Tuesday, June 5, 2012

Michal Hudec: Proposals of energy law could be changed by members of the Parliament

On 31th May 2012 the Slovak government approved two proposals of new energy acts – energy and regulation. There were only little changes in comparison with the previous version. A follow-up discussion in the parliament will be crucial for final wording of both. Of course, if there ever would be some discussion.

In late May members of the Slovak government were given one week to study proposals of new energy law. Slovakia as an EU member is obliged to transpose EU’s 3rd energy package into the domestic law. Despite this “reading week” (and parallel informal meetings between public and private energy representatives), there haven't been many major changes in the texts of both drafts - energy and regulation acts.

There were some minor changes between presented and approved versions of energy act proposal. Just very briefly, they have been linked to issues of unbundling, rules for selling-out of “small” distribution networks to super ordinate distribution companies and some technical details linked to exploiting the unused capacities in underground gas storage systems.

The biggest positive change in the proposal of energy act has been the increase of price limit for goods and services, above which the public procurement would be required from regulated energy companies. The former proposal assumed the price limit at level EUR 10,000, approved draft by the government had increased it to EUR 100,000. When in comes to the draft of regulation act, some changes have been made with regards to membership in Regulation Council, the role of Ministry of Environment in process of creating the Regulation Policy and the price limit for water usage in network industries. Under the future regulation acts, the chairman of Regulatory Office (URSO) would be obliged to choose regulatory office’s vice-chairman within 2 month after his own appointment.

On the other hand and despite a few positive changes, some issues and specific elements remain in both drafts, while it would be better to remove or change them. For example, the definition of “fuel poverty” is quite vague and very broad. In case of no additional clarification, there would be a risk of various interpretations, what “substantial part of household’s income” might be. The other issue is personal union between the chairman of Regulation Office and the chairman of Regulation Council. The first one if 1st level regulator, the second one should act as an appeal body and creator of Regulation Policy. At the same time, the future energy act proposes the price regulation of electricity deliveries for small and medium enterprises, which is not in line with the trend supported by European Commission.

After governmental approval, the final decision is up to Members of National Council of Slovak Republic (Slovak Parliament), in which the majority of seats is held by ruling social democrats – SMER-SD party. Despite this, proposals and comments from the opposition parties could be very beneficial, but at the same time, the chance that they come up with them is already minimal, because former governmental coalition is quite fragmented and acts usually on its own.

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