Case C-327/25, known also as VETS Svoge, is a significant preliminary ruling procedure before the Court of Justice of the European Union (CJEU), initiated at the request of the Supreme Administrative Court of the Republic of Bulgaria (SAC), sent to the CJEU on 14.05.2025 and published in the Official Journal of the EU – OJ C, C/2025/4436 on 18.08.2025. The proceedings are currently pending and raise important questions about the relationship between European rules on intervention in the energy market and national measures adopted in response to high electricity prices.
At the heart of the dispute is Article 8 of Regulation (EU) 2022/1854, adopted as part of the European Union’s emergency response to the energy crisis. The expected CJEU ruling could have implications not only for the company in question, but also for a range of electricity producers and for the way in which Member States can tax or limit revenues from electricity production.
- The Energy Crisis and Regulation (EU) 2022/1854
Regulation (EU) 2022/1854 of the Council dated 6 October 2022 was adopted in the context of exceptionally high and volatile energy prices. The main factors behind the crisis included: limited natural gas supplies; the consequences of the war in Ukraine; the European economy’s dependence on imported energy resources; the strong correlation between the price of natural gas and the price of electricity; and significant increases in costs for households and businesses.
The Regulation introduced a temporary EU-wide framework to mitigate the effects of high prices. Its main elements included a reduction in electricity consumption; a cap on market revenues for certain producers; a temporary solidarity contribution on excess profits in the energy sector; the use of the funds received to support end-users; and the possibility of certain national measures, subject to the conditions of EU law.
The Regulation is particularly important because it is directly applicable in all Member States. This means that its rules do not need to be transposed into national law to have effect.
- Parties and Subject Matter of the Main Proceedings
The case arises from a dispute between the Bulgarian hydroelectric power plant “VETS Svoge” EOOD, UIC 206622694, and the Fund “Security of the Electricity System” (FSES), a Bulgarian state body related to the regulation of the energy sector. ” VETS Svoge” EOOD appealed against the Act for Establishing a Public State Receivable # 36 of 22.04.2024, issued by the Chairman of the Management Board of FSES. The inquiry was made by the Supreme Administrative Court within the framework of national administrative proceedings under Administrative Case # 11462/2024 according to the inventory of SAC with a ruling on the case dated 13.05.2025.
The dispute concerns the application of a national measure to a producer of electricity from a hydroelectric power plant. Of crucial importance is the question whether a Member State can maintain or apply a national financial measure when there is already a pan-European framework regulating the market revenues of producers.
- Questions Referred
The publicly disclosed information on the case states that SAC wants to establish whether Art. 8 of Regulation (EU) 2022/1854 should be interpreted as allowing the retention of a national measure existing under Bulgarian law, namely the contribution under Art. 36f of the Energy Act in the amount of 5% of the revenues from the sold electricity and its simultaneous existence with a mandatory ceiling on the market revenues of electricity producers. If permissible, whether the contribution of 5% of the revenues from the sold electricity should be calculated and due on the amounts above the mandatory ceiling of revenues that electricity producers are obliged to contribute to FSES and do not constitute income for them. Can, when interpreting these provisions, it be considered that the contribution of 5% of the revenues from the sold electricity is non-discriminatory, given that for some producers it leads to double taxation of the same amounts. Can such treatment be considered proportionate, given that it does not take into account the actual operating costs of electricity producers?
The essence of the major question can be presented as follows:
Can a Member State continue to apply a national mechanism that limits or redistributes the revenues of electricity producers if that mechanism differs from the European scheme provided for in Regulation 2022/1854?
This involves several sub-questions: whether the national measure pursues the same objective as the regulation; whether the measure has the same or similar subject matter; whether it covers the same producers; whether it concerns the same period; whether it is based on the same calculation methodology; whether it results in a double financial burden; whether the State has fulfilled the conditions for maintaining the national mechanism.
- The Importance of Art. 8 of Regulation (EU) 2022/1854
Article 8 is found in the part of the Regulation that regulates the possibility for Member States to adopt or maintain national measures relating to the limitation of market revenues. Here it is important to distinguish between two hypotheses:
• A national measure that complements the European scheme: The State may be able to maintain a certain mechanism if it contributes to the same objective — for example, protecting consumers and limiting windfall revenues — and if it does not conflict with the general requirements of the Regulation, and
• A national measure that replaces or circumvents the European scheme: This is the more problematic hypothesis, in which the national measure uses a different basis of calculation or covers producers excluded from the Regulation or imposes a heavier or unlimited financial obligation or applies for a period not covered by the European framework or leads to a result incompatible with the objectives of the Regulation.
