Press Release: State aid: Commission requests Poland to end long-term power purchase agreements and approves compensation scheme to replace them

The European Commission has requested Poland, following an investigation under EC Treaty state aid rules, to end long term power purchase agreements (PPAs) for electricity because they constitute unlawful and incompatible state aid. At the same time, the Commission authorised a system to compensate for the costs which arise as a result of the cancellation of such agreements and cannot be recouped by the generator (the so-called 'stranded costs'). The Commission has come to the conclusion that the compensation will not exceed what is necessary to recoup the shortfall in investment costs repayment over the assets' lifetime, including where necessary a reasonable profit margin.