ministry of industry and trade of the czech republic role of the public administration in the czech...

Ministry of Industry and Trade of the Czech Republic

Role of the Public Administration in the Czech Energy Sector

Jan PoučekDirector of Energy Policy Department

Ministry of Industry and Trade

of the Czech Republic

24 March 2003, Roma

Ministry of Industry and Trade of the Czech Republic 2

Periods of Change

1)1) 1989 – 1994, key political and economic transformation, 1989 – 1994, key political and economic transformation, split of state, privatisation, market liberalisation, split of state, privatisation, market liberalisation, institutions and energy sector restructuring, first energy institutions and energy sector restructuring, first energy policy guidelines, new legislationpolicy guidelines, new legislation

2)2) 1995 – 2000, further privatisation, price rectification, 1995 – 2000, further privatisation, price rectification, unemployment, institutional reorganisation, Atomic Actunemployment, institutional reorganisation, Atomic Act

3)3) Since 2000Since 2000,, new energy policy, Energy Performance and new energy policy, Energy Performance and Energy management Act, new organisational framework: Energy management Act, new organisational framework: regulatory office, market operator, restructuring for state-regulatory office, market operator, restructuring for state-driven privatisationdriven privatisation


Structure of the public administration in energy sector (1989-94)

Until 1993, Federal Ministry of EconomyUntil 1993, Federal Ministry of Economy Since 1993: Ministry of Industry and Trade -MIT, Since 1993: Ministry of Industry and Trade -MIT,

Ministry of Economy, Ministry of Finance (MF), National Ministry of Economy, Ministry of Finance (MF), National Property Fund (NPF), (MoP,…)Property Fund (NPF), (MoP,…)

FEA FEA —— >> MIT/Energy Agency CR, State Energy MIT/Energy Agency CR, State Energy Inspection, - Nuclear Safety Office, -ASMR (material Inspection, - Nuclear Safety Office, -ASMR (material reserves); Mining Office, RWRA (rad. waste)reserves); Mining Office, RWRA (rad. waste)


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 Regional administration: Ministry of Regional

Development (RM),Development (RM), Energy Efficiency + renewables: new Czech Energy Energy Efficiency + renewables: new Czech Energy

AgencyAgency


Government Institutions Involved in Energy Policy-Making in 2000 (source IEA)

Ministry of Industryand Trade

(Energy Section)

Czech EnergyAgency

Radioactive WasteResponsibility Authority

State EnvironmentalFund

State EnergyInspection

Ministry of Environment

Ministry of Finance

Government of theCzech Republic

Administration of State Material Reserves

State Office forNuclear Safety

Central StatisticalOffice

Energy RegulatoryOffice

Czech MiningAuthority

Office for the Protection ofEconomic Competition

National PropertyFund


Role of the Ministry of Industry and Trade (2000)

Responsibility for energy policyResponsibility for energy policy Administration and business conditions of coal and Administration and business conditions of coal and

uranium, power, gas, heat sectorsuranium, power, gas, heat sectors Production, transmission, distribution, storageProduction, transmission, distribution, storage Effective use of energy and renewablesEffective use of energy and renewables International co-operationInternational co-operation Pre-accession activitiesPre-accession activities


Structure of the Ministry of Industry and Trade

Energy sector is governed by the Section of Raw Minerals, Energy sector is governed by the Section of Raw Minerals, Energy and MetallurgyEnergy and Metallurgy– Energy Policy DepartmentEnergy Policy Department

– Department of Electrical Power and Heat ProductionDepartment of Electrical Power and Heat Production

– Department of Uranium Mining and Safe Disposal of Radioactive Department of Uranium Mining and Safe Disposal of Radioactive WasteWaste

– Coal Mining DepartmentCoal Mining Department

– Gas and Liquid Fuels DepartmentGas and Liquid Fuels Department

Each Department has about 12-15 employeesEach Department has about 12-15 employees


Process of Privatisation

1. Full state ownership1. Full state ownership2. State-driven privatisation: 34% shares sold to regional or 2. State-driven privatisation: 34% shares sold to regional or

city/town administration and 15% through vouchers to city/town administration and 15% through vouchers to private sector, 1-3% for restitutionprivate sector, 1-3% for restitution

3. Strong acquisition effort of foreign firm and budget deficit 3. Strong acquisition effort of foreign firm and budget deficit of cities of cities

4. Non state firms or foreigners gained more than „blocking“ 4. Non state firms or foreigners gained more than „blocking“ minority: loss of state control in the processminority: loss of state control in the process


Energy Legislation/Regulation

Two main acts adopted in 2000 have a general application for Two main acts adopted in 2000 have a general application for Czech energy sector:Czech energy sector:

– The Energy Act (No. 458/2000) applies to the electricity, gas, The Energy Act (No. 458/2000) applies to the electricity, gas, and heat sectors, and the related public institutions.and heat sectors, and the related public institutions.

– The Act on Energy Management (No. 406/2000) regulates The Act on Energy Management (No. 406/2000) regulates the adoption of national and local energy policies, the the adoption of national and local energy policies, the national programme for energy efficiency and use of national programme for energy efficiency and use of renewables, energy labelling, energy audits, and other rules renewables, energy labelling, energy audits, and other rules relating to energy efficiency. relating to energy efficiency.

Both acts require the adoption of new secondary regulations.Both acts require the adoption of new secondary regulations.