It is in this second hypothesis that the legal interest of VETS Svoge case lies.
- The Potential Conflict between National and European law
The case involves several fundamental principles of EU law.
• Principle of Primacy of EU Law: Where a national provision conflicts with a directly applicable rule of EU law, the national court must ensure the primacy of EU law. This does not automatically mean that every national measure in the same area is inadmissible. It is necessary to establish whether there is a real conflict;
• Principle of Legal Certainty: Producers must be able to reasonably foresee what obligations will be imposed on them, for what period they will apply, how the financial burden will be calculated and which revenues fall within the scope of the measure. If a measure is applied retrospectively or on the basis of unclear criteria, the question of its compliance with the principles of legal certainty and the protection of legitimate expectations may arise;
• Principle of Proportionality: Even where the State pursues a legitimate aim, the means must be appropriate and necessary to achieve it. Accordingly, it must be assessed whether the financial burden on the producer does not exceed what is necessary to protect consumers and stabilise the market;
• Principle of Sincere Cooperation: Member States are obliged to refrain from taking action that would jeopardise the achievement of the objectives of EU law. A national measure that effectively renders the EU-wide mechanism meaningless could raise a problem under this principle.
- Why the Case is Important for Electricity Producers
The decision may have a direct impact on the way in which the financial obligations of electricity producers, including producers from renewable sources, are determined. The practical consequences may concern: the amount of contributions or other payments due; the possibility of recovering amounts already paid; the legality of administrative acts; the calculation of eligible revenues; the applicability of national mechanisms for different periods; the risk of double taxation or double restriction of revenues.
It is particularly important whether CJEU will accept that Member States have a wide margin of appreciation or will set strict limits on national measures.
- Possible Approaches of the Court of Justice of the EU
CJEU could approach the issue in several ways. Under a strict interpretation, a national measure would only be admissible if it fully complies with the conditions expressly set out in Regulation 2022/1854. This would ensure a high degree of harmonisation but would limit the freedom of Member States to react with national instruments. Under a more flexible interpretation, CJEU could accept that Member States may maintain different national measures if they: pursue a compatible objective; do not undermine the Regulation; do not lead to discrimination; and comply with the principles of proportionality and legal certainty. This approach would leave more freedom to national authorities but could lead to differences between Member States.
CJEU could also distinguish between measures applied before the entry into force of the Regulation, during its application and after the expiry of its transitional period. It could also be assessed whether the national mechanism constitutes a tax, a contribution, a revenue cap or another form of public financial intervention.
- Significance for Bulgarian Judicial Practice
It is important to emphasise that the mere submission of a preliminary ruling does not mean that the national measure has been declared unlawful. It means that the Bulgarian court has deemed it necessary to obtain an authoritative interpretation of EU law. Until the decision is rendered, the national proceedings continue in accordance with the procedural rules – the case is suspended; the CJEU does not rule on all the facts and evidence in the dispute; it cannot be assumed in advance that the company will win the case, as the final application of the interpretation remains the task of SAC.
The ruling of CJEU will be binding on SAC in resolving the specific dispute. In addition, it can be used as a reference in other proceedings related to recovery of revenues from producers; disputes over the legality of energy contributions; acts of the Energy and Water Regulatory Commission; public receivables in the energy sector; application of European regulations in the context of an economic emergency.
The ruling could also provide guidance for future crises. If Member States were to be given a widely recognised option to retain national mechanisms, this would facilitate a rapid response at national level. However, if CJEU were to adopt a more restrictive approach, future measures would likely need to be more closely aligned with the EU-wide framework.
In conclusion, Case C-327/25, VETS Svoge raises the important question about the limits of national intervention in the energy sector. It concerns the balance between three competing interests: the need for States to protect consumers in the event of excessively high prices; the requirement for uniform and effective application of EU law; and the right of energy undertakings to a predictable, proportionate and lawful financial framework. The CJEU ruling will be significant for the interpretation of Regulation (EU) 2022/1854 and for the future distinction between permissible national measures and mechanisms incompatible with EU law. It could affect both the specific dispute between Svoge Hydroelectric Power Plant and the Bulgarian authorities, as well as a wider range of disputes regarding the revenues of electricity producers.
