Judgment of 28 November 2024

R e a s o n s:

A.

I.

1

The two constitutional complaints, lodged by 22 operators of renewable-energy power plants, directly challenge the redistribution of surplus revenues from power plant operators to consumers introduced by the Act to Control Electricity Prices (Strompreisbremsegesetz – StromPBG; hereinafter: the Act) of 20 December 2022 (Federal Law Gazette, Bundesgesetzblatt – BGBl I p. 2512), a federal law. Specifically, they challenge §§ 13, 14, 15, 16, 17, 18 and 29 of the Act. Under § 13(1) of the Act, the period of application of the challenged provisions was limited from 1 December 2022 to 30 June 2023.

2

1. The complainants operate power plants that generate power from solar energy, wind energy or solid biomass. They assert that the challenged provisions violate their fundamental rights. They claim that the redistribution obligation constitutes an extraordinary levy to finance consumer relief that does not comply with the applicable constitutional requirements. According to the complainants, ensuring affordable electricity supply to prevent economic damage is a task of the common good that may not be financed by way of an extraordinary levy on electricity producers, let alone electricity producers that have a cost-curbing effect like the complainants; instead, this task is to be financed through a tax.

3

2. The Act to Control Electricity Prices is part of a set of measures taken by the Federal Republic of Germany to mitigate the impact of the massive increase in energy prices in 2022 following Russia’s invasion of Ukraine on 24 February 2022 (for more information regarding the exceptional situation on the electricity market resulting from the crisis see para. 89 f. below). The Act served to implement Art. 6 ff. of Council Regulation (EU) 2022/1854 of 6 October 2022 on an emergency intervention to address high energy prices (hereinafter: EU emergency regulation). This regulation directed Member States to introduce a cap on revenues generated from the sale of electricity in excess of EUR 180 per megawatt hour (‘surplus revenues’) and to redirect such revenues to mitigate the impact of high electricity prices on consumers in a targeted manner (Art. 6(1), Art. 10(1) EU emergency regulation). Member States may only use budgetary resources if surplus revenues are insufficient to adequately support electricity consumers (Art. 10(3) EU emergency regulation). Member States can design the relief measures in various ways. For example, surplus revenues can be used to compensate electricity suppliers who have to deliver electricity to customers below costs (Art. 10(4)(c) EU emergency regulation). In deviation from the uniform cap on revenues of 18 cents per kilowatt hour, Member States may also lower the cap further, differentiating between different types of electricity production, or set a higher cap for producers whose investment and operating costs exceed the uniform maximum set by EU law (Art. 8(1)(a) and (b) EU emergency regulation). The measures must not affect electricity price formation (Art. 8(2)(d) EU emergency regulation).

4

The redistribution of surplus revenues for the benefit of electricity consumers required by EU law is based on the consideration that operators of power plants with low marginal costs (especially fuel costs), due to the price formation mechanism of the electricity markets, have recorded high revenues since the start of the Ukraine war, well above their expectations when deciding to invest. In a situation where consumers are exposed to extremely high prices, which also harm the EU’s economy, it is necessary to limit these revenues on a temporary basis (EU emergency regulation, recitals nos. 24 and 25). Yet the cap on market revenues should not be set below the reasonable expectations of electricity producers as to the average level of electricity prices at times of peak demand before the Ukraine war. Consequently, the uniform cap of EUR 180 per megawatt hour is significantly higher than average peak prices that could be expected in the wholesale electricity market across the European Union in the last decades until February 2022 (EU emergency regulation, recitals nos. 27 and 28).

II.

5

The constitutional complaints are directed against §§ 13 to 18 of the Act to Control Electricity Prices – the essential provisions of Part 3 of the Act (redistribution of surplus revenues). In addition, the constitutional complaints challenge § 29 of the Act, which imposes reporting obligations on power plant operators. The challenged provisions implement the EU law requirement to redistribute ‘surplus revenues’ of electricity producers in excess of certain limits and to use these revenues to provide relief to electricity consumers. According to the legislator, this is done by linking the surplus revenues of electricity producers resulting from the Ukraine war with the relief provided to consumers to mitigate the impact of high electricity costs that likewise result from the war by way of a private pass-through mechanism involving different entities in the electricity industry, which then forms a generally self-contained financial circuit (Bundestag document, Bundestagsdrucksache – BTDrucks 20/4685, p. 4). Relief for electricity consumers is governed by §§ 3 ff. of the Act. Under § 4(1) first sentence of the Act, electricity companies must lower electricity costs for consumers in the amount of the statutory monthly relief.

6-15

[…]

III.

16-17

[…]

IV.

18

With their constitutional complaints, the complainants directly challenge §§ 13, 14, 15, 16, 17, 18 and 29 of the Act to Control Electricity Prices. The challenges are essentially identical.

19

The complainants assert a violation of their rights under Art. 12(1) in conjunction with Art. 3(1) of the Basic Law (Grundgesetz – GG) on the grounds that the provisions governing the redistribution of revenues do not regulate prices without generating revenue for the federal budget, but rather constitute an extraordinary levy that serves to finance public tasks. According to the complainants, such levies are subject to strict limits under Art. 105 and Art. 106 of the Basic Law, which have not been met in the present case. […]

V.

20

1. The Federal Government considers the constitutional complaints to be inadmissible and in any case unfounded. […]

21

2. In addition to the Federal Government, the German Chamber of Industry and Commerce (Deutsche Industrie- und Handelskammer), the Monopolies Commission (Monopolkommission) and five associations submitted written statements in accordance with § 27a of the Federal Constitutional Court Act (Bundesverfassungsgerichtsgesetz – BVerfGG).

22-23

[…]

24

3. Following a request for information from the Federal Constitutional Court in preparation of the oral hearing, the Federal Government, the European Commission and the Federal Network Agency (Bundesnetzagentur) submitted written statements regarding the extent to which uniform pricing on the basis of marginal costs (merit order) in the context of electricity trading in the spot market is regulated by EU law or on the basis of EU law, and whether relevant provisions exist in German law.

VI.