Energy sector regulationEnergy Regulatory Office (1)

StatuteStatute

– ERO is a separate state organisation ERO is a separate state organisation under the responsibility under the responsibility of the Prime Ministerof the Prime Minister. Its operating costs are covered by the . Its operating costs are covered by the state budget approved every year by the Parliament. state budget approved every year by the Parliament.

Selection of staff, structureSelection of staff, structure

– The government appoints for The government appoints for a five-year period the a five-year period the ChairpersonChairperson who can only be removed for a limited number who can only be removed for a limited number of reasons (physical or mental incapacity, violation of duties, of reasons (physical or mental incapacity, violation of duties, criminal acts or resignation).criminal acts or resignation).

– The structure of ERO includes the following departments: The structure of ERO includes the following departments: Regulation, Licensing and Tariffs. The current staff is Regulation, Licensing and Tariffs. The current staff is around 50 and should reach up to 100 in future.around 50 and should reach up to 100 in future.



ResponsibilitiesResponsibilities – ERO regulates the grid-based energy industriesERO regulates the grid-based energy industries i.e., gas, electricity i.e., gas, electricity

and district heat. Its responsibilities include:and district heat. Its responsibilities include:

Concession and revocation of licences to energy market participants Concession and revocation of licences to energy market participants (generation, transmission, distribution, traders)(generation, transmission, distribution, traders)

Establishment of tariffs (wholesale, end-users and ancillary Establishment of tariffs (wholesale, end-users and ancillary services) for electricity, natural gas and heat for protected services) for electricity, natural gas and heat for protected customers (households, services, etc.)customers (households, services, etc.)

Regulation of connection conditions, trading rules and the quality Regulation of connection conditions, trading rules and the quality of suppliesof supplies

Protection of protected customersProtection of protected customers

Application of sanctions and penalties for violation of regulation Application of sanctions and penalties for violation of regulation

Settlement of disputes (including concerning third party access).Settlement of disputes (including concerning third party access).



Decisions taken by ERO are to published in the bulletin of Decisions taken by ERO are to published in the bulletin of ERO and appeals can only be made to the Chairperson or ERO and appeals can only be made to the Chairperson or to an administrative court on administrative matters only. to an administrative court on administrative matters only.

Inspection activitiesInspection activities are carried out by the State Energy are carried out by the State Energy Inspection Board. The State Energy Inspection Board also Inspection Board. The State Energy Inspection Board also has the power of fining licences for licence violations, at has the power of fining licences for licence violations, at the recommendation of ERO.the recommendation of ERO.


Energy Programmes

National Programme for Support of Energy Efficiency and a Wider National Programme for Support of Energy Efficiency and a Wider Use of Renewable and Waste Energy SourcesUse of Renewable and Waste Energy Sources– approved in May 2002 for 4 yearsapproved in May 2002 for 4 years

– sets a general framework for annual programmessets a general framework for annual programmes

– sets medium term goals in energy efficiency and renewables till 2005sets medium term goals in energy efficiency and renewables till 2005

– should be revised every 4 years should be revised every 4 years State Programme for Support of Energy Efficiency and a Wider Use State Programme for Support of Energy Efficiency and a Wider Use

of Renewable and Waste Energy Sourcesof Renewable and Waste Energy Sources– annual programme approved by the government with involvement of annual programme approved by the government with involvement of

individual sectorsindividual sectors

– 2 implementation agencies: 2 implementation agencies: » Czech Energy Agency (annual budget 3 mill. USD from state budget)Czech Energy Agency (annual budget 3 mill. USD from state budget)

» State Environmental Fund (annual budget 30 mill. USD from emission State Environmental Fund (annual budget 30 mill. USD from emission charges).charges).


Czech Energy Agency

Its targets are:Its targets are:- Residential buildings, family houses and their equipment for supplying heat and hot water.Residential buildings, family houses and their equipment for supplying heat and hot water.- Schools, health service buildings and plants supplying heat and energy.Schools, health service buildings and plants supplying heat and energy.- Buildings of services and facilities, the public sector institutions and their energy Buildings of services and facilities, the public sector institutions and their energy

operations.operations.- Industry, transport and agriculture: application of modern technologies and materials for Industry, transport and agriculture: application of modern technologies and materials for

energy efficiency and alternative energy sources.energy efficiency and alternative energy sources.- Towns and municipalities: support for energy savings.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 Consultancy, education, training, promotion of energy savings, renewables and protection

of the environment.of the environment.- Detailed energy audits in all fields of economy and energy consumption.Detailed energy audits in all fields of economy and energy consumption.- Energy labelling, energy management, Monitoring and targeting in industryEnergy 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.


Assistance from the European Commission, the World Bank, IEA

The experience of EU countries The experience of EU countries and institutions is useful and institutions is useful mainly in technology selection, managerial and financial mainly in technology selection, managerial and financial skillsskills

a Task Force consisting of experts from EU,a Task Force consisting of experts from EU, b bankankss and the and the candidate countries candidate countries can can investigate issues and propose the investigate issues and propose the best solutionbest solution

Local expertise is inevitableLocal expertise is inevitable


Recommendation

Clear definition of the policy goals – role of stateClear definition of the policy goals – role of state Realistic scope of measuresRealistic scope of measures Clear implementing bodyClear implementing body Supervision, monitoring, evaluation and time rangeSupervision, monitoring, evaluation and time range Main requirements anchor in legislationMain requirements anchor in legislation Perfect preparation and simulation before Perfect preparation and simulation before

implementation (privatisation)implementation (privatisation) Staff education and stabilizationStaff education and stabilization To be in touch with relevant parties To be in touch with relevant parties

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