Provisional text
JUDGMENT OF THE COURT (Third Chamber)
17 September 2026 ( * )
[para_4]( Reference for a preliminary ruling – Internal market for electricity – Directive (EU) 2019/944 – Point 41 of Article 2 – Concepts of ‘direct line’, ‘isolated generation site’ and ‘isolated customer’ – Article 7 – Conditions for authorising a ‘direct line’ – Article 9 – Public service obligations imposed on electricity undertakings – Connection of a new customer to an electricity line linked to a producer – Maintenance of a back-up connection to the operator’s distribution system )
[para_5]In Joined Cases C‑722/24 and C‑756/24,
[para_6]TWO REQUESTS for a preliminary ruling under Article 267 TFEU from the Augstākā tiesa (Senāts) (Supreme Court (Senate), Latvia), made by decisions of 23 October 2024 and 31 October 2024, received at the Court on 23 October 2024 and 31 October 2024 respectively, in the proceedings
SIA Elektro bizness
[para_8]v
[para_9]Sabiedrisko pakalpojumu regulēšanas komisija (C‑722/24) ,
[para_10]and
Sabiedrisko pakalpojumu regulēšanas komisija
[para_12]v
[para_13]SIA Jelgavas autobusu parks (C‑756/24) ,
[para_14]THE COURT (Third Chamber),
[para_15]composed of C. Lycourgos, President of the Chamber, O. Spineanu-Matei, S. Rodin, N. Piçarra (Rapporteur) and N. Fenger, Judges,
[para_16]Advocate General: J. Kokott,
[para_17]Registrar: A. Calot Escobar,
[para_18]having regard to the written procedure,
[para_19]after considering the observations submitted on behalf of:
[para_20]– the Sabiedrisko pakalpojumu regulēšanas komisija, by J. Miķelsons, izpilddirektors, and A. Ozola, padomes priekšsēdētāja,
[para_21]– the Italian Government, by S. Fiorentino, acting as Agent, and by L. Vignato, avvocato dello Stato,
[para_22]– the Austrian Government, by A. Posch, J. Schmoll and P. Thalmann, acting as Agents,
[para_23]– the European Commission, by O. Beynet, L. Ozola and T. Scharf, acting as Agents,
[para_24]after hearing the Opinion of the Advocate General at the sitting on 12 February 2026,
[para_25]gives the following
Judgment
[para_27]1 These requests for a preliminary ruling concern the interpretation of point 41 of Article 2 and Article 7 of Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market for electricity and amending Directive 2012/27/EU (OJ 2019 L 158, p. 125).
[para_28]2 The requests have been made in proceedings between, in Case C‑722/24, SIA Elektro bizness, a company incorporated under Latvian law operating in the electricity generation and supply sector and Sabiedrisko pakalpojumu regulēšanas komisija (Public Utilities Regulatory Commission, Latvia; ‘the Regulator’), concerning authorisation to construct an electricity line to link an existing line, owned by Elektro bizness, to a municipal authority of Ogre (Latvia), and in Case C‑756/24, between the Regulator, namely the Sabiedrisko pakalpojumu regulēšanas komisija, and SIA Jelgavas autobusu parks, a company incorporated under Latvian law operating in the municipal passenger transport sector (‘Autobusu parks’), concerning authorisation for the construction of an electricity line to link SIA Gren Latvija, an electricity producer, to Autobusu parks, in order to supply electricity to the latter without using the operator’s distribution system.
Legal context
Directive 2019/944
3 Recitals 2, 6, 7, 10 and 11 of Directive 2019/944 state:
[para_32]‘(2) The internal market for electricity, which has been progressively implemented throughout the [European] Union since 1999, aims, by organising competitive electricity markets across country borders, to deliver real choice for all Union final customers, be they citizens or businesses, new business opportunities, competitive prices, efficient investment signals and higher standards of service, and to contribute to security of supply and sustainability.
[para_33]…
[para_34](6) The [European] Commission Communication of 15 July 2015, entitled “Launching the public consultation process on a new energy market design”, highlighted that the move away from generation in large central generating installations towards decentralised production of electricity from renewable sources and towards decarbonised markets requires adapting the current rules of electricity trading and changing the existing market roles. The Communication underlined the need to organise electricity markets in a more flexible manner and to fully integrate all market players – including producers of renewable energy, new energy service providers, energy storage and flexible demand …
[para_35](7) With a view to creating an internal market for electricity, Member States should foster the integration of their national markets and cooperation among system operators at Union and regional level, and incorporate isolated systems that form electricity islands that persist in the Union.