25

At the oral hearing held on 24 September 2024, the complainants and the Federal Government made use of the opportunity to make a statement. Statements were also made by the following expert third parties within the meaning of § 27a of the Federal Constitutional Court Act: the European Commission, the Federal Cartel Office (Bundeskartellamt), the Federal Network Agency, the Monopolies Commission, the Federal Association of the Energy and Water Industry (Bundesverband der Energie- und Wasserwirtschaft – BDEW) and the European Energy Exchange AG (EEX AG).

B.

26

The constitutional complaints are admissible in part.

I.

27

The complainants have standing insofar as they challenge § 14(1) of the Act (obligation to pay surplus revenues), § 16(1) of the Act (different caps on revenues) and § 29 of the Act (reporting obligations); for the rest, the complainants lack standing.

28-56

[…]

II.

57-59

[…]

III.

60

[…]

IV.

61

The challenged provisions are not fully determined by EU law in the form of the EU emergency regulation, but instead fall within the leeway for implementation provided for in the regulation. The standard of review must therefore be the Basic Law (cf. Decisions of the Federal Constitutional Court, Entscheidungen des Bundesverfassungsgerichts – BVerfGE 152, 152 <168 f. para. 39, 42> – Right to be forgotten I; 155, 119 <162 ff. para. 83 ff.> – Subscriber data II; 158, 170 <183 para. 23> – IT security vulnerabilities).

62

It is true that the EU emergency regulation provides that all surplus revenues resulting from the application of the cap on market revenues must be used to finance measures that serve to mitigate the impact of high electricity prices on final electricity consumers in a targeted manner, and that budgetary resources may only be used to this end if surplus revenues are insufficient to adequately support final electricity consumers (Art. 10(1) and (3) EU emergency regulation). However, Member States have considerable leeway in implementing these requirements. In adopting the challenged provisions, the federal legislator exercised this leeway. The Act to Control Electricity Prices does not adopt the uniform cap of 18 cents per kilowatt hour laid down in Art. 6(1) of the EU emergency regulation, but sets different caps in line with the options provided for in Art. 8(1)(a) and (b) of the EU emergency regulation for different types of electricity production (§ 16(1) of the Act). Member States also have leeway when it comes to the design of the measures to provide relief to final electricity consumers. The Act to Control Electricity Prices makes use of the option, listed as an example in Art. 10(4)(c) and (d) of the EU emergency regulation, to lower the electricity purchase costs for final electricity consumers, including for a limited volume of electricity consumed, and to compensate suppliers accordingly (cf. §§ 4 and 20 of the Act). Finally, under Art. 6(4) of the EU emergency regulation, Member States can decide whether to apply the cap on market revenues at the settlement of the exchange of energy or thereafter; if they apply the cap thereafter, the state is free to pre-finance support measures to final electricity consumers (EU emergency regulation, recital no. 31). The federal legislator exercised this leeway by providing support to consumers as early as March 2023 – including for January and February 2023 (§ 49 of the Act), while surplus revenues only had to be paid from 15 August 2023 (§ 14(1) third sentence of the Act). The possibility created by EU law to pre-finance support measures for consumers through state funds before the state receives the surplus revenues is set out in § 25 of the Act (for more details see para. 72 ff. below).

C.

63

To the extent that the constitutional complaints are admissible, they are unfounded. While the admissibly challenged provisions of § 14(1), § 16(1) and § 29 of the Act interfere with the complainants’ fundamental right under Art. 12(1) of the Basic Law (see I. below), the interference is constitutional in both formal (see II. below) and substantive (see III. below) terms.

I.

64

The admissibly challenged provisions interfere with the complainants’ fundamental right to occupational freedom, which is protected by Art. 12(1) of the Basic Law.

65

1. The provisions fall within the scope of protection of Art. 12(1) of the Basic Law.

66

Art. 12(1) of the Basic Law guarantees all Germans a comprehensive fundamental right to freely choose and practice their occupation as a basis for their personal and economic life (cf. BVerfGE 101, 331 <346 f.>). In accordance with Art. 19(3) of the Basic Law, this right also extends to domestic legal entities under private law (cf. BVerfGE 97, 228 <253>; 161, 63 <89 para. 43>). ‘Occupation’ is any activity that is practised on a long-term basis and serves to create and maintain a livelihood. One manifestation of occupational freedom is the ‘freedom of enterprise’, understood as the right to freely establish and operate a business. This encompasses the freedom to structure the organisational and contractual arrangements of one’s business (cf. BVerfGE 50, 290 <363 ff.>; 123, 186 <238 f.>; 138, 261 <284 f.>; 161, 63 <89 para. 43>; established case-law). It also includes the freedom to, in principle, generate revenues by way of free price formation (cf. BVerfGE 101, 331 <347>; 106, 275 <298>; 114, 196 <244 >; 117, 163 <181>; 134, 204 <222 f. para. 66 f.>) and the freedom to make economic use of one’s occupational or professional work (cf. BVerfGE 97, 228 <253>).

67

Occupational freedom also includes a defensive right against obligations to participate in public tasks, such as investigation, disclosure, reporting or documentation obligations, that are directly linked to an occupational activity and constitute a significant administrative burden (regarding the commissioning of private entities for public tasks cf. BVerfGE 22, 380 <383 f.>; 30, 292 <312 ff.>; 68, 155 <170 ff.>; 114, 196 <244>; 161, 1 <34 ff. para. 71 ff.>).

68

2. The admissibly challenged provisions of the Act to Control Electricity Prices regarding the redistribution of surplus revenues and the related reporting obligations interfere with occupational freedom, which is protected by Art. 12(1) of the Basic Law. The operation of power plants at issue here is a protected occupation under Art. 12(1) of the Basic Law (cf. BVerfGE 155, 238 <276 para. 93> and 161, 63 <89 para. 43> regarding wind farms). The redistribution of surplus revenues does not restrict the freedom of affected power plant operators to determine their prices. However, the redistribution of revenues that exceed the determined amounts results in a cap on revenues, which amounts to price-setting that interferes with the generation of revenue.

