1. Ministry of Industry and Trade of the Czech Republic Role of the Public Administration in the Czech Energy Sector Jan Pouček Director of Energy Policy Department Ministry of Industry and Trade of the Czech Republic 24 March 2003, Roma

2. 2 Ministry of Industry and Trade of the Czech Republic Periods of Change 1) 1989 – 1994, key political and economic transformation, split of state, privatisation, market liberalisation, institutions and energy sector restructuring, first energy policy guidelines, new legislation 2) 1995 – 2000, further privatisation, price rectification, unemployment, institutional reorganisation, Atomic Act 3) Since 2000, new energy policy, Energy Performance and Energy management Act, new organisational framework: regulatory office, market operator, restructuring for state- driven privatisation

3. 3 Ministry of Industry and Trade of the Czech Republic Structure of the public administration in energy sector (1989-94) Until 1993, Federal Ministry of Economy Until 1993, Federal Ministry of Economy Since 1993: Ministry of Industry and Trade -MIT, Ministry of Economy, Ministry of Finance (MF), National Property Fund (NPF), (MoP,…) Since 1993: Ministry of Industry and Trade -MIT, Ministry of Economy, Ministry of Finance (MF), National Property Fund (NPF), (MoP,…) FEA — > MIT/Energy Agency CR, State Energy Inspection, - Nuclear Safety Office, -ASMR (material reserves); Mining Office, RWRA (rad. waste) FEA — > MIT/Energy Agency CR, State Energy Inspection, - Nuclear Safety Office, -ASMR (material reserves); Mining Office, RWRA (rad. waste)

4. 4 Ministry of Industry and Trade of the Czech Republic Role of public administration in energy sector (1995 – 2000) Restructuring: Ministry of Industry (MIT), Restructuring: Ministry of Industry (MIT), Pricing and privatisation: MF, NPF, (MIT) Pricing and privatisation: MF, NPF, (MIT) Regional administration: Ministry of Regional Development (RM), Regional administration: Ministry of Regional Development (RM), Energy Efficiency + renewables: new Czech Energy Agency Energy Efficiency + renewables: new Czech Energy Agency

5. 5 Ministry of Industry and Trade of the Czech Republic Government Institutions Involved in Energy Policy-Making in 2000 (source IEA)

6. 6 Ministry of Industry and Trade of the Czech Republic Role of the Ministry of Industry and Trade (2000) Responsibility for energy policy Responsibility for energy policy Administration and business conditions of coal and uranium, power, gas, heat sectors Administration and business conditions of coal and uranium, power, gas, heat sectors Production, transmission, distribution, storage Production, transmission, distribution, storage Effective use of energy and renewables Effective use of energy and renewables International co-operation International co-operation Pre-accession activities Pre-accession activities

7. 7 Ministry of Industry and Trade of the Czech Republic Structure of the Ministry of Industry and Trade Energy sector is governed by the Section of Raw Minerals, Energy and Metallurgy Energy sector is governed by the Section of Raw Minerals, Energy and Metallurgy –Energy Policy Department –Department of Electrical Power and Heat Production –Department of Uranium Mining and Safe Disposal of Radioactive Waste –Coal Mining Department –Gas and Liquid Fuels Department Each Department has about 12-15 employees Each Department has about 12-15 employees

8. 8 Ministry of Industry and Trade of the Czech Republic Process of Privatisation 1. Full state ownership 2. State-driven privatisation: 34% shares sold to regional or city/town administration and 15% through vouchers to private sector, 1-3% for restitution 3. Strong acquisition effort of foreign firm and budget deficit of cities 4. Non state firms or foreigners gained more than „blocking“ minority: loss of state control in the process

9. 9 Ministry of Industry and Trade of the Czech Republic Energy Legislation/Regulation Two main acts adopted in 2000 have a general application for Czech energy sector: Two main acts adopted in 2000 have a general application for Czech energy sector: –The Energy Act (No. 458/2000) applies to the electricity, gas, and heat sectors, and the related public institutions. –The Act on Energy Management (No. 406/2000) regulates the adoption of national and local energy policies, the national programme for energy efficiency and use of renewables, energy labelling, energy audits, and other rules relating to energy efficiency. Both acts require the adoption of new secondary regulations. Both acts require the adoption of new secondary regulations.

