Business Battle breaks out between state bodies over role of energy regulator

08-07-2014 11:17 | Chris Johnstone

An unseemly battle has broken out between out between the Czech energy regulator, ERÚ, and the Ministry of Industry and Trade over proposed changes to the country’s flagship energy law.

Photo: archive of Radio PraguePhoto: archive of Radio Prague In short, the regulator ERÚ says that the planned rules will cripple its operations and shift the balance of the energy market fundamentally in favour of big, monopoly, electricity and electricity companies. The regulator has been positioning itself as the champion of consumers.

The brewing row between the two state institutions who share the main responsibility for the state’s energy strategy and market culminated yesterday in a press conference by controversial ERÚ chairwoman Alena Vitásková. The office says it was shut out of the preliminary consultations over the new rules and now has a limited window before July 11 to react.

The main points of her attack are that the nature of the regulator’s price decisions will be changed so that they can now be open to court challenge, that the way will be paved for out of court settlements between the regulator and companies, that new deadlines for consultations mean that its hands will be tied for months and years, and that the regulator will be forced to ensure the energy company is making an adequate return on its investments due to its pricing decisions.

According to one official close to Vitásková, the outcome of the changes if they go ahead as planned is that the 200-strong regulator might as well close up its shop and shut down.

The ERÚ head also laid out some more specific charges; saying that a large body of the new rules have been hatched in consultations between the ministry and lobbyists and consultants for big energy companies.

In particular, she picked out the fact that the changes will torpedo its attempts to force two of the biggest domestic gas companies, gas distributor and seller RWE and gas pipeline owner and operator NET4GAS to make investments of around 3 billion crowns. It argues that RWE has already earned 1.2 billion crowns and NET4GAS around 1.8 billion crowns from charges to consumers for investments that it did not finally deliver. The regulator has been pressing for either the investments to be made or the money clawed back to benefit consumers.

The ministry reacted to the press conference late Monday saying that consultations with the regulator took place last week and said it regarded attempts to put the media spotlight on differences as ‘premature and irrelevant and creating the impression of a conflict between ERÚ and the ministry which in fact does not exist.’

Part of the new changes would also hoist a new council, nominated by the ministry, to oversee the regulator’s operations, decisions, and strategy. ERÚ has doubts whether this is in line with the regulator’s independence as enshrined in EU legislation but insists that this not a personal issue surrounding the controversial actions of Alena Vitásková and her self proclaimed crusade against some solar power companies and big energy monopolies.

The episode has a somewhat embarrassing hue due to the fact that the Czech Republic has in recent months complained vociferously about undue pressure on energy regulators, in particular in the Balkans, which have in particular hit state-controlled electricity company ČEZ.

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