Ordinanza n. 161 del 2024

Order No. 161 of 2024

ORDER NO. 161

YEAR 2024

ITALIAN REPUBLIC

IN THE NAME OF THE ITALIAN PEOPLE

THE CONSTITUTIONAL COURT

composed of:

President: Augusto Antonio BARBERA;

Judges: Franco MODUGNO, Giulio PROSPERETTI, Giovanni AMOROSO, Francesco VIGANÒ, Luca ANTONINI, Stefano PETITTI, Angelo BUSCEMA, Emanuela NAVARRETTA, Maria Rosaria SAN GIORGIO, Filippo PATRONI GRIFFI, Marco D'ALBERTI, Giovanni PITRUZZELLA, Antonella SCIARRONE ALIBRANDI,

has issued the following

ORDER

in the proceedings concerning the constitutional legitimacy of Article 3 of the Emilia-Romagna Regional Law No. 17 of 28 December 2023 (Provisions related to the 2024 Regional Stability Law), initiated by the President of the Council of Ministers with an application served on 23 February 2024, filed with the Registry on 27 February 2024, registered under No. 5 of the 2024 applications register and published in the Official Gazette of the Republic No. 11, Special First Series, of the year 2024.

Having considered the appearance of the Emilia-Romagna Region;

having heard, at the public hearing of 3 July 2024, the Judge Rapporteur Emanuela Navarretta;

having heard the State Attorney Giacomo Aiello for the President of the Council of Ministers and the Attorneys Giandomenico Falcon and Andrea Manzi for the Emilia-Romagna Region;

having deliberated in chambers on 3 July 2024.

Legal considerations

1. – In the application indicated in the heading (App. Reg. No. 5 of 2024), the President of the Council of Ministers, represented and defended by the State Legal Department, raised questions of constitutional legitimacy concerning Article 3 of Emilia-Romagna Regional Law No. 17 of 2023, which provides that: "[w]here the concessionaire of water derivations for hydroelectric use up to 3000 kilowatts has obtained incentives for the production of electricity connected to the derivation, the duration of the concession, upon application by the concessionaire, is aligned with the incentive period for the recognition of incentives, without prejudice to the maximum thirty-year duration provided for in Article 21 of Royal Decree No. 1775 of 11 December 1933."

In a first ground of appeal, the President of the Council of Ministers argues that Article 117, third paragraph, of the Constitution has been violated, in relation to the fundamental principles of the subject matter of "national production, transport and distribution of energy", set forth in Articles 21, 28 and 30 of R.D. No. 1775 of 1933. These latter provisions, unlike the impugned provision, would make the possibility of renewing concessions for small hydroelectric derivations subject to verification of the persistence of certain conditions of public interest.

At the same time, the applicant alleges a violation of Article 117, first paragraph, of the Constitution, in relation to Article 49 TFEU and Article 12, paragraphs 1 and 2, of Directive 2006/123/EC, inasmuch as the regional legislator has granted "the concessionaire the benefit of automatic extension". The State Legal Department considers, in fact, that the competition principles of the aforementioned provisions are independently binding and applicable to concessions for small hydroelectric derivations, irrespective of the provisions of national legislation in this regard.

Finally, in a further ground of appeal, the President of the Council of Ministers alleges a violation of Article 117, second paragraph, letter e), of the Constitution, inasmuch as the impugned regional provision encroaches on the subject matter of "protection of competition", which falls within the exclusive legislative competence of the State, a subject matter whose meaning should "reflect that operating within the Community framework".

2. – By document filed on 2 April 2024, the Emilia-Romagna Region entered an appearance, arguing that the questions raised are inadmissible and, in any event, unfounded.

3. – This Court, having reserved the decision on the procedural objections raised by the regional defence, as well as the examination on the merits of the objections concerning Article 117, second paragraph, letter e), of the Constitution and Article 117, third paragraph, of the Constitution, considers it a priority to address the question raised in reference to Article 117, first paragraph, of the Constitution, relating to Article 49 TFEU and Article 12 of Directive 2006/123/EC.

4. – As a preliminary matter, it is necessary to illustrate, in its essential features, the impugned Article 3 of Emilia-Romagna Regional Law No. 17 of 2023, within the framework of the national legislation governing concessions for small hydroelectric derivations.