[para_36]…
[para_37](10) Consumers have an essential role to play in achieving the flexibility necessary to adapt the electricity system to variable and distributed renewable electricity generation …
[para_38](11) The freedoms which the Treaty on the Functioning of the European Union (TFEU) guarantees the citizens of the Union – inter alia, the free movement of goods, the freedom of establishment and the freedom to provide services – are achievable only in a fully open market, which enables all consumers freely to choose their suppliers and all suppliers freely to deliver to their customers.’
4 Article 1 of that directive, entitled ‘Subject matter’, provides:
[para_40]‘This Directive establishes common rules for the generation, transmission, distribution, energy storage and supply of electricity, together with consumer protection provisions, with a view to creating truly integrated competitive, consumer-centred, flexible, fair and transparent electricity markets in the Union.
[para_41]Using the advantages of an integrated market, this Directive aims to ensure affordable, transparent energy prices and costs for consumers, a high degree of security of supply and a smooth transition towards a sustainable low-carbon energy system. It lays down key rules relating to the organisation and functioning of the Union electricity sector, in particular rules on consumer empowerment and protection, on open access to the integrated market, on third-party access to transmission and distribution infrastructure, unbundling requirements, and rules on the independence of regulatory authorities in the Member States.
[para_42]This Directive also sets out modes for Member States, regulatory authorities and transmission system operators to cooperate towards the creation of a fully interconnected internal market for electricity that increases the integration of electricity from renewable sources, free competition and security of supply.’
5 Under Article 2 of that directive, entitled ‘Definitions’:
[para_44]‘For the purposes of this Directive, the following definitions apply:
[para_45]…
[para_46](29) “distribution system operator” means a natural or legal person who is responsible for operating, ensuring the maintenance of and, if necessary, developing the distribution system in a given area and, where applicable, its interconnections with other systems, and for ensuring the long-term ability of the system to meet reasonable demands for the distribution of electricity;
[para_47]…
(38) “producer” means a natural or legal person who generates electricity;
[para_49]…
[para_50](41) “direct line” means either an electricity line linking an isolated generation site with an isolated customer or an electricity line linking a producer and an electricity supply undertaking to supply directly their own premises, subsidiaries and customers;
[para_51]…
[para_52](57) “electricity undertaking” means a natural or legal person who carries out at least one of the following functions: generation, transmission, distribution, aggregation, demand response, energy storage, supply or purchase of electricity, and who is responsible for the commercial, technical or maintenance tasks related to those functions, but does not include final customers;
[para_53]…’
[para_54]6 Article 4 of that directive, in the version applicable to the disputes in the main proceedings, entitled ‘Free choice of supplier’, stated:
[para_55]‘Member States shall ensure that all customers are free to purchase electricity from the supplier of their choice and shall ensure that all customers are free to have more than one electricity supply contract at the same time, provided that the required connection and metering points are established.’
[para_56]7 Article 6(1) and (2) of Directive 2019/944, entitled ‘Third-party access’, states:
[para_57]‘1. Member States shall ensure the implementation of a system of third-party access to the transmission and distribution systems based on published tariffs, applicable to all customers and applied objectively and without discrimination between system users. Member States shall ensure that those tariffs, or the methodologies underlying their calculation, are approved in accordance with Article 59 prior to their entry into force and that those tariffs, and the methodologies – where only methodologies are approved – are published prior to their entry into force.
[para_58]2. The transmission or distribution system operator may refuse access where it lacks the necessary capacity. Duly substantiated reasons shall be given for such refusal, in particular having regard to Article 9, and based on objective and technically and economically justified criteria. Member States or, where Member States have so provided, the regulatory authorities of those Member States, shall ensure that those criteria are consistently applied and that the system user who has been refused access can make use of a dispute settlement procedure. The regulatory authorities shall also ensure, where appropriate and when refusal of access takes place, that the transmission system operator or distribution system operator provides relevant information on measures that would be necessary to reinforce the network. Such information shall be provided in all cases when access for recharging points has been denied. The party requesting such information may be charged a reasonable fee reflecting the cost of providing such information.’
8 Under Article 7 of that directive, entitled ‘Direct lines’:
[para_60]‘1. Member States shall take the measures necessary to enable:
[para_61](a) all producers and electricity supply undertakings established within their territory to supply their own premises, subsidiaries and customers through a direct line, without being subject to disproportionate administrative procedures or costs;
[para_62](b) all customers within their territory, individually or jointly, to be supplied through a direct line by producers and electricity supply undertakings.
[para_63]2. Member States shall lay down the criteria for the grant of authorisations for the construction of direct lines in their territory. Those criteria shall be objective and non-discriminatory.
