EDP ​​gives up the case against the State at CESE. Costs outweigh probability of success

The energy company also announced that it will ask Brussels to analyze compliance with the future of the Social Tariff financing mechanism. "EDP does not question the existence of the Social Tariff itself, with the purpose of which it agrees, but cannot, in view of the evolution of the respective regime, comply with the terms of financing".

EDP ​​-Energias de Portugal withdrew the lawsuit against the State due to the imposition of the Extraordinary Contribution of the Energy Sector (CESE), after analyzing the cost of the process in view of the probability of success, the company said this Thursday.

"In the context of the current pandemic crisis and following the periodic analysis of the probability of success and costs with ongoing legal proceedings, EDP decided to give up the judicial litigation as a Portuguese State regarding this Contribution", informed in the statement published on the CMVM website regarding results of the first nine months of 2020 and in which announced a 8% drop in net profit.

“This decision will have no impact on the financial statements, the cost associated with CESE being accounted for annually since its introduction in 2014, and EDP having all the respective payments up to date. EDP ​​continues to assume the gradual reduction of this contribution over the next few years, in line with the sustained decline in the sector's tariff debt, as provided for in the State Budget ”, he added.

The company explained that to date, it paid 388 million CESE, with reference to the years 2014-19. "There is still to be considered the value of 86 million regarding the processes in which the CESE is not deductible in IRC", explained

Recourse to Brussels on the Social Tariff

The energy company also announced, in the same document, that it decided, following the periodic analysis of litigation, “that it will raise with the European Commission the analysis of the conformity regarding the future of the Social Tariff financing mechanism, under the responsibility of producers under the ordinary regime , in view of the rules and principles of European Union law ”.

He added that since 2011, EDP has already been charged a social tariff cost that exceeds 460 million euros (including ERSE's estimate for 2021). "EDP does not question the existence of the Social Tariff in itself, with the purpose of which it agrees, but cannot, in view of the evolution of the respective regime, comply with the terms in which the legislator enshrined its method of financing".

On October 22, EDP became aware of the definitive values ​​of clawback delete. He explained that “although the current regulation determines the consideration of CESE, Tarifa Social and ISP as internal extra-market events in the scope of calculating the amounts payable (Order No. 12424-A / 2019), only the ISP was taken into account, inducing the payment of higher amounts by the electricity producers ”, adding that, given this aspect, the company will take legal action.

Finally, the company led on an interim basis by Miguel Stilwell de Andrade reported that the related provisions totaled 129 million euros in the 9 months of 20220, including 30 million with derivatives from the anticipation of the closure of coal plants in the Iberian Peninsula and 73 million in the third third quarter "resulting from the alleged compensation of CMEC exchanges within the scope of their participation in the System Services market in 2009-13, having been deducted from the annual CMEC adjustment for the year 2015 recently approved by the Government".

"EDP will proceed to legally challenge the Order, in line with the appeal already filed against the condemnatory decision by the Competition Authority", he stressed.

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