Governmental Authorities’ Supervision over Electricity Trade and Distribution
Electricity trade and distribution, including pricing, is strictly supervised by governmental authorities. These authorities protect the interests of end customers, create rules and supervise compliance with those rules by all market players, particularly by distributors. Governmental authorities overseeing the electricity market and their major activities from the viewpoint of the end customer:
Energy Regulatory Office (ERÚ) – www.eru.cz
- Sets regulated prices for electricity transmission and distribution and the related services
- Sets other regulated prices and charges (e.g., for co-generation, renewable resources, reactive power, fee to the electricity market operator, etc.)
- Sets out and amends the rules governing the electricity market
- Provides for equal conditions for end customers irrespective of the part of the country where they are connected
State Energy Inspection (ČR – SEI) – www.cr-sei.cz
- Supervises compliance with laws and regulations in the electricity industry
- Resolves disputes between distributors and customers.
- Imposes fines based on its own findings. The outcomes of ČR-SEI’s supervisory activities take the form of penalising measures taken against entities that breach laws and regulations. However, in the first place these outcomes enable governmental authorities to analyse objectively the behaviour of all players in the areas of generation, distribution and energy consumption and, being agencies of the State, to take effective measures
Electricity market operator – www.ote-cr.cz
- Identifies the actual values of electricity supply and consumption for the electricity market players
- Evaluates the differences (imbalances) between (on the one hand) the contracted electricity supplies by entities subject to clearing or by registered market participants and (on the other hand) the actually metered electricity supplies and takes for the registered market participants
- Ensures the clearing and settlement of the imbalances between the entities that are subject to clearing
The Position of the End Customer on the Liberalised Electricity Market
- The end customer has the right to enter into an electricity supply contract with any supplier in the Czech Republic.
- Electricity distribution and transmission is a government-regulated activity. The transmission and distribution price is regulated and is the same for all entities in the Czech Republic at each voltage level. As required by law, electricity supply to the end customer is provided by the distributor serving the respective area. The distributor is obliged to transport electricity to the customer from any supplier under the same conditions. By law, the distributor is not allowed to prefer or discriminate against any supplier or customer. In other words, the conditions of electricity transmission and distribution and the fees for these services must always be the same for the customer, regardless of who supplies the electricity to him.
- Traders purchase electricity either straight from independent generators or through the electricity exchange. Only accredited traders have access to the electricity exchange. The Exchange plays a key role as a price-setting platform in the Czech Republic. Transborder supply is another source. A trader who is able to optimise electricity purchasing on the domestic and foreign markets during the course of time enjoys an advantage.
- No power plant supplies electricity straight to the end customers. Electricity is always supplied through traders. There is no need for an electricity supplier to own a power plant, just as there is no need for a fuel filling station operator to own an oil well.
Rules to Choose a Good Electricity Supplier
- A good supplier has a licence for electricity trading (licences are issued by the Energy Regulatory Office to applicants if the statutory conditions are met);
- A good supplier is a helpful partner for its customers, helping them and guiding them to choose the best moment to buy electricity in the volatile price environment and also to choose the best electricity purchase system, advantageous for the end customer;
- A good supplier is able to buy electricity on both the domestic and international electricity exchanges – the exchange is a competitive environment where only financially strong companies can survive;
- A good supplier is able to diversify its electricity sources (importing electricity from abroad, trading on the exchange, running a foreign subsidiary) to optimise the purchases and supplies of electricity for end customers;
- A good supplier is strong financially, able to buy and offer large electricity volumes, and so guarantee electricity supply to a large number of customers;
- A good supplier has a reliable legal form: a public limited company (a.s.), which generally enjoys better credibility, rather than a private limited company (s.r.o.).