69

The complainants also challenge their obligation to participate in the determination of surplus revenues under § 29 of the Act, with non-compliance for the most part punishable by a fine (§ 43(1) no. 5 of the Act). This obligation does interfere with the occupational freedom of affected power plant operators. The numerous obligations to self-administer the distribution of surplus revenues contained in the provision result in considerable administrative burdens on affected power plant operators, which go beyond the obligation to pay surplus revenues and further restrict their freedom to practice an occupation (cf. BVerfGE 161, 1 <36 para. 75> – Lodging tax; regarding the weighting of these burdens see paras. 114, 125 below).

II.

70

The challenged provisions regarding the surplus revenues to be paid by power plant operators (§ 14(1), § 16(1) and § 29 of the Act) are formally constitutional. The federal legislator can base the provisions on its legislative powers for the law relating to the energy sector under Art. 74(1) no. 11 and Art. 72(2) of the Basic Law. The surplus revenues that must be paid by power plant operators (§ 14(1) of the Act) do not result in revenue accruing to the Federation; rather, these revenues are the subject of state intervention in the electricity markets through the redistribution of revenues generated in the market among private market participants (see 1. below). Therefore, no taxation powers (Art. 105(1) of the Basic Law) are required; legislative powers regarding the underlying substantive matter are sufficient (see 2. below). The challenged provisions governing state interventions in electricity markets are covered by the federal legislator’s powers on the law relating to the energy sector under Art. 74(1) no. 11 and Art. 72(2) of the Basic Law (see 3. below).

71

1. No revenue accrues to the state as a result of the redistribution of surplus revenues. Rather, the provisions concern a redistribution of revenues generated through the sale of electricity from some electricity producers to electricity consumers.

72

a) The legislator implemented the EU law requirement to use revenues in excess of certain caps to finance measures in support of electricity customers that mitigate the impact of high energy prices (Art. 10(1) EU emergency regulation) as follows: Pursuant to § 14(1) first sentence of the Act, power plant operators must pay 90% of the surplus revenues determined through self-assessment (cf. § 29 of the Act) to the system operator of the grid to which their power plant is directly connected. This obligation to pay only exists towards system operators, including in cases where the Federal Network Agency, pursuant to § 41(1) second sentence of the Act, determines the surplus revenues for the power plant and system operators in case of non-compliance with the reporting and payment obligations; the payment must then be made to the competent transmission system operators (§ 41(5) first sentence of the Act; cf. BTDrucks 20/4685, p. 114). Under § 22(1) of the Act, transmission system operators have a financial claim vis-à-vis system operators in the amount of the surplus revenues received by the latter to compensate for the burdens arising for transmission system operators when they meet the claim of electricity companies under § 20 of the Act to reimburse electricity companies for electricity cost relief granted to electricity consumers (§ 4(1) of the Act). In addition, transmission system operators have a claim vis-à-vis the Federal Republic of Germany for interim financing of their expenditure under the Act to Control Electricity Prices (§ 25 of the Act). The transmission system operators and the Federal Republic of Germany concluded a contract under public law to carry out this interim financing (§ 25 second sentence of the Act).

73

b) In the framework of this private pass-through mechanism (BTDrucks 20/4685, pp. 3 f.), the surplus revenues are not available to the state as revenue to perform its tasks, neither during (see aa) below) nor after (see bb) below) the provision of relief to electricity consumers. Instead, they serve redistribution purposes (see c) below).

74

aa) For consumer relief provided to mitigate the impact of high electricity costs between 1 January and 31 December 2023 (§ 3(1) of the Act), this follows from § 25 second sentence of the Act in conjunction with § 5(2) third sentence of the public-law contract. According to these provisions, transmission system operators must make monthly forecasts of the interim payments necessary to meet the claims for advance payment of electricity companies under § 22a(1) of the Act and deduct the surplus revenues obtained by the system operators. In this way, the use of surplus revenues helps provide relief to consumers without generating revenue for the Federation. At the oral hearing, the Federal Network Agency stated that redistribution amounts below the monthly costs of consumer relief had not been used to repay the interim financing provided by the Federation during the period in which relief was provided (regarding the monthly payments made by the Federation to the transmission system operators see also BTDrucks 20/10597, p. 3).

75

bb) For the time after the expiry of the consumer relief measures, § 7(2) third sentence of the public-law contract provides that surplus revenues still collected by the transmission system operators on the basis of the settlement of their actual revenues against their actual expenditure pursuant to § 24(2) of the Act must be transferred to the federal budget in the amount of interim financing received but not yet returned. This does not however result in revenue accruing to the federal budget; instead, these payments meet the Federation’s claim to repayment of the interim financing provided to the transmission system operators in accordance with § 25 first sentence of the Act in conjunction with § 7(2) first sentence of the public-law contract in order to enable them to fulfil their obligations to compensate electricity companies for the electricity cost relief granted to consumers. Such repayments do not mean that revenue accrues to state budgets (cf. BVerfGE 81, 156 <186 f.>). These repayments merely settle the Federation’s repayment claims, which arise from the programme of interim financing that is similar to loans and serves to fulfil the obligation on the part of the transmission system operators – rather than of the Federation itself – under § 20 of the Act to meet electricity companies’ claim for compensation for consumer relief measures, including through the surplus revenues received by them. After settling all actual expenditure with the Federation, there are no legal grounds for surplus revenues accruing at that point to be left to the transmission system operators.

76

c) Thus, based on the objective content of the challenged provisions, the redistribution of surplus revenues does not serve to generate revenue for the Federation to help finance consumer relief measures to mitigate the impact of high electricity prices, as the complainants have claimed. Instead, the surplus revenues are ‘passed through’ on the basis of private law relationships from the power plant operators via the system operators, transmission system operators and electricity companies, and finally through to electricity consumers. The legislative objective is therefore the redistribution of funds among private entities that results in depriving electricity producers of a portion of their revenues from the sale of electricity and transferring them to electricity consumers to mitigate the burden arising from high electricity prices. This also applies insofar as surplus revenues still accrue once the revenue and expenditure of transmission system operators from the implementation of the Act to Control Electricity Prices have been settled against one another; these must then be transferred to the federal budget. As set out above, this is solely about meeting the Federation’s repayment claims arising from the programme of interim financing provided for a task incumbent upon transmission system operators (see para. 75 above).

