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Influence of third EU legislative package on status of Energy Agency - International Law Office

International Law Office

Energy & Natural Resources - Slovenia

Influence of third EU legislative package on status of Energy Agency

February 07 2011


The European Union's third legislative package on energy will come into force in March 2011 and will have a substantial impact on Slovenian domestic laws. In particular, it will significantly affect the status of the domestic energy regulator, the Energy Agency, and debate has already begun on necessary amendments to the agency's competence and the manner in which it operates. While the regulations(1) directly apply, the two directives(2) included in the package will have to be transposed into Slovenian law through the adoption of a new Energy Act. At present, the new act is still in the expert phase of preparation at the Ministry of Commerce; however, certain conclusions can already be drawn on the agency's future status.

Both directives envisage the independence of domestic energy regulators from any public or private interest. It is believed that effective regulation is hampered by a lack of independence from government and insufficient discretion. However, the directives emphasise that judicial review or parliamentary supervision in accordance with the constitutional law of the member state is not precluded. In addition, the national legislature's approval of the regulator's budget does not constitute an obstacle to budgetary autonomy; the member state will ensure the regulator's autonomy in the implementation of the allocated budget. Furthermore, the directives provide for the independence of the regulators' top management members by fixing their terms of office at five to seven years, thereby restricting grounds for termination and setting up an appropriate rotation scheme.

At present, the Slovenian Energy Agency has a public agency status that is governed by the Energy Act(3) and the Public Agencies Act.(4) In accordance with these laws, the agency was established by the republic of Slovenia, but the rights of founder (eg, the appointment and recall of the top management members) are exercised by the government. The agency's autonomy is declared by law;(5) however, the described arrangement de facto implies the agency's insufficient independence. This view is further supported by the fact that certain general acts of the agency are subject to the government's consent.(6)

The new Energy Act should provide for the agency's independence by excluding the application from all or at least most of the provisions of the Public Agencies Act, and by reforming the appointment and recall of the agency's director and council of members. At present, the grounds for termination of these members' terms of office are listed in the Energy Act(7) and the Public Agencies Act,(8) and are more broadly determined than the directives envisage. In particular, the Public Agencies Act provides that the director's term of office may be terminated if:

  • his or her performance is considered to be unprofessional or reckless;
  • it turns out that his or her working and professional qualities are not suitable for service in the position of director or in the agency; or
  • he or she is not achieving satisfactory results.

It is believed that these grounds for termination are too wide and give the government too much manoeuvring space. Thus, the existing arrangement clearly diminishes the independence of the managing staff and should therefore be adjusted and a new rotation system put in place.

In contrast, the directives' requirements on terms of office are satisfied since the Public Agencies Act envisages five-year terms of office for the director and council members.(9) However, the directives provide for the renewal of terms of office only once, while the Public Agencies Act states only that the term of office may be renewed, without clearly stipulating the number of renewals. Accordingly, the new Energy Act will have to limit the number of renewals to one.

Essentially, the agency is financed in accordance with the new amendments brought by the directives - that is, through the allocation of budgetary resources, the agency's own resources and a percentage of network use. The supervision of the agency's legal, purposeful, efficient and effective use of public funds is undertaken by the Court of Auditors. The new Energy Act is unlikely to amend this arrangement.

The new Energy Act is due to be adopted in March 2011; however, it is unlikely that it will be adopted by this deadline. Until the release of the first draft, possible changes to the agency's status are open to suggestion. However, in order to comply with EU legislation, the above-mentioned discrepancies should be eliminated, and therefore it is reasonable to expect that the agency's status will be substantially altered.

For further information on this topic please contact
Helena Vranič or Tjaša Lahovnik at Odvetniki Šelih & partnerji op, doo by telephone (+386 1 300 7650), fax (+386 1 433 7098) or email (helena.vranic@selih.si or tjasa.lahovnik@selih.si).

Endnotes

(1) EU Regulation 713/2009 establishing an Agency for the Cooperation of Energy Regulators; EU Regulation 714/2009 on conditions for access to the network for cross-border exchanges in electricity and repealing EU Regulation 1228/2003 and EU Regulation 715/2009 on conditions for access to the natural gas transmission networks and repealing EU Regulation 1775/2005.

(2) EU Directive 2009/72/EC concerning common rules for the internal market in electricity and repealing EU Directive 2003/54/EC and EU Directive 2009/73/EC concerning common rules for the internal market in natural gas and repealing EU Directive 2003/55/EC.

(3) Official Gazette of the Republic of Slovenia 27/2007, as amended.

(4) Official Gazette of the Republic of Slovenia 52/2002.

(5) Article 2(4) of the Public Agencies Act.

(6) Article 85 of the Energy Act.

(7) Article 83(4) of the Energy Act.

(8) Article 23 of the Public Agencies Act.

(9) Articles 12(2) and 19(1) of the Public Agencies Act.


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