directorate, Alexander Schaub, had promised that the commission would wait for Germany's own review of the REFIT, due by the end of the year, before taking any action. But in Brussels the REFIT seems to be have been swept up in a flurry of last minute activity on the competition front, ranging from book pricing to east German shipyards, says Hintsch. "We do not believe the investigation is necessary because the electricity tax will not affect premium payments until 2001, by which time much will have happened," says Frank Bonaldo of the economy ministry. If the commission does lodge a complaint, the ministry will be required torespond within one month, he adds.

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