Act

No. 656 in the Collection of Laws

of 26 October 2004

on Energy and consequential amendments

The National Council of the Slovak Republic has passed the Act as follows:

Article I

PART I

BASIC PROVISIONS

Section 1

Subject matter of the Act

This Act governs:

a)      conditions for conducting business in the energy sector,

b)      access to the market, rights and obligations of market participants in the energy sector,

c)      rights, legitimate interests and obligations of natural or legal persons whose rights, legitimate interests or obligations may be affected by market participants in the energy sector,

d)      the performance of state administration in the energy sector,  

e)      the performance of state supervision of business in the energy sector.

Section 2

Definitions

For the purposes of this Act:

a) in general,

1.      ”energy sector” means the electricity sector, gas sector, the pipeline transportation of fuels or oil, the filling of pressure vessels with liquefied petroleum gas (in this Act referred to as "pressure vessels"), the distribution of liquefied petroleum gas;

2.      ”undertaking” means a legal person who conducts business in the energy sector;

3.      ”related undertaking” means an undertaking, which is controlled by one or more other undertakings, because this undertaking or these undertakings are in a proprietary or personal relation through which a decisive share of voting rights are held;

4.      ”proprietary relation” means a direct or indirect share of the voting rights of one or more other undertaking or undertakings through a share of the registered capital or stock of the one or more other undertakings in which a decisive share of voting rights are held;

5.      ”personal relation” means a situation where the statutory body, member of the statutory body, member of the control body or supervisory body of an undertaking and of another undertaking or undertakings are the same person or persons, or at least most of them with a decisive share of voting rights on the body, or where the statutory body, member of the statutory body, member of the control body or supervisory body of an undertaking and of another undertaking or undertakings are related persons. A decisive share is understood as an  absolute majority of the voting rights; 

6.      ”defined territory” means the territory of the Slovak Republic in which the transmission system operator or distribution system operator is obliged to provide the transmission of electricity or distribution of electricity or in which the transmission system operator or distribution system operator is obliged to provide the transmission of gas and distribution of gas;

7.      ”part of the defined territory” means the territory of the Slovak Republic in which the transmission system operator or distribution system operator is obliged to provide the transmission of electricity or distribution of electricity, or in which the transmission system operator or distribution system operator is obliged to provide the transmission of gas and distribution of gas;

8.      ”territory of the European Union” means the defined territory and territories of the other Member States of the European Union;

9.      ”territory of third states” means territory other than the territory of the European Union;

10.  ”security of electricity and gas supply” means the securing of a balance between, on the one hand, the offer and supply of electricity and gas, and, on the other hand, the demand and consumption of electricity and gas within the defined territory or a part of the defined territory; security of the electricity and gas supply also means the securing the technical safety of energy facilities;

11.  ”internal market” means the electricity market or gas market, which is realised within the territory of the European Union;

12.  ”national electricity transmission system or gas transmission system” means the electricity system or gas system which transports electricity or gas within the defined territory;

13.  ”electricity system and gas system interconnection” means the interconnection of a national electricity transmission system and gas transmission system with a electricity system and gas system which transports electricity or transports gas in the territory of the European Union, or which transports electricity or transports gas in the territory of third states;

14.  ”integrated undertaking” means a vertically integrated or horizontally integrated undertaking;

15.  ”vertically integrated undertaking” means an undertaking or a group of undertakings whose mutual relationship with another undertaking or group of undertakings enables them to exercise decisive influence on an undertaking or group of undertakings, whereby the decisive influence is exercised in particular:

15.1    through ownership rights or the rights to use the assets of an undertaking, or ownership rights or the rights to use the assets of a group of undertakings;

15.2    through the composition of the statutory bodies of an undertaking or group of undertakings;

15.3    through the exercise of a voting right or through the exercise of another decision-making method of the statutory bodies of an undertaking or group of undertakings;

      and where the undertaking or group of undertakings performs at least one of the functions of electricity transmission or electricity distribution, and at least one of the functions of electricity generation or electricity supply, or at least one of the functions of gas transmission, gas distribution, LNG facility operator, gas storage, and at least one of the functions of gas production or gas supply;

16. ”horizontally integrated undertaking” means an undertaking performing at least one of the functions of electricity generation for electricity supply, or for electricity transmission or for electricity distribution and another  activity, which is outside the scope of business in the electricity sector; or an undertaking performing one of the functions of gas production, gas transport, gas distribution, gas storage, gas supply and another activity, which is outside the scope of business the gas sector;