[para_64]3. The possibility of supplying electricity through a direct line as referred to in paragraph 1 of this Article shall not affect the possibility of contracting electricity in accordance with Article 6.
[para_65]4. Member States may issue authorisations to construct a direct line, subject either to the refusal of system access on the basis, as appropriate, of Article 6 or to the opening of a dispute settlement procedure under Article 60.
[para_66]5. Member States may refuse to authorise a direct line if the granting of such an authorisation would obstruct the application of the provisions on public service obligations in Article 9. Duly substantiated reasons shall be given for such a refusal.’
9 Under Article 9 of that directive, entitled ‘Public service obligations’:
[para_68]‘1. Without prejudice to paragraph 2, Member States shall ensure, on the basis of their institutional organisation and with due regard to the principle of subsidiarity, that electricity undertakings operate in accordance with the principles of this Directive with a view to achieving a competitive, secure and environmentally sustainable market for electricity, and shall not discriminate between those undertakings as regards either rights or obligations.
[para_69]2. Having full regard to the relevant provisions of the TFEU, in particular Article 106 thereof, Member States may impose on undertakings operating in the electricity sector, in the general economic interest, public service obligations which may relate to security, including the security of supply, regularity, quality and price of supplies and environmental protection, including energy efficiency, energy from renewable sources and climate protection. Such obligations shall be clearly defined, transparent, non-discriminatory and verifiable, and shall guarantee equality of access for electricity undertakings of the Union to national consumers. Public service obligations which concern the price setting for the supply of electricity shall comply with the requirements set out in Article 5 of this Directive.
[para_70]…
[para_71]5. Member States may decide not to apply Articles 6, 7 and 8 of this Directive in so far as their application would obstruct, in law or in fact, the performance of the obligations imposed on electricity undertakings in the general economic interest and in so far as the development of trade would not be affected to such an extent as would be contrary to the interests of the Union. The interests of the Union include, inter alia, competition with regard to customers in accordance with Article 106 TFEU and this Directive.’
[para_72]10 Article 31 of that directive, entitled ‘Tasks of distribution system operators’, provides, in paragraph 1 thereof:
[para_73]‘The distribution system operator shall be responsible for ensuring the long-term ability of the system to meet reasonable demands for the distribution of electricity, for operating, maintaining and developing under economic conditions a secure, reliable and efficient electricity distribution system in its area with due regard for the environment and energy efficiency.’
11 Article 59(7)(a) of Directive 2019/944 provides:
[para_75]‘The regulatory authorities, except where [the European Union Agency for the Cooperation of Energy Regulators (ACER)] is competent to fix and approve the terms and conditions or methodologies for the implementation of network codes and guidelines under Chapter VII of Regulation (EU) 2019/943 [of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity (OJ 2019 L 158, p. 54)] pursuant to Article 5(2) of Regulation (EU) 2019/942 [of the European Parliament and of the Council of 5 June 2019 establishing a European Union Agency for the Cooperation of Energy Regulators (OJ 2019 L 158, p. 22)] because of their coordinated nature, shall be responsible for fixing or approving sufficiently in advance of their entry into force at least the national methodologies used to calculate or establish the terms and conditions for:
[para_76](a) connection and access to national networks, including transmission and distribution tariffs or their methodologies, those tariffs or methodologies shall allow the necessary investments in the networks to be carried out in a manner allowing those investments to ensure the viability of the networks’.
Latvian law
[para_78]12 Under point 29 of Article 1 of the Elektroenerģijas tirgus likums (Law on the electricity market) of 5 May 2005 ( Latvijas Vēstnesis , 2005, No 82), in the version applicable to the disputes in the main proceedings (‘the ETL’), a ‘direct line’ is ‘an electricity line linking an isolated electricity generation site with an isolated customer, or an electricity line linking an isolated electricity producer and a trader which supplies directly to premises in its ownership or possession, to affiliated undertakings and to its own customers’.
[para_79]13 Article 25 of the ETL, entitled ‘Installation of electricity lines’, provides, in paragraphs 2 and 3 thereof:
[para_80]‘2. The distribution system operator shall be entitled to install a distribution line in the area covered by its licence.
[para_81]3. A person other than the distribution system operator shall be entitled to install a distribution line in the area covered by the distribution system operator’s licence in the event that the line to be constructed is:
(1) a direct line;
[para_83]…’
14 Article 26 of the ETL, entitled ‘Direct line’, stated:
[para_85]‘1. The producer shall be entitled to supply electricity to customers or to its own facilities by means of a direct line connection.
[para_86]2. The authorisation for the installation of the direct line connection shall be issued by the regulator. The regulator shall establish objective and uniform criteria serving as the basis for issuance of authorisations for the installation of direct line connections.’