4.1. – Concessions for small hydroelectric derivations are governed, at the national level, by Royal Decree No. 1775 of 1933, which identifies them as those whose plant is characterized by the production of motive power with an average annual nominal power equal to or less than 3000 kW (Article 6 of the aforementioned Royal Decree).

In particular, the assignment of new concessions for small derivations takes place, pursuant to Articles 7, 8, 9 and 12-bis of Royal Decree No. 1775 of 1933, through a competitive procedure.

All concessions for small hydroelectric derivations are temporary and their duration may not exceed thirty years (Article 21 of Royal Decree No. 1775 of 1933).

Upon expiry of the term of concessions for small water derivations, they may, always on the basis of national legislation (Article 30 of Royal Decree No. 1775 of 1933), be renewed in accordance with Article 28, paragraph 1-bis, of the same Royal Decree, which requires verification of "the actual water needs", in relation to the specific activity carried out, as well as compliance with the conditions indicated in Article 12-bis, paragraph 1, of Royal Decree No. 1775 of 1933.

4.2. – The regional provision that is the subject of the present proceedings is situated within the framework of the aforementioned national legislation.

Article 3 of Emilia-Romagna Regional Law No. 17 of 2023 provides for a statutory extension of the duration of concessions for small hydroelectric derivations, subject to the following conditions: that there is an application from its holder; that the extension serves to fully utilize the incentive obtained by the concession holder for the production of electricity from renewable sources; that the extension period, added to the duration originally provided for the concession, does not exceed thirty years, i.e. the maximum term which, under Article 21 of Royal Decree No. 1775 of 1933, may be provided for ab initio for the granting of a concession for a small hydroelectric derivation.

5. – The applicant argues that this provision conflicts with Article 49 TFEU and Article 12 of Directive 2006/123/EC.

As regards the first provision, according to "constant case law" – as noted by the Court of Justice (judgment of 20 April 2023, in Case C-348/22, Autorità garante della concorrenza e del mercato, point 36) – "any national measure adopted in a sector which has been the subject of exhaustive or complete harmonization at Union level must be assessed in relation not to the provisions of primary law, but to those of that harmonization measure" (cited, among others, are judgments of 12 October 1993, in Case C-37/92, Vanacker and Lesage, point 9; 11 December 2003, in Case C-322/01, Deutscher Apothekerverband, point 64; 14 July 2016, in joined Cases C-458/14 and C-67/15, Promoimpresa and others, point 59). It is also specified – through a reference to point 61 of the judgment Promoimpresa – that "Articles 9 to 13 of Directive 2006/123 provide for exhaustive harmonization concerning the services falling within their scope" (point 37 of the aforementioned AGCM judgment).

For these reasons, the alleged infringement of the freedom of establishment, under Article 49 TFEU, must be assessed through the normative coordinates defined by the secondary legislation.

In particular, the applicant claims that Article 12, paragraph 2, of Directive 2006/123/EC has been violated, according to which, in the cases referred to in paragraph 1 – i.e. where the number of authorizations available for a given activity is limited due to the scarcity of natural resources or usable technical capacities – "the authorization is granted for an appropriate limited duration and may not provide for an automatic renewal procedure or grant other advantages to the outgoing provider or to persons who have particular links with that provider".

6. – Now, precisely with regard to the possibility that the scope of Directive 2006/123/EC, with its Article 12, includes concessions for small hydroelectric derivations and prevents legislation such as that impugned in the present proceedings, this Court has identified interpretative doubts.

Therefore, in a spirit of loyal cooperation (Orders No. 29 of 2024, No. 217 and No. 216 of 2021, No. 182 of 2020 and No. 117 of 2019), it considers that it should refer a preliminary question to the Court of Justice of the European Union on the aspects illustrated below.

7. – First of all, it is necessary to clarify whether the activity of energy production, using plants connected to small hydroelectric derivations, is to be classified as the provision of a service – as such subject to Directive 2006/123/EC – or as the production of a good.

Directive 2006/123/EC concerns the provision of services, which Article 4, paragraph 1 – through a reference to Article 50 of the Treaty establishing the European Community, currently Article 57 TFEU – identifies as "services normally provided for remuneration, in so far as they are not governed by the provisions relating to the free movement of goods, capital and persons. Services comprise in particular: (a) industrial activities; (b) commercial activities; (c) craft activities; (d) activities of the liberal professions".

However, hydroelectric derivation plants serve to exploit the kinetic energy of water to produce electricity, which EU law seems to classify, no differently from national laws, as a good (or commodity or product).