17. ”settlement coordinator” means a legal person who ensures the settlement of differences between contractually agreed quantities of electricity or gas supplies and the quantities of electricity or gas actually supplied at a given time;

18. ”regulated access to the electricity system or gas system” means access to the electricity system or gas system in accordance with the rules approved by the respective state administration authority, and for the regulated tariffs; 1

19. ”negotiated access to the gas system” means access to the gas system negotiated by the gas market participants under business conditions for system access and utilization which are published in advance;

20. ”energy efficiency” means a procedure aimed at influencing the amount of electricity consumption and timing of electricity consumption (in this Act referred to as "influencing") in order to reduce primary electricity consumption; influencing may be achieved by preferring those investments which ensure energy efficiency over  measures which establish the expenditure of additional investments in raising production capacity, or over measures aimed at interrupting electricity supplies, provided that the preferred investments are more efficient and economically advantageous solutions also with regard to having a positive impact on the environment.

b) in the electricity sector,

1.      ”electricity producer” means a natural or legal person authorized to generate electricity pursuant to this Act;

2.      ”electricity generating facility” means a facility which is used for conversion of any of various energy sources into electricity; it includes the infrastructure and technological equipment;

3.      ”combined heat and power” means the generation of electricity together with the production of heat, where the heat is used to supply natural or legal persons or for technological purposes;

4.      ”renewable energy source” means an energy source whose energy potential is continuously renewed through natural processes or human activity;

5. ”electricity transmission” means the transport of electricity on the transmission system in the defined territory, or the transport of electricity on the transmission system in that part of the defined territory which connects part of the defined territory with the territory of Member States of the European Union or with the territory of third states;

6. ”transmission system” means the system of interconnected electricity lines and electricity facilities necessary for the transmission of electricity and the system of interconnected electricity lines and electricity facilities necessary for interconnection of the transmission system with a system outside the defined territory; the transmission system also includes the metering, protection, control, security, information and telecommunication equipment necessary for the operation of the transmission system;

7. ”transmission system operator” means a legal person authorized to transport electricity in the defined territory;

8. ”electricity distribution” means the transport of electricity on the distribution system in part of the defined territory;

9. ”distribution system means the system of interconnected electricity lines and electricity facilities necessary for the distribution of electricity in part of the defined territory; the distribution system also includes the metering, protection, control, security, information and telecommunication equipment necessary for the operation of the distribution system; the distribution system does not include the electricity line or electricity facility used for the transmission of electricity from the territory of a Member State of the European Union to the defined territory or part of the defined territory, or from the territory of third states to the defined territory or part of the defined territory;

10. ”distribution system operator” means a legal person authorized to distribute electricity in part of the defined territory;

11.  ”direct line” means an electricity line linking:

11.1. the electricity producer with the final customer of electricity;

11.2. the electricity producer with the electricity supplier who consumes the purchased electricity directly in their own energy facility or who supplies the purchased electricity to an integrated undertaking;

11.3. the electricity producer with the eligible customer who is not connected to the transmission system or to the distribution system;

12.  ”cross-border connection” means the line linking the national transmission system with the system of a European Union Member State;

13.  ”system” means the interconnected electricity facilities of the electricity producer, transmission system operator, distribution system operator, direct line operator and the owner of an electric connection, which are used for the generation, transmission, distribution and transport of electricity; the system also includes the metering, protection, control, security, information and telecommunication equipment necessary for the operation of the system;

14.  ”electricity facility” means a facility used for the generation, connection, transmission, distribution, transport or supply of electricity;

15.  ”ancillary service” means the service provided by the electricity producer to the transmission system operator in order to ensure the provision of system services necessary for maintaining the quality of electricity supply and for ensuring the operational reliability of the system, with the provision of such services typically resulting in the supply of control electricity;

16.  ”system service” means the service of the transmission system operator necessary for ensuring the operational reliability of the system in the defined territory; it includes services of the transmission system operator necessary for the safe operation of the electricity producer”s generating facilities;

17.  ”offtake point” means an electricity offtake point equipped with a designated meter;2

18.  ”offtake model diagram” means an offtake diagram identical for a given group of electricity customers;