77

2. Such redistribution of funds among private entities, which does not result in any revenue accruing to the state, does not require taxation powers. Legislative powers regarding the underlying substantive matter are sufficient.

78

a) Taxes are payments that are not levied in return for a particular service; they are collected by a public authority for the purpose of raising revenue to finance public tasks and imposed on all entities or persons who meet the criteria on which the law bases liability for payment. It is thus a defining feature of a tax that it is levied without individual consideration and independent of a specific purpose to raise revenue for the general financial needs of public authorities (cf. BVerfGE 137, 1 <17 para. 41>; 149, 222 <248 f. para. 53>; 161, 1 <37 para. 78>; 161, 63 <99 f. para. 73>). In the present case, not even the criterion of raising revenue is met, as set out above.

79

b) Non-tax levies do not fall within the taxation powers under Art. 105 of the Basic Law; there is a tension between such levies and constitutional law governing public finances. Constitutional law governing public finances serves to provide regulation and protection. This function would be jeopardised if the Federation and the Länder could invoke their substantive legislative powers to tap into revenues outside the distribution rules under constitutional law governing public finances at will, and could impose further financial obligations on individual persons or entities, in addition to their obligation to pay taxes, to finance the burdens to be borne by the community (cf. BVerfGE 55, 274 <302 ff.>; 78, 249 <266 f.>; 92, 91 <113 f.>). Therefore, the imposition of non-tax levies requires particular justification, which must go beyond the purpose of generating revenue (cf. BVerfGE 124, 235 <243 ff.>; 135, 155 <206 ff.>; 137, 1 <20 f. para. 48 f.>; 149, 222 <254 f. para. 65 f.>; 158, 282 <328 para. 113>). By contrast, if payment obligations result in the redistribution of funds among private entities without revenue accruing to the state, as is the case here, this does not affect the regulatory function of constitutional law governing public finances or the requirement of equal burdening (Lastengleichheit) when financing state tasks. This also applies if payment obligations among private entities pursue interests of the common good that do not relate to the reconciliation of interests among private entities (cf. BVerfGE 114, 196 <250>; Federal Constitutional Court, Order of the First Chamber of the Second Senate of 9 January 1996 - 2 BvL 12/95 -, para. 13 ff.; Decisions of the Federal Court of Justice in Civil Matters, Entscheidungen des Bundesgerichtshofes in Zivilsachen – BGHZ 201, 355 <358> regarding the surcharge under the Renewable Energies Act; regarding fundamental rights protection in such cases see para. 105).

80

3. Since it constitutes a redistribution of funds from the sale of electricity among participants in the electricity market, the challenged measure falls within the Federation’s legislative powers for law relating to the energy sector, as part of law relating to economic matters under Art. 74(1) no. 11 of the Basic Law.

81

a) The term ‘law relating to economic matters’ within the meaning of Art. 74(1) no. 11 of the Basic Law must be construed broadly (cf. BVerfGE 5, 25 <28 f.>; 116, 202 <215>; 135, 155 <196 para. 101>; 161, 63 <94 para. 60>; established case-law). The law relating to economic matters includes the regulation of economic life and activity, in particular, laws that relate in any way to the production, manufacture and distribution of goods serving an economic need (cf. BVerfGE 8, 143 <148 f.> 116, 202 <215 f.>; 135, 155 <196 para. 101>; 161, 63 <94 para. 60>; established case-law; on Art. 74(1) no. 11 of the Basic Law as the basis for the regulation of business-related extraordinary levies, cf. BVerfGE 82, 159 <182>; 124, 348 <364>). The term thus not only encompasses the organisation of the economy and of industries and economic actors, but also the management and control of the economy as a whole (cf. BVerfGE 161, 63 <94 para. 60>).

82

‘Energy’ law, as one of the sub-categories listed in Art. 74(1) no. 11 of the Basic Law, pertains to those provisions that specifically concern economic activity in the energy sector. These include provisions relating to the organisation of the energy sector and the legal entities involved – except those that directly establish the legal form and structure of such entities, which are a matter of company law –, as well as provisions relating to the generation and distribution of energy, the regulation of energy prices and measures to secure and save energy (cf. BVerfGE 161, 63 <95 para. 62> with further references; […]).

83

b) The challenged provisions are covered by the powers granted in Art. 74(1) no. 11 of the Basic Law, which in principle also covers the regulation of the electricity market (cf. BVerfGE 161, 63 <95 para. 62>). Based on their objective content, the aim of the provisions is an intervention in the electricity market through the redistribution of revenues generated in the market from the sale of electricity.

III.

84

The interference with the complainants’ occupational freedom, protected by Art. 12(1) of the Basic Law, is also constitutional in substantive terms. It is justified because the challenged provisions serve a legitimate aim (see 1. below) and are suitable (see 2. below), necessary (see 3. below) and appropriate (see 4. below) for achieving that aim.

85

1. The interference pursues constitutionally legitimate aims. According to the legislative intent (more details in BVerfGE 150, 244 <276 para. 74>; 161, 63 <93 para. 57>; 167, 163 <212 f. para. 115> – Contergan II), the redistribution of some of the revenues generated by electricity producers to electricity consumers (see para. 72 above) serves to reconcile the interests of these market participants. Electricity producers are to pass on that portion of their revenues which exceeds investment expectations to electricity consumers, who have been under strain from the massive increase in electricity prices resulting from the crisis. The legislator thus ties redistribution to price formation in the electricity market, responding to the impact of shortages of natural gas in 2022 on the market and consumers (see a) below) in order to reconcile the interests in a way that the legislator considers appropriate (see b) below).

