On 13 June, the European Commission announced that it had launched a formal state aid investigation into potential aid to medium and large sized companies in France via the provision of state financed regulated electricity tariffs.
The European Commission had already expressed concern about artificially low state-regulated tariffs in its energy sector competition inquiry and opened an infringement case against France in relation to the incompatibility of these regulated tariffs with the electricity liberalisation directive (Directive 2003/54/EC) in December 2006.
In this new investigation, the European Commission has expressed concern that certain tariffs (known as "green" and "yellow"), which are financed by the state and are lower than tariffs on the liberal market, may amount to state aid and may be distorting competition.
The investigation does not, however, cover "blue" tariffs (which are mainly applicable to household and small businesses) as it does not consider these to grant any economic advantage to the relevant companies.
This state aid investigation follows a similar investigation which was launched against Spain in January 2007 which focussed on its low regulated electricity tariffs for large and medium sized energy intensive companies.