19.  ”electricity supply” means the sale of electricity;

20.  ”electricity supplier” means a natural or legal person authorized to supply electricity;

21.  ”final supplier of electricity to households” means a supplier of electricity who as a vertically integrated undertaking carries out distribution of electricity and at the same time carries out supply of electricity to the household electricity customer;

22.  ”electricity customer” means a wholesale customer of electricity and a final customer of electricity;

23.  ”wholesale customer of electricity” means a natural or legal person who purchases electricity for the purpose of resale;

24.  ”final customer of electricity” means a household customer of electricity or non-household customer of electricity;

25.  ”household customer of electricity” means a natural person purchasing electricity for their own household consumption;

26.  ”non-household electricity customer” means a natural or legal person purchasing electricity which is not for their own household consumption;

27.  ”eligible customer of electricity” means a natural or legal person who is entitled to choose the supplier of their electricity;

28.  ”domestic coal” means coal mined in the defined territory;

29.  ”control electricity” means the electricity supplied to ensure compensation of imbalances in the system and to ensure a real-time balance of supply and demand in the electricity market;

30.  ”universal service” means the service which is provided to the household customer of electricity by the final supplier of electricity to households and which includes the distribution and supply of electricity;

31.  ”market participant”s deviation” means the deviation occurring in a given period as the difference between the amount of electricity agreed and the amount of electricity actually supplied;

32.  ”system deviation” means the sum of all individual deviations by the subjects of settlement for a given period;

33.  ”export of electricity” means the flow of a contractually agreed amount of electricity from the defined territory to a European Union Member State or a third state;

34.  ”transit electricity” means the flow of a contractually agreed amount of electricity through the defined territory to the territory of a European Union Member State or a third state;

35.  ”import of electricity” means the flow of a contractually agreed amount of electricity from a European Union Member State or a third state to the defined territory.

c) in the gas sector,

1.      ”gas production” means the extraction of natural gas, or the production of biogas, production of gas from biomass or production of gas from another gaseous hydrocarbon;

2.      ”gas producer” means a natural or legal person who extracts natural gas or operates an upstream network for the extraction of natural gas, or produces biogas, gas from biomass or gas from a gaseous hydrocarbon;

3.      ”upstream pipeline network” means a pipeline network used to transport extracted natural gas from a place of natural-gas extraction to a place of natural-gas processing or to a place where natural gas is delivered to the transmission system or the distribution system;

4.      ”gas transmission” means the transport of gas through a gas transmission system;

5.      ”gas distribution” means the transport of gas through a gas distribution system;

6.      ”distribution system” means the gas distribution equipment in a part of the defined territory;

7.      ”transmission system” means the network of compressor stations and network of high pressure pipelines which are interconnected, excluding the upstream network;

8.      ”storage facility” means a facility used for the stocking of natural gas or LNG, including ancillary services for the injection into the storage facility, extraction from the storage facility, treatment, and transport of gas to or from the system, but excluding storage facilities3 used for ensuring extraction activities or used  exclusively by transmission system operators or distribution system operators in order to carry out their functions;    

9.      ”LNG facility” means a terminal used for the liquefaction of natural gas, or for the regasification of LNG, or for temporary storage of LNG during the period necessary for  regasification;

10.  ”system” means the transmission system, distribution system, LNG facility, storage facility, facility for the provision of ancillary services, and facility necessary for providing access to the system;

11.  ”interconnector” means an interconnector linking the transmission system in the defined territory with transmission systems in the territory of the European Union and in the territory of third states;

12.  ”direct line” means a gas pipeline which is not part of the transmission system or  distribution system in the defined territory;

13.  ”offtake point” means a gas offtake point equipped with a designated meter;

14.  ”gas undertaking” means a natural or legal person who performs one or more of the functions of gas transmission, gas distribution, purchase of gas for the purpose of resale, gas supply, or gas storage, including the permanent storage of LNG; it does not include the final customer of gas;

15.  ”transmission system operator” means a gas undertaking authorized to transmit gas under this Act;

16.  ”distribution system operator” means a gas undertaking authorized to distribute gas under this Act,

17.  ”gas supply” means the sale or resale of gas, or the sale of LNG, to customers;

18.  ”gas supplier” means a gas undertaking authorized to supply gas under this Act;

19.  ”storage facility operator” means a gas undertaking authorized to store gas under this Act,

