Background
The joined Latvian cases concerned regulatory refusals to authorise electricity lines intended to supply customers directly from producers without using the distribution system. Elektro bizness, which owns a cogeneration plant and an existing line serving industrial customers, sought to add a short line connecting a new customer to that existing line. The regulator considered that arrangement was not a “direct line” because the new line would not run directly from the generation plant.
In the second case, Jelgavas autobusu parks sought to connect its hydrogen-generation facility directly to a biomass cogeneration plant owned by Gren Latvija. It planned to buy power directly while retaining its distribution-system connection as a backup. The regulator refused authorisation, contending that a customer with a backup grid connection was not “isolated” and that the grid could meet its needs.
The Court’s Holding
The Court held that the Directive’s second definition of a direct line covers a line supplying a customer directly from a producer or electricity supply undertaking without intermediation by the distribution-system operator. A new customer may therefore be connected to an existing producer-owned line that already serves other customers; it is irrelevant that the line does not physically run straight from the generation site or extends beyond that site.
A customer may also retain a backup connection to the public distribution system while receiving electricity through a direct line. That connection may entail an appropriate financial contribution and must not impair the distribution operator’s ability to perform its obligations. Direct lines are not confined to exceptional cases where the distribution system cannot supply the customer, although Member States may apply objective and non-discriminatory authorisation criteria and the limits in Article 7 of Directive 2019/944.
Key Takeaways
- A producer-owned extension connected to an existing private line can qualify as a direct line.
- Maintaining a grid backup connection does not prevent direct-line status.
- Member States may regulate authorisations to protect public-service obligations and network viability, using objective and non-discriminatory criteria.
Why It Matters
The ruling strengthens electricity customers’ and producers’ ability to arrange direct supply outside a distribution operator’s network, supporting supplier choice and decentralised generation. It rejects treating direct lines as a remedy available only when ordinary grid supply is unavailable.
At the same time, it preserves room for national regulators to protect the viability of distribution networks and to require fair financial contributions from customers that retain backup grid access.