The Constitutional Court has annulled the provision in the Walloon Electricity Decree classing the pension costs of the statutory members of personnel of the network operator as non-controllable. Governments can establish general policy guidelines if they merely encourage the energy regulator to take into account the policy guidelines pursued by the government and its interests, such as for example affordability, reliability and sustainability of the energy market. The classing of costs as controllable or non-controllable is an exclusive competence of the energy regulator.
On 25 May 2016, the Constitutional Court annulled article 12, 2° of the Decree of the Walloon Region of 11 April 2014 modifying the Decree of 12 April 2001 organising the regional electricity market ("Decree of 11 April 2014"). This provision instructed the Walloon energy regulator, the Commission wallonne pour l'Energie ("CWAPE") to treat the pension costs of the statutory members of personnel of the network operator as non-controllable. CWAPE has been competent for the Walloon distribution tariffs of electricity and gas since 1 July 2014, as a result of the sixth state reform. According to CWAPE, the obligation imposed by the regional legislator infringed upon its competence to determine tariff methodology and its independence towards all public or private entities.
In the context of the determination of the distribution tariffs, the classing of costs as "controllable" or "non-controllable" has a significant impact on the distribution tariffs applied to the end consumers. Controllable costs are costs over which the network operators exercise direct control. Therefore, these costs are part of the accounting result of the network operators. By contrast, non-controllable costs are costs over which the network operators do not have direct control. They can be a claim or debt towards the end consumers.
According to the Constitutional Court, under the Electricity Directive (Directive No 2009/72/EC), the energy regulators need full functional independence when executing their tasks. Based on the Electricity Directive, governments can impose general policy guidelines on energy regulators. Nevertheless, these are only reconcilable with the full functional independence of an energy regulator under certain conditions. Among other things, a government cannot infringe on regulatory decisions such as "fixing or approving, in accordance with transparent criteria, transmission or distribution tariffs or their methodologies". The Constitutional Court concludes that general policy guidelines are only in accordance with the goal of the Electricity Directive if they encourage the energy regulator to take into account the policy guidelines pursued by the government and its interests, such as, for example, affordability, reliability and sustainability of the energy market.
The Constitutional Court concluded that the choice of specific characterisation of costs cannot be established unilaterally by the government, since this is part of the exclusive competence of the energy regulator. As a result, in its decision, it annulled the contested provision of the Decree of 11 April 2014. In doing so, the Court confirmed the independence of the energy regulators, as provided by the Electricity Directive, to fix or approve, in accordance with transparent criteria, transmission or distribution tariffs or their methodologies.