The disputes in the main proceedings and the questions referred for a preliminary ruling
Case C ‑ 722 /24
[para_89]15 Elektro bizness is a company incorporated under Latvian law that generates electricity from a cogeneration plant and supplies that electricity by means of a 20 000-volt underground cable with a length of 7.6 kilometres, not only to the distribution system operated by AS Sadales tīkls, within the meaning of point 29 of Article 2 of Directive 2019/944, but also to six industrial customers without the intermediation of that system. It owns both that cogeneration plant and that electricity line.
[para_90]16 In 2021, Elektro bizness applied to the Regulator for authorisation to construct a new electricity line, approximately 400 metres long, in order to link the existing line to the premises of a new customer, which would thus be supplied by the electricity generated by its cogeneration plant without the intermediation of that system. Once that line has been constructed, that new customer would disconnect from the operator’s distribution system, become an ‘isolated customer’ and purchase the electricity generated and supplied by Elektro bizness directly.
[para_91]17 By decision of 10 June 2021, the Regulator refused that request, on the ground that the planned electricity line was not a ‘direct line’ within the meaning of point 29 of Article 1 of the ETL, since it would link the customer to the existing electricity line, and not to an electricity generation site, in this case the cogeneration plant belonging to Elektro bizness.
[para_92]18 Since the action brought against that decision was dismissed by a judgment of the Administratīvā apgabaltiesa (Regional Administrative Court, Latvia), Elektro bizness brought an appeal against that judgment before the Augstākā tiesa (Senāts) (Supreme Court (Senate), Latvia), which is the referring court.
[para_93]19 That court is uncertain whether the planned electricity line is a ‘direct line’ within the meaning of point 41 of Article 2 of Directive 2019/944, since it would enable Elektro bizness to supply electricity to the customer without the intermediation of the operator’s distribution system, or whether, as the Regulator maintains, only a line which ensures the direct transmission of electricity from the generation site to the customer can be classified as such.
[para_94]20 That court finds that, since Directive 2019/944 makes no reference to national law, the concept of ‘direct line’ should be regarded as an autonomous concept of EU law. According to that court, it is apparent from a combined reading of recital 11, Article 1 and Article 7(1) thereof that Directive 2019/944 seeks, inter alia, to facilitate the ability of electricity producers to supply electricity to their customers without using the operator’s distribution system, if they so wish.
[para_95]21 That court finds, however, that the concept of an ‘isolated generation site’, referred to in point 41 of Article 2 of that directive, may refer not only to a set of installations for generating electricity situated at a single address, but also to the electricity lines belonging to the producer, by which the electricity thus generated is supplied, even if those lines are situated outside the location of the generation site concerned. The referring court is inclined to consider, in the light of the wording of point 41 of Article 2, that a direct line is an electricity line directly linking the generation site to the customer.
[para_96]22 In those circumstances, the Augstākā tiesa (Senāts) (Supreme Court (Senate)) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:
[para_97]‘For the purposes of point 41 of Article 2 of Directive 2019/944:
[para_98](1) Must the concept of “isolated generation site” used in that provision be construed as also including an electricity line owned by a producer, connected to a generating station, intended to transmit generated electricity and extending beyond the boundaries of the location (postal address) of the generating station?
[para_99](2) Does the definition of “direct line” contained in that provision include an electricity line connecting a customer to an electricity generation site (cogeneration plant) through the deployment of a connection to a pre-constructed electricity line owned by a producer and intended to transmit electricity, if this has the result of ensuring the supply of electricity from the producer to the customer without the intermediation of the distribution network operator’s network? Would it have any bearing on the answer to this question if the pre-constructed electricity line owned by the producer and intended to transmit electricity, to which the proposed line would be connected in order to reach the new customer, were already being used to supply electricity to other customers?’
Case C ‑ 756 /24
[para_101]23 Autobusu parks is a company incorporated under Latvian law operating in the municipal passenger transport sector. In March 2021, it applied to the Regulator for authorisation to construct an electricity line with a length of 6.5 kilometres linking a hydrogen generation plant owned by it – intended to supply hydrogen-powered city buses – to a biomass cogeneration plant belonging to Gren Latvija.
[para_102]24 According to Autobusu parks, linking its hydrogen generation plant to Gren Latvija by means of a direct line is necessary in order, inter alia, to reduce the costs associated with its increased electricity supply needs. Autobusu parks stated that, once the planned line has been constructed, it will purchase electricity directly from Gren Latvija and will not use the operator’s distribution system, with which it would nevertheless like to maintain a back-up connection.