7.1. – In particular, the Court of Justice, since the judgment of 27 April 1994, in Case C-393/92, Comune di Almelo and others, point 28, has declared that "it is undisputed in Community law, as it is in national laws, that electricity constitutes a commodity within the meaning of Article 30 of the Treaty. In fact, it is considered a commodity within the Community customs nomenclature (CN code 27.16). Moreover, the Court recognized, in the judgment of 15 July 1964, Case 6/64, Costa/Enel (Rec. p. 1127), that electricity may fall within the scope of Article 37 of the Treaty."

More recently, the Court of Justice, judgment of 28 May 2020, in Case C-727/17, Syndyk Masy, expressly classified the activity of energy production as "the production of a product", not comparable to the provision of a service. The aforementioned judgment (points 53 to 57) has, in particular, established that "Directive 2006/123, in accordance with Article 2(1) thereof, applies to services provided by providers established in a Member State, except for the activities and sectors referred to in Article 2(2) and (3) thereof. In accordance with Article 4(1) of that directive, then, for the purposes of the latter, 'service' is understood as any non-salaried economic activity referred to in Article 57 TFEU, normally provided for remuneration. Finally, recital 76 of that directive clarifies that the restrictions prohibited under that provision of the TFEU concern requirements applicable to access to service activities or their exercise and not those applicable to goods as such. In the present case, it follows from the order for reference that, although [the provision under reference] establishes a territorial restriction as regards the installation of wind farms, that provision concerns the activity of producing a product, namely electricity. Now, it follows from settled case-law that the activity of producing a product cannot be considered, as such, as a service (see, to that effect, judgments of 7 May 1985, Commission v France, 18/84, […] point 12, and of 11 July 1985, Cinéthèque and others, 60/84 and 61/84, […] point 10)."

Nor does it matter – the Court of Justice continues – that "the activity of producing electricity [is] carried out together with the provision of network regulation services and energy price protection services[, since] those services are ancillary to the main activity of producing electricity" (point 59).

7.2. – If these are the interpretive indices that can be deduced from the precedents of the Court of Justice, further elements suggesting the classification of electricity as a good (or product) seem to be drawn from some sources of EU law.

These include, firstly, Article 2 of Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products, which expressly considers electricity as a product (a classification which continues to be found in Article 4 of the proposal for a directive on liability for defective products, which repeals Directive 85/374/EEC, in the text currently approved by the European Parliament and the Commission).

Secondly, reference must be made to Article 15 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, which assimilates electricity to tangible goods.

Finally, it should be noted that Annex I to Commission Regulation (EC) No 213/2008 of 28 November 2007 amending Regulation (EC) No 2195/2002 of the European Parliament and of the Council on the common procurement vocabulary (CPV) and Directives 2004/17/EC and 2004/18/EC of the European Parliament and of the Council on procurement procedures, as regards the revision of the CPV (Text with EEA relevance) – classifies energy among goods (with code 09310000-5).

7.3. – To this it should be added that EU law has provided for rules inspired by the need to separate energy production from activities that are certainly attributable to the provision of services, such as: transmission, storage, distribution and other ancillary services.

EU law has devoted complex regulatory frameworks to the energy chain (between 1996 and 1998 the First Energy Package; in 2003 the Second Energy Package; in 2009 the Third Energy Package; in 2019 the Clean Energy for all Europeans Package and, finally, from 2022 onwards, the sources issued in implementation of the REPowerEU plan).

In particular, among the objectives pursued are the liberalization and unbundling of electricity production, import, transmission and distribution activities (Articles 14 and 15 of Directive 96/92/EC of the European Parliament and of the Council of 19 December 1996 concerning common rules for the internal market in electricity; subsequently, Article 10 of Directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in electricity and repealing Directive 96/92/EC – Declarations concerning the dismantling of plants and waste management activities; then Articles 9 and 14 of Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC; finally, Articles 35 and 43 of Directive 2019/944/EU of the European Parliament and of the Council of 5 June 2019 concerning common rules for the internal market in electricity and amending Directive 2012/27/EU).

