Press Release: Commission authorises public compensation for stranded cost in Portugal

The European Commission has decided not to raise objections to the State refunding three Portuguese energy providers, EDP, Tejo Energia, Turbogás for so-called 'stranded costs', 22 September 2004. In the case at issue, stranded costs arise because old power plants built prior to February 1997 - i.e. prior to liberalisation - will not be sufficiently efficient to be able to face a competitive electricity market. Therefore, the Commission recognises investments in such economically ineffective power plants as a category of stranded costs, where it can be proved that the inefficiency of these investments cause real losses after liberalisation. Such stranded costs have been the object of several earlier Commission decisions.