Electricity is a vital energy source for both industrial and residential customers. To ensure affordable and secure supplies of electricity, there has been a major focus on liberalisation of the electricity market. Slovakia, as a member of the European Union, transposed Directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in electricity through its Act. No.: 656/2004 Coll. on Energy. Under this Act, every non-residential customer became an "eligible customer of electricity" and had the right to choose the supplier of their electricity beginning January 1, 2005. Since July 1, 2007 this right applies to residential customers also.
The electricity market in Slovakia
The electricity market consists of the supply of electricity, connection and access to the transmission system, the distribution system and the transmission and distribution of electricity in a defined territory.
The following legal persons participate in the electricity market: electricity generators, the transmission system operator, distribution system operators, electricity suppliers and, of course, the final customers.
Transmission of electricity from the producer to the final customers within Slovakia is ensured through the electricity facility system: the transmission and distribution systems. The liberalisation of the electricity market brought the separation (unbundling) of the “monopolized activities" which use the existing electricity network for transmission and distribution from activities where competition is desirable, such as the production of electricity and the supply of electricity.
The transmission of electricity within the Slovak Republic is secured through only one transmission system operator - Slovenská elektrizačná prenosová sústava, a.s. (SEPS).
Distributing electricity to the majority of households and industrial customers are three major regional distribution system operators: ZSE Distribúcia, a.s, Stredoslovenská energetika - Distribúcia, a.s. and Východoslovenská distribučná, a.s. Some important industrial customers, however, use local distribution system operators.
Most of the electricity is generated by Slovakia’s biggest electricity producer - Slovenské elektrárne, a.s.. But supplying electricity to customers is the area with the broadest liberalisation. The electricity suppliers purchase electricity from the producers and supply it mainly to the final customers. Besides the three "traditional" regional electricity suppliers (ZSE Energia, a.s., SSE, a.s. and Východoslovenská energetika, a.s.) many "alternative" suppliers have acquired the necessary license from the Regulatory Office for Network Industries (URSO) to supply electricity and to create real competition on the market.
Final consumers are divided into two groups: industrial customers, where the price for electricity is determined by the market and residential customers, where prices are regulated by the URSO. Both groups of customers are, however, entitled to freely choose their electricity supplier.
The process of changing your electricity supplier
The latest annual progress Report of the European Commission on liberalisation of Slovakia’s internal gas and electricity market noted that in 2008 approximately 2% of all electricity customers in Slovakia had exercised their right to change their electricity supplier with most of them being large industrial customers.
Residential customers are only gradually discovering the possibility of changing their electricity supplier. But due to the higher-than-expected increases in electricity prices for 2009 for larger households (annual consumption higher than 5,000 kWh), some 3,000 customers decided to change their electricity supplier since the beginning of 2009.
The legal framework for changing a customer’s electricity supplier is the Decree of the Government of the Slovak Republic No. 317/2007 stipulating the rules of the electricity market. According to its Annex 2, a new electricity supplier can be chosen either:
a) monthly, effective on the 1st day of a month if the customer has a continuous designated meter; or
b) quarterly, effective on the 1st day of the quarter-year if the customer does not have a continuous designated meter.
Such a change must be requested at least 40 days before the planned date. However, the pre-conditions for the change are the valid termination of the electricity supply contract with the present supplier and the conclusion of a contract with the new supplier. Therefore, customers wishing to change their electricity supplier should check with their present supplier on the conditions for the termination of their contracts.
The “traditional suppliers” state how to do this in their general terms and conditions which are available on their websites. The usual termination requires a 90-day notice period and is usually possible with effectiveness at the end of the calendar year. So generally, the termination of the present contract should be performed and a new contract should be concluded before September 30.
It is important to note that customers may terminate their supply agreements if their current supplier changes its general terms and conditions. Then the notice period is usually shorter, not exceeding the legally prescribed 40 days. Furthermore, the technical conditions stipulated by the rules of the applicable distribution system operator must be followed when changing to a new supplier, and also a new contract on access to the distribution system with their electricity distributor should be concluded.
The primary “alternative” electricity suppliers are able to represent their customers in these administrative matters before the applicable authorities if the customer grants them power of attorney to do so.
Mgr. Ing. Dávid Oršula is an attorney and partner with bnt - Sovova Chudáčková & Partner, s.r.o.
This article is of an informative nature only. For more information go to www.bnt.eu.