10. 10 Ministry of Industry and Trade of the Czech Republic Energy sector regulation Energy Regulatory Office (1) Statute Statute –ERO is a separate state organisation under the responsibility of the Prime Minister. Its operating costs are covered by the state budget approved every year by the Parliament. Selection of staff, structure Selection of staff, structure –The government appoints for a five-year period the Chairperson who can only be removed for a limited number of reasons (physical or mental incapacity, violation of duties, criminal acts or resignation). –The structure of ERO includes the following departments: Regulation, Licensing and Tariffs. The current staff is around 50 and should reach up to 100 in future.

11. 11 Ministry of Industry and Trade of the Czech Republic Energy sector regulation Energy Regulatory Office (2) Responsibilities Responsibilities –ERO regulates the grid-based energy industries i.e., gas, electricity and district heat. Its responsibilities include:  Concession and revocation of licences to energy market participants (generation, transmission, distribution, traders)  Establishment of tariffs (wholesale, end-users and ancillary services) for electricity, natural gas and heat for protected customers (households, services, etc.)  Regulation of connection conditions, trading rules and the quality of supplies  Protection of protected customers  Application of sanctions and penalties for violation of regulation  Settlement of disputes (including concerning third party access).

12. 12 Ministry of Industry and Trade of the Czech Republic Energy sector regulation Energy Regulatory Office (3) Decisions taken by ERO are to published in the bulletin of ERO and appeals can only be made to the Chairperson or to an administrative court on administrative matters only. Decisions taken by ERO are to published in the bulletin of ERO and appeals can only be made to the Chairperson or to an administrative court on administrative matters only. Inspection activities are carried out by the State Energy Inspection Board. The State Energy Inspection Board also has the power of fining licences for licence violations, at the recommendation of ERO. Inspection activities are carried out by the State Energy Inspection Board. The State Energy Inspection Board also has the power of fining licences for licence violations, at the recommendation of ERO.

13. 13 Ministry of Industry and Trade of the Czech Republic Energy Programmes National Programme for Support of Energy Efficiency and a Wider Use of Renewable and Waste Energy Sources National Programme for Support of Energy Efficiency and a Wider Use of Renewable and Waste Energy Sources –approved in May 2002 for 4 years –sets a general framework for annual programmes –sets medium term goals in energy efficiency and renewables till 2005 –should be revised every 4 years State Programme for Support of Energy Efficiency and a Wider Use of Renewable and Waste Energy Sources State Programme for Support of Energy Efficiency and a Wider Use of Renewable and Waste Energy Sources –annual programme approved by the government with involvement of individual sectors –2 implementation agencies: »Czech Energy Agency (annual budget 3 mill. USD from state budget) »State Environmental Fund (annual budget 30 mill. USD from emission charges).

14. 14 Ministry of Industry and Trade of the Czech Republic Czech Energy Agency Its targets are: Its targets are: -Residential buildings, family houses and their equipment for supplying heat and hot water. -Schools, health service buildings and plants supplying heat and energy. -Buildings of services and facilities, the public sector institutions and their energy operations. -Industry, transport and agriculture: application of modern technologies and materials for energy efficiency and alternative energy sources. -Towns and municipalities: support for energy savings. Its main tools are: Its main tools are: -Consultancy, education, training, promotion of energy savings, renewables and protection of the environment. -Detailed energy audits in all fields of economy and energy consumption. -Energy labelling, energy management, Monitoring and targeting in industry Staff at the CEA’s - currently 22 people, annual budget 3 mill.USD. Staff at the CEA’s - currently 22 people, annual budget 3 mill.USD.

15. 15 Ministry of Industry and Trade of the Czech Republic Assistance from the European Commission, the World Bank, IEA The experience of EU countries and institutions is useful mainly in technology selection, managerial and financial skills The experience of EU countries and institutions is useful mainly in technology selection, managerial and financial skills a Task Force consisting of experts from EU, banks and the candidate countries can investigate issues and propose the best solution a Task Force consisting of experts from EU, banks and the candidate countries can investigate issues and propose the best solution Local expertise is inevitable Local expertise is inevitable

16. 16 Ministry of Industry and Trade of the Czech Republic Recommendation Clear definition of the policy goals – role of state Clear definition of the policy goals – role of state Realistic scope of measures Realistic scope of measures Clear implementing body Clear implementing body Supervision, monitoring, evaluation and time range Supervision, monitoring, evaluation and time range Main requirements anchor in legislation Main requirements anchor in legislation Perfect preparation and simulation before implementation (privatisation) Perfect preparation and simulation before implementation (privatisation) Staff education and stabilization Staff education and stabilization To be in touch with relevant parties To be in touch with relevant parties