The norm on suspending the mandatory electricity procurement complies with the Satversme
On 14 October 2015 the Constitutional Court passed the judgement in Case No. 2015-05-03 “On the Compliance of Para 100 of the Cabinet Regulation of 16 March 2010 No. 262 “Regulations Regarding the Production of Electricity Using Renewable Energy Sources and the procedures for the Determination of the Price” with Article 64 of the Satversme of the Republic of Latvia.”
The Cabinet of Ministers was authorised to suspend for a definite period of time the mandatory procurement of electricity to prevent disproportional increase of the total electricity price
The Contested Norm
The contested norm of the Cabinet Regulation provides: “From 26 May 2011 until 1 January 2016 the Ministry [of Economics] shall not organise tenders for the acquisition of the right to sell electricity produced in biomass, biogas, solar or wind power plants within the scope of mandatory procurement, and the producer may not qualify for selling electricity within the scope of mandatory procurement and for acquisition of the right to receive a guaranteed payment for the installed electric capacity.”
The Norm of Higher Legal Force
Article 64 of the Satversme: “The Saeima, and also the people, have the right to legislate, in accordance with the procedures, and to the extent, provided by this Constitution.”
The Facts
The case has been initiated with regard to an application submitted by the Department of Administrative Cases of the Supreme Court (SC). The Department of Administrative Cases is reviewing a case, where a company, which produces electricity at a hydroelectric power plant and sells it within the framework of mandatory procurement, requested issuing of an administrative act on increasing the volume of mandatory procurement. Previously the company had turned with this request to the Ministry of Economics, however, the Ministry informed it that the contested norm until 1 April2014 (in the wording currently in force – until 1 January 2016) forbade increasing the established volume of electricity procurement.
The SC Department of Administrative Cases noted in its application that the contested norm had been adopted in violating the authorisation granted by the legislator. Electricity Market Law provides that a producer, who produces electricity by using renewable energy resources, may acquire the right to sell the produced electricity in the form of electricity to be procured mandatorily. Allegedly, the Cabinet has only the authorisation to define the way, in which the rights of the electricity producers are to be exercised, and not whether currently such rights should be granted to producers. Therefore the application comprises the opinion that the contested norm is incompatible with Article 64 of the Satversme.
Court Findings and Ruling
On the right to legislate
The Constitutional Court has already noted that pursuant to Article 64 of the Satversme the right to legislate, i.e., the right to regulate an issue by law is vested into the Saeima and the people. However, to ensure effective exercise of the state power, a deviation from the requirement that the legislator must decide all issues entirely itself is admissible. The legislator decides on those issues that it holds as being most important and authorises the Cabinet or another state institution to adopt legal norms that are necessary for the implementation of laws. [10]
It is the legislator’s obligation, in deciding on an issue, to consider the significance of the particular issue and its connection to the fundamental rights. [10] The Cabinet has the right to adopt external legal acts only if the Saeima, in delegating to the Cabinet the task to elaborate regulation on a particular issue, has complied with the principle of division of power established in the Satversme. [10]
The legislator has decided on the all most significant issues itself
The Constitutional Court recognised that the legislator had decided on the most significant issues linked to the national policy on energy and its aims, inter alia, also with regard to the producers’ rights to sell the produced electricity in the form of electricity to be procured mandatorily. [11.2]
The Cabinet has acted within the limits of the authorisation
The Constitutional Court noted that the Cabinet of Ministers could adopt an external legal act only if the legislator had envisaged in law the adoption of such an act and had defined the limits of authorisation. [12] Thus, the Constitutional Court must establish the content and aim of the authorising norms, and also – whether the Cabinet has not exceeded the scope of authorisation granted by the legislator. [12]
The Constitutional Court recognised that the legislator had authorised the Cabinet to regulate the issues linked to the implementation of the mandatory electricity procurement, inter alia, the authorisation to regulate the procedure for setting the volume of mandatory procurement. [13.2]
The authorisation granted by the legislator should be understood not only as one particular legal provision, but the substance and aims of the law itself. To form a comprehensive understanding of the substance and aims of the law, it is not always possible to rely only upon one law, but the regulation of the relevant field and sometimes also the regulation of related fields must be taken into consideration. [13.3]
In assessing the regulation in the field of electricity, the Constitutional Court arrived at the conclusion that the Cabinet’s task was to elaborate a procedure that would not only promote production of electricity from renewable energy resources, but also, inter alia, to ensure that electricity was supplied to all electricity users for valid prices. [13.3]
The Constitutional Court found that the contested norm had been adopted to ensure that electricity was supplied to all electricity users for valid prices. [13.4] Thus, the Constitutional Court also found that the contested norm had been adopted in compliance with the aim of the authorising law. [13.4]
The Constitutional Court noted that the authorisation granted by the legislator allowed the Cabinet to suspend for a certain period of time granting to producers the right to sell the produced electricity within the framework of mandatory procurement. However, this does not mean that the Cabinet had been authorised to extend infinitely the term established in the contested norm. At the same time the Saeima retains the obligation to decide on the producers’ right to sell the produced electricity within the framework of mandatory procurement. [14]
The Constitutional Court noted that the Cabinet of Ministers had not violated the authorisation granted by the legislator and had acted within its limits and recognised the contested norm as being compatible with Article 64 of the Satversme.
The judgement by the Constitutional Court is final and not subject to appeal. The judgement enters into force on the day of its official publication.
Linked case: 2015-05-03