[para_103]25 By decision of 4 November 2021, the Regulator refused that request, on the ground that authorisation was not sought for the construction of a ‘direct line’, since Autobusu parks could not be regarded as an ‘isolated customer’ since it was linked to the operator’s distribution system. According to the Regulator, in the present case there was no technical or economic justification for constructing the planned line, since that distribution system was capable of meeting Autobusu parks additional electricity supply needs at a reasonable cost.
[para_104]26 Autobusu parks brought an action against that decision before the Administratīvā apgabaltiesa (Regional Administrative Court), which granted its request and ordered the Regulator to authorise the construction of a direct line linking Autobusu parks to the electricity producer Gren Latvija, taking due account of the fact that, following the construction of that line, Autobusu parks would no longer use the operator’s distribution system to obtain its electricity supply.
[para_105]27 That court also found that direct lines are part of competitive electricity markets and that the position of the Regulator, according to which a direct line can be constructed only in order to ensure the supply of electricity to customers who are unable to obtain a supply from the operator’s distribution system, cannot be inferred from the applicable legislation.
[para_106]28 The Regulator brought an appeal against that judgment before the Augstākā tiesa (Senāts) (Supreme Court (Senate)), which is the referring court, claiming that the authorisation to construct direct lines without any technical and economic justification would undermine the interests and needs of all customers. Indeed, customers who, as a result of using a direct line to obtain their electricity supply, would cease to be linked to the operator’s distribution system, would no longer contribute financially to the maintenance and development of that system, thereby leading to an increase in the cost of the services provided.
[para_107]29 According to the referring court, it follows from a combined reading of Article 7(1) and recital 11 of Directive 2019/944, in the light of Article 1 of thereof, that the objective of that directive is to facilitate the ability for producers to supply electricity to their customers through direct lines where they so wish. However, in the light of Article 7(3) and (5) and Article 4 of that directive, that court asks whether the supply of electricity through a direct line must be authorised only in exceptional cases, or whether it must be regarded as an alternative method of supplying electricity.
[para_108]30 In addition, that court has doubts as to the concept of ‘isolated customer’, within the meaning of point 41 of Article 2 of Directive 2019/944. It wishes to ascertain, first, whether the fact that the customer wishes to maintain a back-up connection to the operator’s distribution system constitutes an obstacle to authorisation for the construction of a direct line and, second, whether the fact that that system is capable of providing the customer with the necessary electricity supply capacity is relevant for the purposes of interpreting that concept.
[para_109]31 In those circumstances, the Augstākā tiesa (Senāts) (Supreme Court (Senate)) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:
[para_110]‘(1) Must Article 7 of Directive 2019/944 be interpreted as meaning that a “direct line” constitutes an alternative form of electricity supply if a customer so wishes or, on the contrary, as meaning that a direct line is acceptable only in exceptional cases?
[para_111](2) Must point 41 of Article 2 of Directive 2019/944 be interpreted as meaning that a “direct line” can be understood to mean an electricity line that is intended to be used to connect an electricity producer connected to the distribution system with an electricity customer connected to the distribution system, if that customer is to maintain that connection to the distribution system as a back-up connection after the planned electricity line has been constructed, but is to be disconnected from the distribution system while electricity is being supplied to it from the electricity producer by means of that direct line?
[para_112](3) Must the concept of “isolated customer” used in point 41 of Article 2 of Directive 2019/944 be understood as meaning only a customer that is not connected to the distribution system and for which the distribution system operator is not in a position to ensure the necessary capacity through the construction of a connection at reasonable cost?’
[para_113]32 By decision of 10 December 2024, the President of the Court joined Cases C‑722/24 and C‑756/24 for the purposes of a joint written and oral procedure and a joint final judgment.
Consideration of the questions referred
[para_115]33 By its questions, which it is appropriate to examine together, the referring court asks, in essence, whether point 41 of Article 2 of Directive 2019/944, read in conjunction with Article 7 thereof, must be interpreted as meaning that the concept of ‘direct line’ contained therein covers an electricity line which is intended to link
[para_116]– a new customer to an existing electricity line, by which the owner of that line supplies other customers, without the intermediation of the operator’s distribution system, even if that line extends beyond the location of the generation site concerned;
[para_117]– an electricity producer to a customer who wishes to maintain a back-up connection to the operator’s distribution system, the latter being able to provide that customer with the necessary electricity supply without the installation of that new line.
[para_118]34 As a preliminary point, it should be noted that point 41 of Article 2 of Directive 2019/944 contains two definitions of the concept of ‘direct line’. According to the first definition, a direct line is ‘an electricity line linking an isolated generation site with an isolated customer’. According to the second definition, a direct line is ‘an electricity line linking a producer and an electricity supply undertaking to supply directly their own premises, subsidiaries and customers’, with the term ‘isolated’ being absent from the wording of that second definition.
