Tuesday, October 2, 2012

New Law on Regulation in Network Industries

On July 31, 2012 new Law on Regulation in Network Industries (250/2012 Coll.) was approved in Slovak Parliament. Its amendment was necessary due to belated transposition of gas and electricity directives of the third EU energy package. It came into effect on September 1, 2012.

The new Law states that the Regulatory Office for Network Industries (Slovak abbr. URSO) is legally separated and functionally independent form any state, public or private institutions. Its representatives act independently, without any market or other interests and while performing their duties they do not follow instructions from any third parties.

The bodies of the Office remained Office Chairperson and Regulatory Council. The term of the Office Chairperson shall be six years and he/she may be appointed for a maximum of two consecutive terms. He/she is appointed or removed from the function by the President of Slovak Republic based on proposal from the Government.

The Office Chairperson also acts as Chairperson of the Regulatory Council which secures strategic management and concept of regulation in network industries. It consists of the chairperson and six other council members.

The Office is performing tasks subject to price regulation, factual regulation, extraordinary regulation, quality regulation, control of the Law enforcement, supervision over gas and market transmission operators and supervision over auctions in sale of electricity. 

Price regulation

While determining the maximum or fixed regulated price the Office reflects the scope of justified costs, economic efficiency and adequate profit, including the scope of investments. Maximum prices (price cap) and fixed prices might comprise of multiple components.

Price regulation was again expanded in gas sector as to apply to households and small enterprises, too. According to new law small enterprise is defined as a final electricity consumer with annual electricity consumption up to 30.000 kWh in the previous year and final gas consumer with gas consumption up to 100.000 kWh in the previous year.

New Law on Energy (251/2012 Coll.) which was also adopted together with the regulation law provides new definition of protected and vulnerable consumers. In case of crisis situation in gas sector the protected customers are last to be disconnected from supplies and they include households, small enterprise, gas consumer producing heat and hot water for households and further protected consumers such as medical facility, school, provider of social services or social protection of children.

Vulnerable consumer is defined as a household consumer of gas/electricity who is handicapped or his/her life functions depend on electricity supply.

Provisions of the new law will be applied for price regulation since 2014, price regulation for gas supplies to households and small enterprises since 2013.

Quality and compensations

Regulation of quality is performed by determining standards of quality, required level of compliance with the standards, as well as determining the amount of compensation payment, method of its calculation and conditions for disbursement.

According to new provisions in case of non-compliance with standards of quality the regulated subject is oblige to reimburse its consumer a compensation payment. This does not apply if the standards were not kept due to extraordinary event, emergency or crisis situation, accident caused by a third party or due to decision on the consumer´s account.

Provisions of extraordinary regulation apply in case of extraordinary market situation, insufficiently developed market competition, need for consumer protection or general economic interest.

Duties of regulated subjects

One of the changes brought by the new law is that a regulated subject which is a part of vertically integrated undertaking is obliged to submit contracts for services agreed with other entity from the same undertaking and estimated value over €100,000 to the Office for approval. If the company is not a part of vertically integrated undertaking it is obliged to inform the Office about any contract with estimated value over €300,000.

Company which is a part of vertically integrated undertaking is obliged to issue public procurement announcement if the estimated value of the contract exceeds €100,000. If the company is not a part of vertically integrated undertaking it is obliged to announce to the Office every contract with estimated value over 300,000 no later than 30 days after its implementation.

According to energy law 251/2012 Coll. license from the Office is necessary to be obtained for the following activities:
  • production, transmission, distribution and supply of electricity
  • operation of the organizer of short-term market with electricity
  • production, transport, distribution, storage and supply of gas
  • operation of pipelines for the transport of fuels
  • operation of pipelines for the transport of oil
  • operation of equipment for filling of pressure vessels
  • operation of equipment for the distribution of liquefied hydrocarbon gas
An entity with permanent residence or headquarter in an EEA member state who is interested in supplying electricity or gas in a specified area is obliged to apply for license at the Office. They have to enclose officially translated certificate which entitles them to supply gas or electricity in compliance with their state´s law. Their Slovak license expires if the original certification expires. The entity is obliged to inform the Office about the expiration without delay.

Out-of-court dispute settlements

The Office powers in the area of dispute settlement have been strengthened. The final consumer of gas or electricity is entitled to submit an out-of-court dispute with his/her supplier after the warranty complaint proceedings were finished and the consumer does not agree with the result or proceedings manner. The settlement results in written agreement which is binding for both parties.

The Office also may decide in settlements between operator of transmission network and owner of the network, if they violated their obligations, between operator of the network and other gas/electricity market participant, between vertically integrated undertaking and operator of transmission network if it is a part of the undertaking and have violated their obligations.

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1 comment:

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