20. 8.1999 Official Journal of the European Communities L 220/33 COMMISSION DECISION of 9 December 1998 on State aid granted by Germany to a lignite-fired power station in Cottbus (notified under document number C(1998) 4275) (Only the German text is authentic) (Text with EEA relevance) (1999/581/EC) THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, and in particular the first subparagraph of Article 93(2) thereof, Having regard to the Agreement on the European Economic Area, and in particular Article 62(1)(a) thereof, Having called on interested parties to submit their comments pursuant to the provisions cited above and having regard to their comments, Whereas: I. PROCEDURE In a complaint received from a Member of the European Parlia- ment on 26 March 1996, the Commission was informed that Germany had granted aid to a lignite-fired power station in Cottbus. By letters dated 7 June 1996 and 5 September 1996, the Commission requested information from the German authorities on the matter. It received replies from Germany on 26 July 1996 and 20 February 1997. By letter dated 12 August 1997, the Commission informed Germany that it had decided to initiate proceedings pursuant to Article 93(2) of the EC Treaty in respect of the aid. Germany replied by letter dated 31 October 1997. The Commission decision to initiate proceedings was published in the Official Journal of the European Communities ('). The Commission invited interested parties to submit their comments on the aid. By letter dated 3 March 1998, the comments were transmitted to Germany. On 6 and 7 March 1998, an on-site visit to the power station in Cottbus took place with the participation of Commission representatives. On 9 July 1998, Germany sent its reply to the comments. II. DETAILED DESCRIPTION OF THE AID Cottbus is located in the largest Eastern German lignite field, in which Lausitzer Braunkohle AG (Laubag) is the lignite producer. On 26 April 1995, the city of Cottbus decided to () O] C 381, 16.12.1997, p. 5. replace its old lignite-fired power station, which dates from the GDR period, but no longer meets current technical standards, particularly as regards fuel consumption and environmental protection, by a new modern combined heat and power (CHP) plant. The main aim of the project is to provide district heating to the city of Cottbus (approximately 70 % of households are connected to a district heating network). As a by-product, electricity will be produced, and this will be supplied only to the city of Cottbus. The overall project cost is DEM 395 million. The Land of Brandenburg provided support for this investment in order to offset the price differential as compared with a modern gas- fired combined heat/power plant, which would have cost about DEM 185 million. Since Germany had expressly excluded the energy supply industry from subsidisation under the ‘Gemein- schaftsaufgabe’, which is the German regional aid scheme approved by the Commission () and according to which investment aid covering up to 35 % of total investment may be granted in Brandenburg, an area falling within Article 92(3)(a) of the EC Treaty, aid was awarded on an ad hoc basis in the amount of DEM 49,95 million. No other national aid, whether ad hoc or under approved aid schemes such as for research and development (R & D) or environmental protection, was granted for the project. Currently, 243 people are employed in the power plant. In the Cottbus project, lignite is being used for the first time anywhere in the world in a CHP-plant as a fuel for the second generation ‘pressurised fluidised bed combustion’ technology. The Commission therefore decided to support this project under the Thermie programme established by Council Regula- tion (EEC) No 2008/90 (}) by providing a further DEM 29 million (Project Nos SF/00122/95/DE/SE and SF/00264/ 97/DE/SE; ‘Second generation PFCB cogeneration plant for eastern German lignite’). The aim was to demonstrate that the pressurised fluidised bed combustion technology may also be applied for the use of lignite as a fuel and thus may increase the chances for exporting this technology outside the Community. As regards the effects of the project on competition, however, the Commission felt that the choice for a more expensive lignite-fired power station and the investment grant connected with it could constitute illegal State aid for the regional lignite producer Laubag, because, although not obtaining prices higher than usual market prices, it would be able to count on long- term supply contracts. () See point 3.1.3 of the 24th outline plan for the joint Federal Government/Linder scheme for improving regional economic structures’, approved on 30 April 1996 (O] C 291, 4.10.1996, p. 4). () OJ L 185, 17.7.1990, p. 1.