The EFTA Surveillance Authority (ESA) has concluded that state guarantees for Landsvirkjun's hedging derivatives did not involve state aid.
The ESA article stated the following: "Landsvirkjun is an Icelandic state-owned energy company and one of the largest producers of renewable electricity in Europe. As such, the company competes with other large scale electricity manufacturers on the continent to attract energy intensive industry to Iceland. Landsvirkjun is exposed to foreign currency exchange risk as well as interest rate risk on its debt portfolio and uses various derivative contracts to hedge these risks. The Icelandic state has granted guarantees for some of Landsvirkjun's hedging derivatives.
In 2017, ESA started an investigation to look into whether the state guarantees were in line with EEA rules. After an inquiry, ESA finds that Landsvirkjun did not gain an economic advantage through these state guarantees and has therefore closed the case."
An annual state guarantee tax must now be paid by Landsvirkjun pursuant to Act No. 121/1997 on state guarantees (amended in 2011) in respect of financial obligations undertaken, and obligations pursuant to long-term power contracts entered into by Landsvirkjun with power intensive companies using the electricity for their own purposes. Landsvirkjun’s derivative contracts are no longer state guaranteed.