Commission Report 2002 (Slovakia)

• Progress since the last Regular Report
• Overall assessment
• Conclusion

Chapter 14: Energy

Progress since the last Regular Report

Since last year's Regular Report, Slovakia made further progress in aligning its energy legislation with the EC acquis. In particular progress has been made in the field of the internal energy market, including setting up the necessary regulatory body. Some progress has been made with regard to decommissioning of the two V1 reactors at Bohunice, which Slovakia is committed to close by 2006 and 2008, respectively.

With regard to security of supply, Slovakia is making progress in particular regarding the setting up of the infrastructure to manage the emergency oil stocks, which are being built up as foreseen. The administrative capacity of the oil stock body was reinforced by 5 additional employees since last year's Regular Report.

As for competitiveness and the internal energy market, Slovakia continued to make progress in establishing the framework for equal and fair application of the acquis. Both the electricity and the gas markets have been partly opened to competition. Restructuring, including privatisation, of both sectors is ongoing.

The opening of the electricity market is proceeding in two stages. Following the entry into force in January 2002 of the Ministry of Economy decree laying down the smallest volume of annual electricity and gas consumption for eligible customers, initial market opening of the electricity market started in January 2002 with liberalisation for the largest consumers (over 100 GWh per annum), corresponding to 31 % of the market. Smaller customers (over 40 GWh per annum) will be free to choose their supplier from January 2003. From January 2004 the same will apply for 20 GWh consumers. These represent 36% and 42% of the market share respectively. For foreigners, one-third of consumption will be liberalised from January 2003, another third from January 2004 and the final third from January 2005.

At the end of 2001, the unbundling of the national electricity company Slovak Electrics took place and three joint stock companies with separate management and accounting were set up. One of these - the Slovak Energy Transmission Network (SEPS) performs the role of the independent Transmission System Operator and will remain 100% state owned.

Three energy distribution companies have been partially privatised in May 2002.

With respect to the gas market, following the entry into force in January 2002 of the Ministry of Economy decree laying down the smallest volume of annual electricity and gas consumption for eligible customers, the market has been opened for customers consuming more than 25 bn m3 annually as of July 2002.. This threshold will be lowered to 15 bn m3 and 5 bn m3 by January 2003 and January 2008, respectively. In effect, this affects only a limited part of the current domestic consumption (10-15%). The Slovak Gas Company (SPP), which currently remains as one vertically integrated company responsible for both transit and distribution, was partly privatised in March 2002.

As regards energy efficiency and renewable energy, some progress can be reported. Government decrees aiming at improving energy efficiency through the labelling of electrical household appliances entered into force in May 2002.

In the field of nuclear energy, Slovakia operates two nuclear power plants located at Bohunice and Mochovce. At Bohunice, there are four units in operation: two VVER 440/230 reactors (units 1 and 2 at Bohunice V1 and two VVER 440/213 reactors (units 3 and 4 at Bohunice V2). At Mochovce, two VVER 440/213 reactors (units 1 and 2) are in operation.

As regards nuclear safety, Slovakia is continuing its safety improvement programmes at the Bohunice and Mochovce nuclear power plants.

With regard to the specfic recommendation by the June 2001 Council Report on Nuclear Safety in the Context of Enlargement that Slovakia completes the regulatory assessment of bubbler condenser containment function under design basis accidents, Slovakia, together with the Czech Republic and Hungary, is financing a set of additional experiments to support this review. The evaluation of the results is due to be presented by December 2002 to all three regulatory authorities.

The Slovak Government decided in September 1999 that the two Bohunice V1 reactors will be closed down by 2006 and 2008 respectively. During the reporting period, Slovakia took some steps to implement this commitment. In November 2001, the Grant Framework Agreement, which is an international agreement, was signed between the Slovak Republic and the EBRD acting as manager of the Bohunice International Decommissioning Support Fund (BIDSF). In June 2002, the Slovak Parliament adopted the legislation which was necessary for the integration of the valid and binding Framework Agreement into the Slovak legal system. The BIDSF held two meetings of the Assembly of Contributors. The first, in November 2001, approved the Framework Agreement and made the BIDSF operational. The second, in June 2002, defined the scope of activities to be financed under the BISDF and reviewed the project pipeline proposed by the Slovak side which is divided in four categories (preparation for final shutdown, decommissioning documentation, waste management and measures in the energy sector). The Assembly is chaired by the Commission, representing the European Community as the main contributor to the BIDSF.

Overall assessment

With regard to security of supply, Slovakia has made progress both in terms of alignment and the actual building up of oil stocks but needs to continue these efforts.

