Slovakia: New energy law enacted
The new Slovak energy legislation will come into force in the autumn 2012, changing rules for the energy sector and implementing relevant European Union directives, above all the Third Energy Package.
In May 2012, the Slovakian government cleared the way for substantially amending two main legislative acts governing Energy Law in Slovakia, the Energy Act and the Act on the Regulation of Network Industries. The new acts adopted by the National Council of the Slovak Republic will take effect on 1 September 2012 and will bring about substantial amendments in the country’s energy sector.
Transposition of Third Energy Package
The principle aim of the new Energy Act is to implement the latest EU directives and regulations, above all the Third Energy Package (TEP), which aims at achieving an internal energy market in Europe. Apart from increasing competition among market participants, the TEP also strengthens the rights of final costumers. These elements have been considered in the new Energy Act.
In line with EU provisions, the new Energy Act introduces the obligation to unbundle energy generation and supply from transmission services in the electricity and gas sectors. Electricity transmission in Slovakia is facilitated by the transmission system operator SEPS (Slovenská elektrizačná prenosová sústava, a.s.) which is fully state-owned and already legally unbundled from electricity production and distribution. The new Energy Act, not surprisingly, also provides for full ownership unbundling of SEPS.
In the case of the gas sector, in which the gas transmission system operator (TSO) eustream, a.s. is a 100%-subsidiary of SPP (Slovenský plynárenský priemysel, a.s.), a dominant vertically integrated player in the gas sector, the ownership structure is not yet in line with the requirements of the TEP. The new Energy Act determines that the gas TSO may either be (i) fully ownership unbundled; (ii) organized as an Independent System Operator (ISO); or (iii) organized as an Independent Transmission Network Operator (ITO). While the full ownership unbundling mode is considered the default model for the gas sector, the government also has the option of changing the regime to ISO or ITO until 1 December 2012.
Increased customer rights
The new Energy Act also substantially strengthens the rights of electricity and gas customers by way of facilitating stronger market liberalization, as well as by increasing customer rights. Under the new provisions, final customers shall have the right to switch their energy supplier within three weeks without any further costs. Furthermore, the new Energy Act extends the customer’s information rights with regard to the supplier and further defines the required contents of electricity and gas supply agreements. In addition, the new law also introduces the concept of universal service as laid down in the TEP. Under this service, electricity and/or gas customers in households and in small companies have the right to be supplied with electricity or gas of a specified quality within their territory at reasonable, easily and clearly comparable, transparent and non-discriminatory prices. This right also includes the right to be supplied by a supplier of last resort, a concept that has already been reflected in the Slovak energy law before.
The new Energy Act implements various other changes that will in practice impact market participants. Above all, the scope of business activities in the energy sector that are subject to licensing has been changed. Furthermore, the act provides for new rules on the cross-border provision of services. The new law also paves the way for the introduction of smart metering devices. And finally, it also changes the provisions on the promotion of renewable energy sources.
More powers for the Regulator
The government and the National Council of the Slovak Republic have also approved the new Act on Regulation of Network Industries, which governs the rights and obligations of the Regulatory Office for Network Industries (Úrad pre reguláciu sieťových odvetví - URSO). The act is characterized by a tendency to strengthen the position, independence and powers of URSO.
The main changes under the new act relate to (i) tariff proceedings in which URSO determines the prices of energy for each supplier, and (ii) licensing proceedings in which licenses are granted to market participants. With regard to the unbundling requirements set out in the new Energy Act, the new Act on Regulation of Network Industries determines the procedure for TSOs in obtaining the relevant certification as being fully ownership unbundled, ISO, or ITO.
Levy on regulated business activities
In addition to the replacement of the energy laws, the special levy on companies carrying out regulated business activities will be effective in Slovakia from 1 September 2012. This levy will inter alia apply also to companies carrying out business activities in the energy sector and holding energy licenses. The levy shall be calculated in the monthly amount of 0.363% of the company’s profit, provided that the company’s estimated total annual profit exceeds EUR 3,000,000. This special levy will apply until the end of year 2013.