20.  ”LNG facility operator” means a natural or legal person authorized to operate a facility for the liquefaction of natural gas;

21.  ”ancillary service” means a service necessary for access to the system, operation of the system including the operation of facilities necessary for system balancing or facilities necessary for gas blending but excluding facilities needed by the operator to carry our its own functions;

22.  ”linepack” means the storage of gas by compression in the pipelines of transmission or distribution systems; it excludes the storage of gas in facilities reserved for the operators of such systems to carry out their own functions;

23.  ”gas customer” means a natural or legal person purchasing gas for resale or for their  own consumption;

24.  ”final customer of gas” means a household customer of gas or a non-household  customer of gas;

25.  ”household customer of gas” means a natural person purchasing gas for their own household consumption;

26.  ”non-household customer of gas” means a natural or legal person purchasing gas which is not used for the own household consumption of household customer of gas;

27.  ”eligible customer of gas” means a natural or legal person who is entitled to choose the supplier of gas;

28.  ”system balancing” means the compensating of imbalances in the system by the supply of gas to the system, or by the removal of gas from the system or by linepack; 

29.  ”combined system” means a network which includes a transmission system, distribution system and storage facility, or any combination thereof;

30.  ”combined system operator” means a gas undertaking authorized to operate a combined system under this Act;

31.  ”gas” means natural gas, including LNG, biogas, gas produced from biomass, and any  other types of gas that meet the criteria for gas transmission or gas distribution;

32.  ”gas facility” means a gas sector facility or gas offtake equipment;

33.  ”gas sector facility” means a facility designed for gas transmission, gas distribution, or gas storage, including facilities necessary for the provision of ancillary services, equipment necessary for ensuring access to and operation of the system, including the main gas shutoff valve and direct line;

34.  ”gas offtake equipment” means a gas customer”s equipment designated for the offtake of gas; 

35.  ”main gas shutoff valve” means a system operator”s equipment which separates the gas facility from the offtake equipment or from the gas facility of another gas undertaking.

Section 3

Performance of state administration

(1) State administration in the energy sector is performed by:

a)       the Ministry of Economy of the Slovak Republic (in this Act referred to as "the Ministry") on the basis of and within the scope of this Act,

b)      the Regulatory Office for Network Industries (in this Act referred to as "the Office") on the basis of and within the scope of this Act and a separate law,¹

c)       the State Energy Inspection on the basis of and within the scope of Part III of this Act.

(2) The Ministry: 

a)      is responsible for formulating an energy policy covering a period of at least twenty years, is responsible for updating the energy policy at intervals of not longer than five years having regard to the optimum utilization of domestic raw material, natural, technical and human potential,

b)     ensures the fulfilment of adopted obligations in the field of energy which arise from treaties binding upon the Slovak Republic and from its membership in international organizations,

c)      ensures monitoring of compliance with the security of electricity and gas supply,

d)     drafts a proposal on measures aimed at ensuring the security of electricity and gas supply,

e)      sets the scope of the criteria for technical safety of the electricity system and gas system, 

f)       defines obligations under a state of emergency or when preventing a state of emergency pursuant to section 14 and in the general economic interest pursuant to section 15, 

g)      assigns responsibility for the balancing of electricity system deviation within the defined territory,

h)      decides on the imposition of obligations in the general economic interest pursuant to section 15,

i)       decides on the implementation of measures with regard to:

1.      the prevention of a state of emergency or a state of emergency,

2.      a threat to the completeness and integrity of the electricity system and gas system,

3.      a threat to the security and reliable operation of the electricity system or gas system, or

4.      a threat to the life, health or property of natural and legal persons,

5.      a breach of regulations on environmental protection,

j)  decides on the granting of authorization for the construction of an energy facility pursuant to section 11,

k)  adopts measures to ensure the intent regarding support for the generation of electricity from renewable energy sources,

l)   analyses the fulfilment of measures adopted to ensure aims regarding the generation of electricity from renewable energy sources,

m) publishes every year by 31 July a report on the results from monitoring of the security of electricity and gas supply and on all adopted and expected measures for addressing  the security of electricity and gas supply; the report is published in the official journal of the Ministry and on the Ministry”s website,

n) publishes once every five years a report on the objectives for electricity generation from renewable sources and on measures adopted to ensure the intent for electricity generation from renewable sources; the report is published in the official journal of the Ministry and on the Ministry”s website,

o) publishes once every two years a report on the state of fulfilment of aims for electricity generation from renewable energy sources and on measures adopted to ensure the reliability of the certification of origin of generated electricity; the report and measures are  published in the official journal of the Ministry and on the Ministry”s website,

p)  sends the European Commission (in this Act referred to as “the Commission”) a request for the granting of a derogation from obligations arising from the common rules for the internal market in electricity and gas,

q)   implements the measures imposed by the Commission.

