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21 October 2019
Article 42(3) of Legislative Decree 28/2011, as amended by Article 1(960)(a) of Law 205/2017, provides that:
In the event that the violations detected during the inspections are material for the purposes of the payment of the incentives, the GSE shall reject the application for incentives or order the revocation of the incentives with the claw-back of the incentives already paid, and shall submit the findings of its controls to the Authority for Electricity, Gas and Water for the application of the relevant fines. As an exception to the above, in order to safeguard the production of electricity from renewable energy sources of the plants which – as at the date of the inspection proceeding – already benefit from incentives, the GSE shall reduce the incentives in an amount ranging from 20% and 80% depending upon the seriousness of the violation. If the project owner voluntarily condemns its violation prior and separately from before and outside of an inspection proceeding, it will be granted a further reduction of one third.
Article 42(5)(cbis) of Legislative Decree 28/2011 mandates the Ministry for Economic Development to issue a regulation identifying, among other things, the material violations that may result in a reduction in the incentives for each renewable energy source, type of plant and capacity. At the time of writing, the Ministry for Economic Development has not yet issued any such regulation.
According to Ruling 10129 published by the Lazio Regional Administrative Court on 30 July 2019, before reaching a decision on the revocation of incentives, the Energy Services Operator (GSE) must confirm whether the renewables exception set out in Article 42(3) of Legislative Decree 28/2011 applies (ie, the plant in question must have received incentives when the violation was verified) and assess the size of the reduction with regard to the extent of the violation detected. The court found that the power to apply a reduction (instead of a revocation) is immediately applicable, even without a ministerial decree as envisaged by Article 42(5)(cbis).
The language of Article 42(3) clearly imposes a requirement on the GSE to assess whether a violation is eligible for a reduction in incentives (instead of the revocation thereof), regardless of ministerial indications. In fact, the law does not make the application of the exception subject to the issuance of a ministerial decree.
The rationale underlying the Lazio Regional Administrative Court's ruling is to avoid the pro-market amendments introduced to Article 42, provided that an exemption to the wholesale revocation of incentives remains 'frozen' due to the Ministry for Economic Development's inactivity, which may have the practical and distorting effect of repealing a provision of law.
The court's decision is noteworthy and, as a general rule, means that if the government delays the implementation of a provision of law, such a delay does not justify the denial of a right recognised by law.
For further information on this topic please contact Arturo Sferruzza or Ginevra Biadico at Norton Rose Fulbright Studio Legale by telephone (+39 02 8635 941) or email (firstname.lastname@example.org or email@example.com). The Norton Rose Fulbright Studio Legale website can be accessed at www.nortonrosefulbright.com.
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