The process of unbundling – entrusted by the European Union to a gradual approach referring first to accounting, then to legal, until reaching, in some cases, a perspective based on ownership separation (full ownership unbundling) – has been implemented in Italy with the provision, for the former monopoly undertaking, of obligations: to separate the ownership of the production activity from that of transmission; to keep it separate, in terms of organization and decision-making power, from the distribution of energy; to separate, again in terms of organization and decision-making power, the sales activity, in the case of undertakings whose networks supply at least 100,000 end customers (Article 3 of Legislative Decree No. 79 of 16 March 1999, concerning "Implementation of Directive 96/92/EC concerning common rules for the internal market in electricity", and Article 1, paragraph 1, of Legislative Decree No. 73 of 18 June 2007, concerning "Urgent measures for the implementation of Community provisions on the liberalization of energy markets", converted, with amendments, into Law No. 125 of 3 August 2007, as well as Articles 36 and 38 of Legislative Decree No. 93 of 1 June 2011, concerning "Implementation of Directives 2009/72/EC, 2009/73/EC and 2008/92/EC relating to common rules for the internal market in electricity, natural gas and a Community procedure on the transparency of prices to industrial final consumers of gas and electricity, and repealing Directives 2003/54/EC and 2003/55/EC").

Within this framework, not only consistent with EU law, but directly implementing it, small hydroelectric derivation plants perform a mere function of electricity production, sometimes aimed at its sale, through injection into the grid, sometimes at its destination, predominantly, if not exclusively, for self-consumption.

In this regard, it should also be highlighted that the mere sale of goods or the withdrawal of goods intended for own use do not appear to fall within the "provision of services" (Articles 14 and 24 of Directive 2006/112/EC).

7.4. – In the face of the aforementioned indices which would seem to suggest the classification of energy production among the activities of producing a good (supra, points 7.1, 7.2 and 7.3), it must, however, be noted that Annex I to the aforementioned Regulation (EC) No 213/2008, concerning public procurement procedures, as regards the revision of the CPV (Text with EEA relevance), considers, conversely, the management of a power plant as a service (with code 65410000-0).

7.5. – It therefore appears crucial that the doubt concerning the classification of the energy production activity, as such, as the production of a good or the provision of a service, be resolved.

Only if the production of energy, although separated from the activities of transmission, distribution and other services specific to the supply of electricity, were considered as the provision of a service, should it, in fact, be considered subject to the rules of Article 12 of Directive 2006/123/EC.

Conversely, the rules concerning the internal energy market should be considered applicable exclusively to the activity of energy production, which, to protect the freedom of establishment, provides for the adoption of an authorization procedure based on objectivity, transparency and non-discrimination criteria for the construction of new generation plants, but does not provide for possible extensions or renewals (Article 8 of Directive 2019/944/EU).

Moreover, the rules on the freedom to provide services, laid down in Article 16 of Directive 2006/123/EC, do not apply to services of general economic interest provided in the energy sector "by Directive 2003/54/EC" (as expressly provided for in Article 17(1)(b) of the same Services Directive).

8. – Subsequently, and in a further subordinate capacity, if the Court of Justice, in response to the first question, were to classify the activity of electricity production as the provision of a service and, in response to the second question, were to consider indispensable the provision of a case-by-case assessment of the scarcity of resources requirement, this Court considers that it must submit a further question concerning the interpretation of Article 12, paragraph 2, of Directive 2006/123/EC.

8.1. – The latter provides that "[i]n the cases referred to in paragraph 1, the authorisation shall be granted for an appropriate limited period and may not provide for automatic renewal or grant other advantages to the outgoing service provider or to persons having special links with that provider".

In this regard, the Court of Justice has clarified that this provision prevents rules "which provide for a statutory extension of the expiry date of authorisations", since this "amounts to automatic renewal, which is excluded by the very terms of Article 12(2) of Directive 2006/123)" (judgment Promoimpresa, point 50). Furthermore, "automatic extension of authorisations […] does not allow for a selection procedure as described in point 49 of this judgment" (point 51), i.e. impartial and transparent.

8.2. – Despite this indication, this Court nevertheless considers it uncertain whether the concept of advantage to the outgoing provider, referred to in Article 12, paragraph 2, of Directive 2006/123/EC, also includes a statutory extension, such as that provided for by the regional provision that is the subject of the present proceedings.

On the one hand, it serves to align the duration of the concession with that necessary to fully benefit from the state incentives obtained by the concessionaire for the production of energy from renewable sources, which seems to differentiate the situation of the concessionaire from that of the outgoing provider who obtains an unjustified advantage. On the other hand, the same extension is subject to the limitation that it cannot exceed, when added to the duration originally set for the concession, the maximum term that could initially be assigned, under national legislation, for a concession for a small hydroelectric derivation.