[para_119]35 According to settled case-law, when interpreting a provision of EU law, account must be taken not only of its wording but also of its context and the objectives pursued by the rules of which it forms part (see judgments of 17 November 1983, Merck , 292/82, EU:C:1983:335, paragraph 12, and of 15 January 2026, AVR-Afvalverwerking , C‑692/23, EU:C:2026:4, paragraph 37).
[para_120]36 As regards the wording of the first definition of ‘direct line’ in point 41 of Article 2 of Directive 2019/944, as the Advocate General observed, in essence, in point 91 of her Opinion, although the language versions of that provision are admittedly not identical, most of them express the same idea of isolation or separation of both the generation site and the customer from the operator’s distribution system. That is the case, in particular, for the Latvian- (‘ izolēts ’), Danish- (‘ isoleret ’), Greek- (‘ mεμονωμένη/μεμονωμένο ’), English- (‘isolated’), French- (‘ isolé ’), Croatian- (‘ izoliran ’), Italian- (‘ isolato ’), Portuguese- (‘ isolado ’) and Romanian- (‘ izolat ’) language versions. That is also the case for the German- (‘ einzelnen ’) and Swedish- (‘ enskild ’) language versions which refer to the idea of something that is ‘by itself’.
[para_121]37 The term ‘isolated’, within the meaning of point 41 of Article 2, thus refers to an electricity generation site or electricity producer and to an electricity consumer which are not linked to the operator’s distribution system and which, therefore, can only be linked to one another by means of a ‘direct line’ within the meaning of the first definition referred to in that provision.
[para_122]38 That idea of separation, expressed by the term ‘isolated’ used in Directive 2019/944, appears to be confirmed by the seventh recital thereof, according to which, with a view to creating an internal market for electricity, Member States must foster the integration of their national markets and cooperation among system operators at EU and regional level, and ‘incorporate isolated systems that form electricity islands that persist in the Union’.
[para_123]39 As regards the second definition of the concept of ‘direct line’ in point 41 of Article 2 of Directive 2019/944 and recalled in paragraph 34 of the present judgment, it should be noted, as did the Austrian Government in its written observations, that the word ‘and’ in the expression ‘linking a producer and an electricity supply undertaking’ must be understood as meaning ‘or’. That interpretation makes it possible to cover all cases in which a ‘producer’ or an ‘electricity supply undertaking’ are linked by an electricity line to their premises, subsidiaries and customers to which they supply electricity.
[para_124]40 That interpretation is supported, in the first place, by the contextual analysis of that second definition of the concept of ‘direct line’.
[para_125]41 First, both the ‘producer’ and ‘the electricity supply undertaking’, within the meaning of the second definition of the concept of ‘direct line’, fall within the concept, defined broadly, of ‘electricity undertaking’ within the meaning of point 57 of Article 2 of that directive, which encompasses ‘a natural or legal person who carries out at least one of the following functions: generation, transmission, distribution, aggregation, demand response, energy storage, supply or purchase of electricity, and who is responsible for the commercial, technical or maintenance tasks related to those functions, but does not include final customers’.
[para_126]42 Second, Article 7 of that directive, entitled ‘Direct lines’, requires Member States, in paragraph 1(a) thereof, to take the necessary measures to enable all producers and electricity supply undertakings established within their territory to supply their own premises, subsidiaries and customers through a direct line, without being subject to disproportionate administrative procedures or costs. It is thus apparent from that provision, as the Advocate General observed, in essence, in point 37 of her Opinion, that both producers and electricity supply undertakings must be able to supply their own premises, subsidiaries and customers by means of a direct line.
[para_127]43 That interpretation is supported, in the second place, by the objectives pursued by Directive 2019/944, as set out in Article 1 thereof, read in the light of recitals 2, 6 and 11 thereof, namely, in particular, the creation of truly integrated competitive, consumer-centred, flexible, fair and transparent electricity markets in the European Union, aimed at ensuring affordable and transparent energy prices and costs for consumers, a high degree of security of supply and a smooth transition towards a sustainable low-carbon energy system.
[para_128]44 First, the construction of ‘direct lines’, within the meaning of point 41 of Article 2 of that directive, increases consumers’ freedom of choice by offering them opportunities to obtain electricity from the electricity undertakings of their choice, without being dependent on the operator’s distribution system. Second, those direct lines, which strengthen consumer autonomy and their role as decentralised players in the electricity market, may contribute, as the dispute in the main proceedings in Case C‑756/24 demonstrates, to the development of electricity generation from renewable sources, which are a means of ensuring energy transition and sustainable development, in accordance with the objectives of that directive.
