Czech Energy Act conference: “We wanted to simplify it,” says head of the Ministry of Industry and Trade’s electricity department

On 16 June 2015, an expert conference focused on the amendment to the Energy Act, which was published in the Collection of Laws on 5 June 2015 following the final signature of the Czech president. Discussion has still not subsided after the stormy debate on the legislation, and it is now crucial to become familiar with the wording of the law and assess its impacts.

The main point now is that the amendment is in its final form and there is no longer any risk that it will be turned upside down again through further legislative proceedings.

The conference, organised by b.i.d services, provided an opportunity to become acquainted with the wording of the law. It was divided into two parts: lawyer Pavel Doucha spoke in the first, while Ladislav Havel, director of the electricity department at the Ministry of Industry and Trade, spoke in the second.

A number of interesting views and questions were raised throughout the conference. For oEnergetice.cz, we have prepared a summary of the most important and interesting points.

Great conference today on czech energy act and its amendments..Thanks to B.I.D services… #czech#energyact

— Martin Voříšek (@vorisekmartin) 16 June 2015

Pavel Doucha: It is not yet possible to quantify precisely the impact of the new RES fee system

The opening presentation was delivered by Pavel Doucha and Luděk Šikola. What should be taken away from it? Above all, that until price decisions are issued and the related legislation is amended, it will not be possible to identify specific impacts. Unfortunately, the only correct answer was all too often:

„Perhaps„, „But nobody knows that at the moment“ or „the law does not address this„.

There is nothing to do but wait.

He focused in particular on new developments in the operation of the Energy Regulatory Office (ERÚ), changes in responsibilities between the Energy Regulatory Office and the State Energy Inspectorate, consumer protection under the Energy Act and the Civil Code. Microgeneration, the financing of renewable energy support and the legislative outlook also received attention.

One particularly interesting topic was the electricity tax. Small producers are currently exempt from electricity tax if electricity is generated for their own consumption. However, this ends under the new law, as small producers will incur a tax liability. „Thanks“ to this, they will have to register with the customs administration and additionally submit monthly tax returns. This is a considerable administrative burden, not only for taxpayers but also for tax administrators.

The law also newly requires technological own consumption to be measured before and after the point of consumption. Logically, this obligation applies only to generating plants. Implementation is also problematic in this case. Producers up to 100 kW must measure technological own consumption from 1.1. 2017, while those above 100 kW have a deadline one year later.

Doucha described the easing of requirements for measuring electricity generated at plants using RES as a positive change made during the legislative process. Under the approved, less stringent version, having a calibrated meter is sufficient (earlier in the legislative process, seals, periodic inspections and similar requirements were mandatory).

Microgeneration

One of the main benefits of the Energy Act is the abolition of the requirement for generating plants up to 10 kW to hold a generation licence. All other conditions remain the same; only the licence is no longer required. However, there is one legislative condition:

It must not constitute a business activity.

It must therefore be a generating plant serving the owner’s own consumption. According to the presenters, there is no legal requirement for the source to be disconnected from the grid (island operation is not a condition), and the law even assumes that exports to the grid may occur. However, no payment or support may be received for these exports; otherwise, the provisions of the Civil Code (OZ) on business activity would be met, with the Civil Code defining this through provisions on entrepreneurs:

„Anyone who independently carries out, on their own account and responsibility, a gainful activity in a trade or similar manner, with the intention of doing so continuously for the purpose of making a profit, is considered, with regard to that activity, to be an entrepreneur.„

Legislative outlook

An interesting part of the presentation concerned expectations for further legislative developments. The most interesting issue in this respect was the review of excessive financial compensation for power plants. This is certainly a very interesting matter which, if adopted, will cause considerable uproar among owners of power plants that benefited from the solar boom in Czechia.

This proposal appeared during the legislative process for the amendment that has now been approved, but was removed during deliberations by the government’s legislative council. In this case, the driving force for the Ministry of Industry and Trade is again the European Commission, which requires the introduction of a system of reviews to determine whether or not a power plant is excessively compensated. According to the speakers, these should be individual reviews rather than blanket ones.

When considering investments, however, the question is what exactly will be deemed a cost of the generating plant. Will this include rent or the price of land?

Following the example of Germany and the UK, an auction system can also be expected in Czechia for the further allocation of RES support, although it must await its legislative implementation.

Ladislav Havel: I would like the Energy Act to become simpler, but that is not the case

In the second part of the conference, Ladislav Havel, director of the electricity department at the Ministry of Industry and Trade, took the floor. He presented the overall concept of the law, including a detailed introduction to selected provisions. He himself noted that he had failed to achieve the same goal he had pursued with previous amendments:

Once again, it was not possible to make the law simpler and clearer.

During his presentation, the department director commented primarily on the role of the Energy Regulatory Office and its newly expanded powers. From 1. 1. 2016, it will take over supervisory powers from the State Energy Inspectorate in the area of the Act on Supported Energy Sources. This will generate additional operating costs for the Energy Regulatory Office. According to Havel, up to 40% more employees will be needed, creating further costs. These will newly be covered by a fee per consumption and delivery point (under the original proposal, the fee was linked to customer consumption). The fee will always be set by government regulation in order to flexibly reflect changes in the required level of funds.

Given the number of interested parties who attended the conference, a second date has already been scheduled for 22. 7.