It should be noted, moreover, that this maximum term indicated by national legislation is set at thirty years: a duration which is relatively short compared to the type of activity involved.

In this regard, the picture offered by the comparison between Member States shows, in fact, that this duration varies from thirty years (provided for, in addition to Italy and Germany, respectively, Article 21 of Royal Decree No. 1775 of 1933 and Article 14, paragraph 2, of the Gesetz zur Ordnung des Wasserhaushalts – WHG), to seventy-five years (established in France, Articles L521-4 and L531-2 of the Code de l’énergie, as amended by Law No. 2023-175 of 10 March 2023, relating to the acceleration of renewable energy production; in Spain, Article 59, paragraph 4, of Royal Legislative Decree 1/2001 of 20 July 2001, Texto refundido de la Ley de Aguas – TRLA; in Portugal, Article 68, paragraph 6, of Law No. 58 of 29 December 2005, Lei da Água), up to ninety years (provided for in Austria, paragraph 21, paragraph 1, of the Wasserrechtsgesetz 1959 - WRG 1959).

9. – Finally, and in a further subordinate capacity, if the Court of Justice, in response to the first question, were to classify the activity of producing electricity as the provision of a service and, in response to the second question, were to consider indispensable the provision of a case-by-case assessment of the scarcity of resources requirement, this Court considers that it must submit a further question concerning the interpretation of Article 12, paragraph 2, of Directive 2006/123/EC.

9.1. – The latter provides that "[i]n the cases referred to in paragraph 1, the authorisation shall be granted for an appropriate limited period and may not provide for automatic renewal or grant other advantages to the outgoing service provider or to persons having special links with that provider".

9.2. – Despite this indication, this Court nevertheless considers it uncertain whether the concept of advantage to the outgoing provider, referred to in Article 12, paragraph 2, of Directive 2006/123/EC, also includes a statutory extension, such as that provided for by the regional provision that is the subject of the present proceedings.

It should be noted, moreover, that this maximum term indicated by national legislation is set at thirty years: a duration which is relatively short compared to the type of activity involved.

10. – In the light of the foregoing, this Court suspends the pending proceedings and refers the following preliminary questions to the Court of Justice of the European Union, pursuant to Article 267 of the Treaty on the Functioning of the European Union:

a) Whether Article 12, paragraphs 1 and 2, of Directive 2006/123/EC must be interpreted as meaning that it also applies to plants that carry out the mere activity of producing electricity, such as small hydroelectric derivation plants;

b) In the event of an affirmative answer to the first question, whether Article 12, paragraphs 1 and 2, of Directive 2006/123/EC must be interpreted as meaning that the reference to the requirement of scarcity of resources precludes a Member State’s legislation that uses, as a general and abstract criterion for distinguishing whether or not derivation plants make the hydroelectric resource scarce, the difference between large and small plants (which respectively produce motive power with an average annual nominal power greater than or, conversely, equal to or less than 3000 kW);

c) Finally, in the event of an affirmative answer to the first and second questions, whether Article 12, paragraph 2, of Directive 2006/123/EC must be interpreted as meaning that it precludes a Member State’s legislation that provides for an extension of the duration of the concession, motivated by the need to allow the concessionaire to fully utilise the incentives obtained for the production of energy from renewable sources, without prejudice to compliance with the maximum duration (thirty years) that may initially be assigned to a concession for a small hydroelectric derivation.

For these reasons

THE CONSTITUTIONAL COURT

1) Orders that the following preliminary questions be referred, as a preliminary matter pursuant to Article 267 of the Treaty on the Functioning of the European Union, to the Court of Justice of the European Union:

a) Whether Article 12, paragraphs 1 and 2, of Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 relating to services in the internal market, must be interpreted as meaning that it also applies to plants that carry out the mere activity of producing electricity, such as small hydroelectric derivation plants;

2) Suspends these proceedings pending the resolution of the aforementioned preliminary questions;

3) Orders that a copy of this Order, together with the documents in the case, be transmitted to the Registry of the Court of Justice of the European Union.

So decided in Rome, at the seat of the Constitutional Court, Palazzo della Consulta, on 3 July 2024.

Signed:

Augusto Antonio BARBERA, President

Emanuela NAVARRETTA, Rapporteur

Roberto MILANA, Registrar

Filed with the Registry on 7 October 2024