(3)  Measures pursuant to subsection (2)(f), (h) and (i) may be applied as:

a)      tariff measures or non-tariff measures,

b)      an obligation to ensure or perform technical or organizational measures,

c)      an obligation to refrain from conduct or activities,

d)      the provision of economic incentives4.

(4)  When applying measures pursuant to subsection (3), the functioning of the electricity market or gas market may be disrupted only to the extent needed to achieve the purpose of the applied measures. The Ministry is obliged to cancel the applied measures if the reasons for which they were adopted have ceased to exist.

(5) A decision on the application of measures under subsection (2)(h) and (i) may be appealed; the appeal shall have no suspending effect.

(6) The Ministry further notifies the Commission of:

a)      measures adopted for the fulfilment of the obligation to provide a universal service,

b)      measures adopted for the fulfilment of obligations in the general economic interest;  amendments to adopted measures shall be notified regularly every two years,

c)      reasons for the rejection of an application for the granting of authorization to construct an  energy facility,

d)      results from the monitoring of the security of electricity and gas supply and on the adopted and expected measures for addressing the security of electricity and gas supplies,

e)      technical rules establishing technical, design and operational requirements for connection to the electricity system and gas system,

f)        measures pursuant to subsection (2)(h) and (i); similarly, it also notifies other European Union Member States.

Section 4

Conducting business in the energy sector

(1) The conduct of business in the energy sector includes:

a)      the generation, transmission, distribution and supply of electricity,

b)      the production, transmission, distribution, supply and storage of gas,

c)      the operation of pipelines for the transport of fuels or oil,

d)      the operation of equipment for the filling of pressure vessels, 

e)      the operation of equipment for the distribution of liquefied petroleum gas.

(2) The conduct of business in the energy sector does not include electricity generation, electricity transmission, electricity distribution, gas production, and gas distribution for own consumption.       

Section 5

Licence

   (1) Business in the energy sector may only be conducted on the basis of a licence.

   (2) Except for activities under subsection (4), a licence is required for:

a)      the generation, transmission, distribution and supply of electricity,

b)      the production, transmission, distribution, storage² and supply of gas,

c)      the operation of pipelines for the transport of fuels,

d)      the operation of pipelines for the transport of oil,

e)      the operation of equipment for the filling of pressure vessels,

f)        the operation of equipment for the distribution of liquefied petroleum gas.

(3) A licence under subsection (2) may be issued for one or more activities for an indefinite period, unless requested otherwise by the applicant. The licence is issued by the Office.

(4) The licence is not required for the following activities:

a) the generation of electricity in a generating facility with a total installed capacity of up to 5 MW;

b) the generation of electricity from renewable energy sources by a  generating facility which has a total installed capacity of up to 5 MW, provided it is electricity generation in:

1.      small hydro power plants,

2.      wind power plants,

3.      solar plants, 

4.      plants for geothermal energy use,

5.      plants for biogas use,

6.      plants for biomass use,

c)   the production of gas from biomass,

d) the production of gas from biogas,

e) the sale of compressed natural gas to be used as fuel for motor vehicles,

f)   the transport of extracted oil from the place of extraction to the place of processing, 

g) the sale of liquefied petroleum gas in pressure vessels of up to 100 litres,

h) the sale of liquefied petroleum gas to be used as fuel for motor vehicles, 

i)   the transport of liquefied petroleum gas in pressure vessels.

       (5) The entity performing an activity that does not require a licence pursuant to subsection (4) is subject to a notification duty for the commencement of any activity, under which it must notify the Office within thirty days of the commencement of the activity, termination of the activity or any change in the performance of the activity. 

Section 6

Conditions for the issuance of a licence

   (1) The natural person to whom a licence is issued must:

a)      be at least 21 years of age at the time of making the licence request,

b)      have full legal capacity,