As regards the internal energy market, mechanisms for regulation and control have been duly set up, but there is a need to fully align with the acquis and to further strengthen the administrative capacity. The market structure is such that it will be difficult to introduce real competition in practice. Privatisation, although not a requirement by the acquis, may help to introduce competition.

Concerning energy efficiency and renewable energy, Slovakia should intensify its activities to promote the use of renewable sources of energy and enhance performance as regards energy efficiency.

The independent Regulatory Office for Network Industries (RONI) has been operational since August 2001. The RONI has the mandate to protect the consumer from negative consequences deriving from the monopoly position of an energy supplier and to create conditions that stimulate market competition and to eliminate political influence on price setting. RONI competencies include granting market licences and setting market rules; the responsibility for price regulation will be transferred from the Ministry of Finance to the RONI as of January 2003. The RONI has a staff of 50. Despite its operationality, the employees of RONI will need further training. Full independence will only be achieved if the Office's budget chapter falls under the Parliament rather than the Government.

The European Union has repeatedly emphasised the importance of a high level of nuclear safety in candidate countries. In June 2001 the Council of the European Union took note of a Report on Nuclear Safety in the Context of Enlargement. This Report contains recommendations to all candidate countries to continue their national safety improvement programmes, including the safe management of spent fuel and radioactive waste and the safety of their research reactors.

During the first half of 2002 a special Peer Review on nuclear safety assessed the progress made by candidate countries in implementing the recommendations. This exercise, conducted under the auspices of the Council, resulted in a Status Report published in June 2002, which concludes that Slovakia has accepted and addressed all the recommendations contained in the Report on Nuclear Safety in the Context of Enlargement of June 2001. Most of the recommendations have been adequately addressed. With regard to four specific recommendations, Slovakia has announced adequate measures, but the Report emphasises that Slovakia is expected to ensure that they are implemented. This concerns the timely completion of the Bohunice V-2 safety improvement programme, the implementation of appropriate guidance for the management of beyond design basis accidents at Bohunice V-1, the completion of the full verification of the containment bubbler-condenser systems, and proper measures to preserve staff motivation at Bohunice units 1 and 2 until final closure.

The two V1 reactors of Bohunice Nuclear Power Plant are subject to early closure commitments. In 1999 the Slovak government decided that these are to be closed down by 2006 and 2008 respectively. These closure commitments must be respected and therefore duly included in the Accession Treaty.

The independent status and resources of Slovakia's nuclear safety regulatory authority should be further strengthened and the safety improvement programmes on Bohunice units 3 and 4 and Mochovce should be continued.

Longer-term solutions for spent fuel and nuclear waste will need continued attention.

Slovakia will need to ensure compliance with Euratom requirements and procedures. In this respect, due attention must be given to preparing for the implementation of Euratom Safeguards, in particular regarding the reporting of nuclear material flows and inventories directly by the persons or undertakings operating nuclear installations or storing nuclear material. It should be noted that Slovakia has concluded a Full-Scope Safeguards Agreement with the IAEA.

Conclusion

In its 1997 Opinion, the Commission concluded that, Slovakia needed to step up its efforts in order to comply with most of the EC energy legislation in the coming years. In particular, matters such as the adjustment of monopolies, access to networks, energy pricing, emergency preparedness -including the building-up of mandatory oil stocks-, state interventions in the solid fuel sector, and the development of energy efficiency and fuel quality standards needed attention. The Commission further pointed out that, although no major difficulties were foreseen regarding compliance with Euratom provisions, nuclear safety required particular attention. Safety standards should be tackled appropriately and realistic programmes implemented quickly. Furthermore, longer term solutions for waste need attention.

Since the Opinion, steady progress has been made, notably with regard to oil stocks, the internal energy market, particularly the electricity and gas sectors, nuclear issues, the gradual development of administrative capacity and, to a lesser extent, the improvement of energy efficiency and the promotion of renewable energy. Overall, Slovakia has achieved a good level of alignment with EC requirements in this field, as regards both legislative alignment and administrative preparations.

Negotiations on this chapter have been provisionally closed. Slovakia has been granted a transitional arrangement for the building-up of oil stocks (until 31 December 2008). Slovakia is generally meeting the commitments it has made in the accession negotiations in this field.

In order to complete preparations for membership, Slovakia's efforts now need to focus on ensuring full and timely implementation of legislation in this area, in particular with regard to the internal energy market (gas and electricity), and on strengthening the administrative capacity of the established bodies (in particular the energy regulator and the nuclear safety authority). Slovakia needs to take further measures for the progressive building up of oil stocks. Continued attention will need to be paid to state interventions in favour of the solid fuels sector and the repercussions on the electricity market. With respect to the Bohunice International Decommissioning Support Fund, Slovakia should further refine its project pipeline to ensure satisfactory projects for the decommissioning of the Bohunice V1 reactors.

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