86

a) Price formation in the electricity market and the impact of shortages of natural gas in the context of the Ukraine war are as follows ([…]):

87

aa) The reference price for electricity is determined on the so-called ‘day-ahead’ spot market, the lead market of the EU electricity trading system. In this market, electricity prices for the hours of the following day are determined by means of an auction for the respective bidding zone. Success at auction is determined by current electricity demand using an algorithm in the order of increasing variable marginal costs of the producers (in particular fuel costs) at a single price for all consumers (merit order). The marginal costs of the most expensive power plants needed to meet electricity demand – in times of high electricity demand, these are often gas-fired power plants – determine the electricity price applicable in the bidding zone for all electricity producers that successfully participate in the auction, regardless of the marginal costs of their respective plants. Thus, the higher the marginal costs that determine this uniform pricing, the higher the profits of the operators of plants with low marginal costs. Such plants typically include renewable-energy power plants without fuel costs like photovoltaic systems or wind farms. According to the written statements and the statements made at the oral hearing, this procedure for price formation is based on the free market economy and strikes the best possible balance between supply and demand; it is particularly favourable for electricity consumers due to the optimal use of plants with low marginal costs.

88

The uniform prices set in the day-ahead spot market also serve as reference prices for longer-term electricity trading on the futures market and are a necessary basis for electricity trading between different bidding zones within the European Union. Due to the latter function for the EU-wide electricity trading system (‘market coupling’), the formation of a uniform price in the order of increasing marginal costs is implicitly provided for by EU law (cf. Art. 39(2)(a) in conjunction with Art. 38(1)(b), Art. 2 no. 28 of Commission Regulation (EU) 2015/1222 of 24 July 2015 establishing a guideline on capacity allocation and congestion management <OJ L 197, p. 24>; cf. also Art. 8(2)(d) EU emergency regulation).

89

bb) Russia’s war of aggression against Ukraine, which started in February 2022, led to a massive increase in electricity prices formed on the basis of this uniform pricing mechanism. Immediately after the start of the war, the amount of natural gas available on the European energy market plunged by more than half. This led to the price of natural gas, and thus the marginal costs of gas-fired power plants, skyrocketing; the price for other fossil fuels such as coal also saw massive increases. The uniform price was often set by gas-fired power plants with their extremely high marginal costs. As a result, the average spot price for electricity peaked in August 2022, reaching a level of ten times the average price for 2021 and five times the price in the same month year on year. Operators of power plants whose marginal costs were not affected by the war-related distortions in the natural gas market were able to realise exceptionally high profits. These include, in particular, operators of renewable-energy power plants, which can produce electricity without using fossil fuels.

90

cc) For consumers, the Ukraine war, which was also described as a historic turning point (Zeitenwende; policy statement by Federal Chancellor Scholz on 27 February 2022), triggered an unexpected cost shock for businesses and private households due to the massive increase in natural gas and electricity prices. Given the uncertainties regarding the feasibility of maintaining an affordable energy supply for businesses and private households, the situation was categorised as an unusual emergency situation (cf. BTDrucks 20/9666, pp. 13 f.). Private and commercial consumers were implored to take all possible actions to reduce electricity consumption in households, offices and production ([…]). The Ordinance on Short-Term Measures To Secure the Energy Supply (Kurzfristenenergieversorgungssicherungsmaßnahmenverordnung – EnSikuMaV of 26 August 2022, BGBl I p. 1446), which entered into force on 1 September 2022, provided for a mandatory reduction in minimum room temperatures for certain work spaces.

91

b) The redistribution of surplus revenues aimed to overcome this ‘extraordinary disruption of the economy’ (cf. BTDrucks 20/9666, p. 14). According to the EU and German legislators, the high revenues that, due to uniform pricing, could also be recorded by power plant operators whose marginal costs remained unaffected by the war-related distortions in the energy market constitute revenues that are well above operators’ expectations when deciding to invest and are therefore not needed for economic plant operation with sufficient returns (cf. EU emergency regulation, recital no. 24; BTDrucks 20/4685, p. 3; ‘surplus revenues’). These exceptionally high revenues recorded by some electricity producers as a result of the crisis must be weighed against the great burdens for private and commercial consumers, which also arose from the crisis (cf. BTDrucks 20/4685, pp. 4, 70). In its statement of 13 September 2024, the Monopolies Commission finds that the allocation of financial resources between consumers and these electricity producers runs counter to market principles; the Monopolies Commission therefore supports a reconciliation of interests between electricity producers with extraordinary revenues as a result of the crisis on the one hand, and private and commercial consumers, who have been heavily burdened by the crisis, on the other. According to the legislative concept, those revenues that exceed a cap determined on the basis of reasonable investment expectations before the Ukraine war are to be taken from electricity producers and to be redistributed to consumers to provide relief from high electricity prices. The cap on revenues was to be designed in such a way that all types of electricity production are guaranteed sufficient returns and no power plant has to be taken off the market due to the redistribution scheme (cf. EU emergency regulation, recitals nos. 25 and 27 to 30; BTDrucks 20/4685, pp. 3 f., 70, 91 f.).

92

The Act to Control Electricity Prices serves to implement this objective. The German legislator exercised the leeway granted to it under Art. 8(1)(a) and (b) of the EU emergency regulation and – in deviation from the uniform cap on revenues under Art. 6(1) of the EU emergency regulation – set different caps (§ 16(1) nos. 1 to 7 of the Act) that are based on the investment and operating costs of the individual types of electricity production and, together with safety margins, serve to ensure the economy of electricity production ([…]; cf. BTDrucks 20/4685 p. 95). This is especially clearly shown by the caps on revenues applicable for renewable-energy power plants (§ 16(1) nos. 1, 2(a) of the Act), which are based on the ‘value to be applied’, referencing the support guaranteed for 20 years under the Renewable Energies Act (Erneuerbare-Energien-Gesetz), and thus on investment expectations (cf. BTDrucks 20/4685, p. 95 f.). The revenues that could theoretically be realised on the exchange (§ 16(1) of the Act) or the actual revenues recorded on the basis of plant-related marketing agreements which exceed these caps are – as set out above (para. 72) – passed on via a private pass-through mechanism within the electricity sector from affected electricity producers via system operators, transmission system operators and electricity companies to private and commercial electricity consumers.

