Interruptibility power contracts in Sicily, Sardinia not state aid - EU

MILAN, Oct 3 (Reuters) - The European Commission said on Wednesday interruptibility contracts in Sardinia and Sicily allowing companies to pay less for their electricity do not constitute state aid.

In a statement, the Commission said it had authorised an extension for the use of such contracts until 2015.

Under interruptibility contracts, big companies accept their power supplies can be halted by the grid operator if needed to re-balance the electricity network or avoid blackouts.

In return the companies are offered discounts on the price they pay for power.

Alcoa has decided to shut its aluminium smelter in Sardinia blaming high power prices for undermining its competitiveness.

Italian power prices are often between 30 and 50 percent higher than the EU average.

(Reporting By Stephen Jewkes)