[para_129]45 It follows from the foregoing that, where a customer is supplied with electricity by means of a line linking it directly to the producer or electricity supply undertaking, without passing through the operator’s distribution system in order to do so, that line must be classified as ‘direct’, within the meaning of the second definition set out in point 41 of Article 2, even if that customer, producer or undertaking is not ‘isolated’, that is to say, disconnected from that system.
[para_130]46 It is for the referring court, in the light of all the information available to it, to determine whether the electricity lines for which the Regulator refused to grant authorisation for construction fall within either of the two definitions set out in point 41 of Article 2 of Directive 2019/944 and, in particular, whether those lines would enable the new customer of Elektro bizness and Autobusu parks to be supplied with electricity by Elektro bizness and Gren Latvija, respectively, without passing through the operator’s distribution system, within the meaning of point 29 of Article 2.
[para_131]47 The Court may nevertheless provide the referring court with all the guidance as to the interpretation of EU law which may be of assistance in adjudicating on the cases before it (judgment of 4 March 2021, Frenetikexito , C‑581/19, EU:C:2021:167, paragraph 36 and the case-law cited).
[para_132]48 It is apparent from the request for a preliminary ruling in Case C‑722/24 that the electricity generated by the cogeneration plant belonging to Elektro bizness is transported by means of a line, also belonging to that company, to its six industrial customers and to the operator’s distribution system. If, following the construction of the new line for which Elektro bizness sought authorisation, that electricity undertaking, within the meaning of point 57 of Article 2 of Directive 2019/944, supplies a new customer, by means of that line and without the intermediation of the operator’s distribution system, that line can be classified as a ‘direct line’ within the meaning of the second definition contained in point 41 of Article 2 of Directive 2019/944, it being irrelevant that the fact that that line, belonging to Elektro bizness, links the customer to the existing line which supplies the electricity, and not directly to the generation site, in this case the cogeneration plant also belonging to Elektro bizness.
[para_133]49 As is apparent from paragraph 45 of the present judgment, the decisive criterion for the purposes of classification as a ‘direct line’, within the meaning of the second definition set out in that provision, is that of the supply to the customer by the electricity producer or by the electricity supply undertaking, without the intermediation of the operator’s distribution system, within the meaning of point 29 of Article 2 of that directive, irrespective of whether those economic operators are already linked to that system.
[para_134]50 The fact, noted by the referring court in its request for a preliminary ruling in Case C‑756/24, that the customer concerned maintains a back-up connection to the operator’s distribution system after the construction of the line linking it directly to the electricity producer is also irrelevant to that classification.
[para_135]51 Indeed, a requirement to disconnect entirely from the operator’s distribution system following connection to a direct line – which does not follow from either the wording or the context of point 41 of Article 2 of Directive 2019/944 – would be liable to conflict with the customer’s right freely to choose his or her electricity supplier, set out in Article 4 of that directive, and the principle of free access to the system, which follows from Article 6(1) of that directive. Furthermore, under Article 7(3) of that directive, the possibility of supplying electricity through a direct line does not affect the right to conclude contracts for the supply of electricity in accordance with Article 6 of Directive 2019/944.
[para_136]52 It follows from those considerations that the customer must be able, if he or she so wishes, to maintain a back-up connection to the public distribution system after the installation of a direct line. That said, as the Commission stated, in essence, in its written observations, the maintenance of such a connection must not adversely affect the tasks of the distribution system operator, in particular, as provided for in Article 31(1) of Directive 2019/944, to ensure the long-term ability of the system to meet reasonable demands for the distribution of electricity, to operate, to maintain and to develop under economic conditions a secure, reliable and efficient electricity distribution system in its area with due regard for the environment and energy efficiency. Thus, a customer who maintains such a back-up connection may be subject to certain obligations, such as, inter alia, the payment of a financial contribution, the details of whose calculation must comply with Directive 2019/944 and, in particular, with the procedure laid down in Article 59(7) thereof.
[para_137]53 As regards, lastly, the question whether the ‘direct line’, within the meaning of point 41 of Article 2 of that directive, may be authorised only in exceptional circumstances, in particular where the operator’s distribution system is unable to provide the customer with the necessary electricity supply, it is apparent, first, from Article 7(1) of Directive 2019/944, read in the light of recital 11 of that directive, that all producers and electricity supply undertakings established in the territory of the Member States must be able to supply their own premises, subsidiaries and customers through a direct line without being subject to disproportionate administrative procedures or costs. In addition, all customers established in that territory, individually or jointly, must be able to be supplied by means of a direct line from ‘electricity undertakings’ within the meaning of point 57 of Article 2 of that directive.