93

2. The challenged measures are also suitable under constitutional law. The criterion of suitability is met if there is a possibility that the provisions further the legislative purpose (cf. BVerfGE 156, 63 <116 para. 192>; 159, 223 <305 f. para. 185>; 161, 299 <367 f. para. 166>; established case-law). A provision can only be found to be unsuitable if it cannot further the legislative purpose in any way or if it counteracts this purpose (BVerfGE 158, 282 <336 para. 131> with further references; 161, 299 <367 f. para. 166>).

94

Based on these standards, the challenged measure is suitable under constitutional law. The redistribution of revenues in excess of investment expectations that were generated by some electricity producers as a result of the crisis in order to benefit electricity consumers that are burdened by the crisis (see para. 72 ff.) and its implementation mechanism further the reconciliation of interests pursued.

95

3. a) Interferences with fundamental rights must not go further than is necessary to achieve the legislative purpose. A measure falls short of this standard if an equally effective means is available that would be less intrusive for fundamental rights holders and would not entail greater burdens for third parties or the general public (cf. BVerfGE 148, 40 <57 para. 47> 159, 223 <314 para. 203 f.>; 161, 299 <378 para. 187>; 162, 378 <428 para. 117>; established case-law; see also BVerfGE 103, 172 <184 >; 113, 167 <259>). It must be clearly established that the alternative measure is equally effective in every respect for achieving the purpose pursued. In principle, the legislator has a margin of appreciation, including when assessing the necessity of a law. This margin of appreciation includes, among other things, appraising the effects of the chosen measures in comparison with other, less intrusive measures.

96

b) The redistribution of surplus revenues for the benefit of electricity consumers and its implementation mechanism are necessary under constitutional law to achieve the legislative aim of reconciling the interests of power plant operators, who are particularly favoured by the impact of war-related shortages of natural gas on electricity price formation on the one hand, and electricity consumers, who are particularly burdened by this impact, on the other.

97

aa) While the use of budgetary resources would be less restrictive for affected electricity producers than the redistribution of revenues, this does not stand in the way of the challenged measure meeting the constitutional criterion of necessity – even if questions of EU law are disregarded–, given that the use of budgetary resources would merely shift the costs to the general public (cf. BVerfGE 109, 64 <86>; 161, 299 <378>). Moreover, the aim of reconciling the interests of power plant operators and electricity consumers can only be achieved through the redistribution of surplus revenues generated by plant operators (see para. 107 below).

98

bb) Changing the mechanism for price formation on the electricity market by switching from price formation based on the merit order, in which all electricity producers receive the same price determined on the day-ahead spot market on the basis of marginal costs (‘pay-as-clear’), to the alternative model of a bid price procedure, in which each electricity supplier successful in the auction receives only the price at which it offered the electricity (‘pay-as-bid’) – again notwithstanding questions of EU law – also would not constitute a less restrictive and at least equally effective alternative.

99

The bid price procedure would only be less restrictive for affected electricity producers if, under this alternative, they retained surplus revenues that would be redistributed by the Act to Control Electricity Prices. Yet the reconciliation of interests sought could then only be achieved in an equally effective manner if the reduced redistribution amounts did not entail a lesser reduction of the level of energy prices, and thus of electricity costs for consumers affected by the crisis. That said, it cannot be assumed that the bid price procedure would lead to a reduction of the level of energy prices compared to the uniform price procedure. Rather, according to the unanimous assessments of the European Commission, the Federal Cartel Office and the Federal Network Agency, the uniform price procedure (cf. para. 87) results in the most favourable electricity prices for consumers; the massive increase in electricity prices triggered by the sudden shortages of natural gas in the context of the Ukraine war could not have been better countered by the bid price procedure. This is because, according to the assessment of the expert third parties, the bid price procedure requires that auction participants guess the bidding behaviour of the operators of power plants with the highest marginal costs that are needed to meet electricity demand. Success in the auction would then depend on which operators made the best guess. This means that, for example, it is possible under the bid price procedure that a coal-fired power plant rather than a wind farm is used to meet electricity demand, despite strong winds, because the price demanded by the wind farm operator was too high. By contrast, according to the experts, the uniform price procedure guarantees that at any given time only the power plants with the lowest marginal costs needed to meet electricity demand at that time are used.

100

cc) Insofar as the complainants contend that it is not necessary to use caps on revenues that are based on the cost structures of different types of electricity production (§ 16(1) of the Act) because it would be less restrictive to determine a uniform cap on revenues for all types of electricity production, this argument cannot be accepted. The legislator made the prognosis-based assessment that a uniform cap on revenues would lead to less redistribution of surplus revenues or to the frustration of the justified investment expectations of power plant operators with high marginal costs, resulting in even higher electricity prices (cf. BTDrucks 20/4685, p. 95); this assessment is within the legislator’s leeway.

101

A uniform cap on revenues, which would be more favourable to operators of renewable-energy power plants, would only be an alternative that would not entail greater burdens for third parties if the cap was not lower than the caps determined for other types of electricity production in § 16 of the Act. This would mean a uniform cap of 28 cents per kilowatt hour, because this price is necessary to cover the investment and operating costs of power plants based on petroleum products in accordance with § 16(1) no. 6 of the Act (cf. BTDrucks 20/4685, p. 95). This cap would be well above the uniform cap of 18 cents per kilowatt hour determined in Art. 6(1) of the EU emergency regulation, which, according to the EU legislator’s assessment, constitutes a level well above the average peak prices in the European electricity market expected before the Ukraine war (EU emergency regulation, recital no. 28). It is evident that a uniform cap on revenues in this amount would not be an equally effective means to bring about the reconciliation of interests pursued, since a considerable portion of revenues in excess of investment expectations of the electricity producers favoured by the crisis could then not be redistributed as surplus revenues and used for the benefit of electricity consumers burdened by the crisis.

102

The approach of an equally effective uniform cap on revenues that would be so low that it would enable the use of surplus revenues for the reconciliation of interests to at least the same extent as the applicable law likewise would not be a suitable alternative. According to the legislator’s tenable assessment, such a solution would not only impose greater burdens on power plant operators with marginal costs higher than those of renewable-energy power plants when compared to the applicable caps specific to the respective power plant type, it would also impose greater burdens on the general public through even higher electricity prices because there would be a risk that expensive gas-fired power plants would have to be used to a greater extent to meet electricity demand due to the loss of some of the power plants.

103

4. The measure is proportionate in the strict sense.

104

a) aa) For a measure to meet the constitutional criterion of appropriateness, and thus proportionality in the strict sense, the purpose pursued by the measure, and the likelihood of it achieving that purpose, may not be disproportionate to the severity of the interference (cf. BVerfGE 155, 119 <178 para. 128> – Subscriber data II; 161, 299 <384 para. 203>; 167, 166, 1 <71 para. 155>; 167, 163 <224 para. 146>; established case-law). A legal provision is appropriate, and thus proportionate in the strict sense, when, in an overall balancing of the severity of the interference on the one hand, and the weight and urgency of the reasons invoked to justify it on the other hand, the limits of what is reasonable are observed (cf. BVerfGE 163, 107 <152 f. para. 119>; 167, 163 <224 para. 146>; established case-law).

105

bb) If the legislator provides for redistribution measures to pursue tasks of the common good that lie outside the private law relationships of the parties, such redistribution cannot be expected of private entities, at least in cases where they have no specific connection to the task at issue (cf. BVerfGE 77, 308 <337>; 81, 156 <198>; 85, 226 <236>; see also BVerfGE 114, 196 <246, 249 f.> […]).

106

b) In light of the foregoing, the burdens on power plant operators resulting from the redistribution of surplus revenues are not disproportionate to the aim of reconciling, on the basis of investment expectations, the interests of electricity producers who are particularly favoured by a crisis of extraordinary dimensions on the one hand, and the interests of electricity consumers, who are particularly burdened by the same crisis, on the other.

107

aa) The redistribution of surplus revenues need not satisfy the stricter requirements applicable to redistribution schemes among private entities for purposes of the common good. This is because the measure aims to correct the imbalance between electricity producers who were exceptionally favoured by the massive increase in electricity prices and electricity consumers exceptionally burdened by the same increase by redistributing the revenues in excess of investment expectations generated through the sale of electricity (see para. 91 f. above). The two interests to be reconciled both stem from the specific price formation mechanism in the energy market, which, given the extraordinary crisis, was unable to achieve the reconciliation of interests that is usually associated with price formation in the market. The redistribution of revenues is thus a necessary element of a reconciliation of interests between private participants in the electricity market that could not be achieved with the use of budgetary resources. Contrary to the complainants’ submissions, the measure does not simply concern general relief for electricity consumers that serves social and economic policy interests, in which case the surplus revenues could easily be replaced by budgetary resources.

108

bb) Nor do the admissibly challenged provisions (see para. 27 above) amount to inappropriate impairments of the complainants’ occupational freedom in any other respect.

109

(1) The obligation to redistribute surplus revenues results in considerable interference with the occupational freedom of the affected electricity producers (see (a) below). In addition, the administrative burdens resulting from the obligations to self-administer the redistribution under § 29 of the Act give rise to impairments of occupational freedom of some weight (see (b) below).

110

(a) The redistribution of surplus revenues results in considerable interference.

111

Above all, this follows from the fact that the revenues targeted by the measure are the result of free and competitive price formation (cf. BVerfGE 114, 196 <242 f.>). According to the written statements submitted and the statements made at the oral hearing, the uniform price determined on the basis of the highest marginal costs of the last power plant needed to meet electricity demand is the price that reconciles supply and demand in as cost-effective a manner as possible (equilibrium price). This function of uniform pricing remained intact during the distortions in the energy market triggered by the Ukraine war. The redistributed surplus revenues are therefore based on electricity prices which were the lowest possible prices to meet electricity demand in view of the crisis.

112

The severity of interference is further increased by the amounts redistributed, which are in part considerable, and by the fact that the massive increase in electricity prices cannot be attributed to affected electricity producers. They were neither responsible for the shortages of natural gas that arose in the context of the Ukraine war, nor did their power plants, which have low marginal costs, set the price.

113

On the other hand, the brief period of seven months in which the redistribution obligation applied (§ 13(1) no. 1 of the Act) and the fact that a large portion of the exceptionally high revenues occasioned by the war in Ukraine are not affected, because electricity prices peaked in August 2022 while the first redistribution period only started on 1 December 2022 (§ 14(1) of the Act), have a clear mitigating effect.

114

(b) The administrative burdens imposed on affected electricity producers through the obligation to self-administer the surplus revenues under § 29 of the Act, such as the obligation to communicate ‘grid feed-in of the power plant in 15-minute intervals in the accounting period’ (§ 29(1) no. 2 of the Act) or to communicate the ‘calculation of surplus revenues and the amount to be distributed, including all assumptions and documents on which the calculation is based’ (§ 29(1) no. 4 of the Act) do not just constitute a relevant additional complication of the professional activity, but also result in financial burdens of some weight. In the legislative process, the financial burden on electricity producers was estimated to amount to approximately EUR 50 million (cf. BTDrucks 20/4915, p. 3).

115

(2) The purpose of the measure – countering the imbalance between a part of electricity producers who were able to record unexpected revenues due to the crisis and electricity consumers burdened by high electricity prices resulting from the crisis – is also of considerable importance.

116

This follows from the extraordinary scale of the imbalances and from the fact, as emphasised by the expert third parties, that the temporary price peaks resulting from the crisis cannot reliably incentivise private investment. According to information provided at the oral hearing and the statements submitted, electricity prices peaked in August 2022, reaching a level of ten times the average price for 2021 and five times the price in the same month year on year, as a result of the Ukraine war and the shortages of natural gas associated with it. For operators of renewable-energy power plants in particular, whose marginal costs do not depend on the price of fossil fuels, this meant exceptionally high revenues, which far exceeded the revenues necessary for economic plant operation with sufficient returns. Electricity consumers, on the other hand, faced an unexpected ‘cost shock’, which was seen as the cause of an unusual emergency (see paras. 90 f. above). The decisive factor for this assessment is that electricity is not an expendable commodity. In fact, securing an affordable electricity supply is key for meeting existential needs and for maintaining Germany’s economic position. However, it reduces the extent of the relief provided that the redistribution amounts used to reimburse administrative costs are in part unavailable for countering the imbalance between the exceptionally high revenues of some electricity producers and the exceptional burdens on consumers.