[para_138]54 Second, Article 7(1) must be read in conjunction with Article 4 of that directive, which provides that all customers must be free to purchase electricity from suppliers of their choice.
[para_139]55 Third, as recalled in paragraphs 43 and 44 of the present judgment, the construction of direct lines contributes to the attainment of the objectives of Directive 2019/944, as set out in Article 1 thereof.
[para_140]56 Fourth, as the Advocate General stated in point 55 of her Opinion, it is important to distinguish the conditions under which an electricity line must be classified as a ‘direct line’, within the meaning of point 41 of Article 2 of Directive 2019/944, from those in which such a line may be authorised. While Article 7(1) of that directive sets out the right of customers to be supplied with electricity through a direct line and that of producers and electricity suppliers to ensure that supply, Article 7(2) requires Member States to establish objective and non-discriminatory criteria for the grant of authorisations for the construction of a direct line. Under Article 7(4), Member States may make the granting of such authorisations subject either to a refusal of system access based on Article 6 of that directive or to the initiation of a dispute settlement procedure under Article 60 thereof.
[para_141]57 Furthermore, under Article 7(5) of that directive, Member States may refuse to authorise a direct line if granting that authorisation would obstruct the application of provisions on public service obligations laid down in Article 9 of that directive, which relate, in accordance with paragraph 2 thereof, to security, including security of supply, regularity, quality and price of supplies, and environmental protection, including energy efficiency, energy from renewable sources and climate protection.
[para_142]58 Finally, in accordance with Article 9(5) of Directive 2019/944, Member States may decide not to apply, inter alia, Article 7 thereof, in so far as the application of that provision would obstruct, in law or in fact, the performance of the obligations imposed on electricity undertakings in the general economic interest and in so far as the development of trade would not be affected to such an extent as would be contrary to the interests of the European Union.
[para_143]59 It is apparent from all of those provisions that that directive leaves the Member States discretion to define, in compliance with its objectives and general principles, the criteria for granting authorisations for direct lines, provided that they are objective and non-discriminatory, in order to ensure that the construction of those lines does not contravene, inter alia, the integrity and viability of the operator’s distribution system, and enables customers to be guaranteed the necessary connection to the system at affordable costs.
[para_144]60 In the present case, it is for the referring court to assess whether, having regard to the national context of the electricity market and, in particular, to the specific features of the energy supply on that market, set out in the requests for a preliminary ruling, authorisation to construct direct lines such as those at issue in the main proceedings would disproportionately impede the ability of the distribution system operator to fulfil its public service obligations, in particular that of providing producers and customers with the necessary connection to the system concerned, in accordance with the connection conditions laid down by the Regulator.
[para_145]61 It follows from all of the foregoing considerations that point 41 of Article 2 of Directive 2019/944, read in conjunction with Article 7 thereof, must be interpreted as meaning that the concept of ‘direct line’ contained therein covers an electricity line which is intended to link:
[para_146]– a new customer to an existing electricity line, by which the owner of that line supplies other customers, without the intermediation of the operator’s distribution system, even if that line extends beyond the location of the generation site concerned;
[para_147]– an electricity producer to a customer who wishes to maintain, in return for an appropriate financial contribution, a back-up connection to the operator’s distribution system, in the absence of exceptional circumstances such as the inability of that operator to provide that customer with the necessary electricity supply, without prejudice to the limits laid down in Article 7(2), (4) and (5) of that directive as regards authorisation for the construction of a direct line.
Costs
[para_149]62 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.
On those grounds, the Court (Third Chamber) hereby rules:
[para_151]Point 41 of Article 2 of Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market for electricity and amending Directive 2012/27/EU, read in conjunction with Article 7 thereof,
[para_152]must be interpreted as meaning that the concept of ‘direct line’ contained therein covers an electricity line which is intended to link:
[para_153]– a new customer to an existing electricity line, by which the owner of that line supplies other customers, without the intermediation of the operator’s distribution system, even if that line extends beyond the location of the generation site concerned;
[para_154]– an electricity producer to a customer who wishes to maintain, in return for an appropriate financial contribution, a back-up connection to the operator’s distribution system, in the absence of exceptional circumstances such as the inability of that operator to provide that customer with the necessary electricity supply, without prejudice to the limits laid down in Article 7(2), (4) and (5) of that directive as regards authorisation for the construction of a direct line.
[para_155][Signatures]
[para_156]* Language of the case: Latvian.