117

(3) Based thereon, the impairment of the freedom of enterprise of electricity producers affected by the redistribution obligation is not disproportionate to the significance and urgency of the public interest in the redistribution of the exceptionally high revenues generated in the electricity market to benefit private and commercial electricity consumers, who were exceptionally burdened by high electricity prices.

118

(a) Nevertheless, a redistribution between producers and consumers in a market with free competitive price formation processes that balance supply and demand requires justification in view of the freedom of enterprise protected by Art. 12(1) of the Basic Law. The mere fact that in a competitive price formation process, shortages can lead to exceptionally high profits or revenues cannot justify their redistribution to consumers. At least in light of the specifics of the present exceptional situation, however, the redistribution measure at issue is appropriate. Electricity is an indispensable commodity used to cover essential needs. For electricity consumers, the high electricity prices resulted in exceptional and unavoidable burdens of considerable weight (see (aa) below). By contrast, the revenues of the power plant operators affected by the measure vastly exceeded typical investment expectations (see (bb) below), without these revenues providing incentives to invest that would reduce prices in the long run (see (cc) below).

119

(aa) As set out above, the exceptionally high revenues recorded by some of the electricity producers as a result of the crisis must be seen in light of the exceptionally strained situation of private and commercial electricity consumers, because their affordable supply of electricity – a vital commodity for private life and business– was jeopardised by the massive increase in electricity prices (see para. 90 above).

120

(bb) As a result of the massive increase in uniform prices caused by the natural gas shortages occasioned by the Ukraine war, operators of power plants with low marginal costs, and renewable-energy power plants in particular, recorded revenues that far exceeded the prices that they could expect and that were needed for economic plant operation with sufficient returns (cf. EU emergency regulation, recital no. 24); this was confirmed by the expert third parties in the oral hearing. According to the legislator’s tenable assessment, which was not challenged in a substantiated manner by the complainants, the redistribution is limited to revenues that exceed legitimate investment expectations prior to the Ukraine war. The legislator intended the caps above which revenues are redistributed, set out in § 16(1) of the Act, to reflect the typical revenues of different types of electricity production that correspond to operators’ investment expectations prior to the Ukraine war and guarantee economic plant operation (cf. BTDrucks 20/4685, p. 95). For instance, the cap on revenues for renewable-energy power plants based on the ‘value to be applied’ (§ 16(1) nos. 1, 2(a) of the Act), along with safety margins, serves to maintain the support guaranteed for 20 years under the Renewable Energies Act, which has formed the basis for investment decisions (cf. BTDrucks 20/4685, pp. 69, 95). Insofar as operators of renewable-energy power plants opt for consideration of their actual revenues generated on the basis of marketing agreements, a cap of at least 8 cents per kilowatt hour applies pursuant to § 18(1) no. 2 of the Act. According to the report of the Bundestag Committee on Climate Action and Energy, this rule serves to account for cases in which very low prices were bid in the tender procedure, which are only economical with additional revenues from a marketing agreement; no power plant operator could have expected revenues higher than 8 cents per kilowatt hour before the start of the crisis (cf. BTDrucks 20/4915, pp. 49 f., 150).

121

(cc) Particularly high profits or revenues in excess of investment expectations that are generated through the sale of scarce goods can serve an important function in the market economy if they provide incentives for increasing investment and thereby lead to greater supply that overcomes the original scarcity and reduces prices ([…]). There can be a considerable public interest in maintaining such investment signals, which must be balanced against the public interest in a redistribution of revenues that exceed investment expectations for the benefit of consumers burdened by exceptionally high prices for a vital commodity.

122

According to the unanimous assessment of the expert third parties heard at the oral hearing and the written statements, the surplus revenues that were subject to the redistribution obligation in this case would not have been capable of providing such investment signals. The increase in electricity prices resulting from the crisis and the associated surplus revenues occurred suddenly. It could not be assumed that electricity prices would remain at this exceptional level for a long time. It was not possible to quickly react to the massive increases in the price of natural gas by building new power plants with low marginal costs due to the time it takes to complete such projects. Given the uncertainty of future price development, there was no incentive for investors to react to surplus revenues by planning to build new power plants with low marginal costs that had not been planned before ([…]).

123

(b) The impairments are also not disproportionate on the grounds that the participatory obligations of the businesses affected by the redistribution of surplus revenues and the passing-through via system operators, transmissions system operators and electricity companies to consumers resulted in high administrative expenses.

124

(aa) The freedom of enterprise protected by Art. 12(1) of the Basic Law may not be inappropriately affected by obligations to participate in the performance of public tasks that are directly occupation-related and involve great administrative burdens (cf. para. 67). There is also a public interest in avoiding such inappropriate impairments.

125

(bb) In the present case, the severity of interference resulting from the redistribution of surplus revenues is increased by the administrative burdens arising from the obligation to self-administer the surplus revenues for affected electricity producers, which is directly occupation-related. This obligation led to additional costs of approximately EUR 50 million for these electricity producers (see para. 114 above). These and other administrative burdens that are apparent from the [legislative] documents are considerable in light of the actual surplus revenues that were redistributed – approximately EUR 750 million according to the information provided by the Federal Government at the oral hearing. However, such a retrospective assessment is not relevant here. This is because the legislator had to provide an effective remedy at the time when the law was adopted, which was characterised by uncertainties; it remained within its margin of prognosis and assessment in this regard (cf. BVerfGE 68, 193 <220>). Therefore, and due to the short duration of the measure (cf. BVerfGE 159, 355 <439 f. para. 197 ff.>), the legislator was entitled to assume that significantly greater amounts of surplus revenues would be distributed for the benefit of consumers.