In April 2011 the Constitutional Court adopted a decision(1) in which it ruled that several provisions of the Energy Act(2) with respect to the regulation of electricity network charges did not comply with the Constitution.(3)
The court was responsible for, among other things, control of the constitutionality of the fourth and 44th bullet points of Article 4 of the act. At the time of its decision, the 44th bullet point of Article 4 was no longer in force following its annulment on the basis of the amendments and supplements to the act (EZ-D),(4) which entered into force in April 2010.
At the time of the court's decision, the fourth bullet point of Article 4 of the act stipulated that 'network charge' is the price that a customer pays for open access, comprising the network charge determined by the Energy Agency and the supplements to the network charge determined by the government. Moreover, the 44th bullet point of Article 4 (which was, as mentioned above, no longer valid at the time of the court's decision) determines that the network charge is a part of the price paid for use of the network, intended to cover the costs for the performance of public services by system operators of distribution and transmission networks, as well as for covering the costs of system services.
At the time of its decision, the court was further responsible for controlling the constitutionality of:
- the first sentence of Article 27(2) of the act which, due to its annulment on the basis of the amendments under EZ-D, was also no longer in force at the time of the decision and which set out that that the Energy Agency must determine the methodology for the calculation and determination of the network charge and the manner that must be used by the agency in this respect; and
- the second sentence of Article 27(2) of the act which set out that, in relation to determination of the prices for network use for a qualified producer with rated output up to one megawatt, the items which are not justified, as the minimum costs should not be considered.
The party initiating the proceedings with respect to control of constitutionality alleged that the respective provisions of the act were contrary to principles of legal clarity and certainty; clear calculation of the price is not ensured due to the inadequate determination of the network charge and an unclear and uncertain method and procedure for pricing.
While the court adhered to the initiator's statement that the respective provisions were contrary to the principle of legality, it did not follow the initiator's reasoning. The initiator alleged that the network charge, as regulated by the Energy Act, was contrary to the principle of legality (determined by Article 153 of the Constitution), due to a lack of determination of the method and procedure for calculating the prices of the public service of operating the transmission and distribution networks, and the manner of change of the respective prices. It therefore argued that the provisions had not provided the adequate legal framework for implementing regulations.
In contrast, the court based its reasoning on Article 147 of the Constitution, arguing that the network charge is a type of monetary payment that must be paid by the citizens to state or other legal entities of public law. Such public levies shall be introduced on the basis of the legal act and levied on the subjects that fulfil the legal requirements. Therefore, since such charges are forcible and non-refundable, they are in the nature of a tax, but nevertheless differ from taxes (due to the connection between the performance and counter-performance). The charge is paid for the use of the system and covers the cost of the public service, which is carried out in the public interest. Nonetheless, Article 147 of the Constitution envisages that the public duties must be determined by the law and not by the implementing regulations.
The network charge was determined by the Energy Act, from which it also derives that consumers of electricity must pay the network charge to system operators; the latter may independently and effectively decide on the assets necessary for the operation, maintenance and development of the network.(5) However, the act does not determine the amount of charge, but rather authorises the Energy Agency to adopt the general act on methodology for the calculation of the network charge, the criteria for determination of justified costs and the system of calculation of the price, on the basis of such costs.(6)
In the proceedings before the court, the government alleged that the methodology was clearly determined by the Act Determining the Methodology for Charging for the Network Charge, the Methodology for Setting the Network Charge and the Criteria for Establishing Eligible Costs for Electricity Networks.(7) The government was of the opinion that the network charge is subject to constant development and upgrading, and it would therefore be inappropriate to regulate it under the Energy Act. However, the court did not uphold this argument, arguing that although the Energy Act includes the professional technical rules, the framework for determination of the methodology should nevertheless be provided by the act, while more detailed rules may be adopted in the form of an implementing regulation.
The court concluded that since the respective provisions of the Energy Act do not fulfil such requirements, they are in contravention of the Constitution. The court solely established the unconstitutionality of the respective provisions and has ordered the National Assembly to remedy the established unconstitutionality within one year of the publication of its decision (ie, by May 20 2012). In the court's opinion, immediate annulment of the respective provisions would result in legal uncertainty, due to the fact that several implementing regulations of the Energy Agency were adopted on their basis.
To date, the National Assembly has not yet remedied the established unconstitutionality. However, the proposed new Energy Act, which will significantly alter the current energy sector and provide a more systematic and transparent legal framework, has already been published.
For further information on this topic please contact Helena Vranič or Tjaša Lahovnik at Odvetniki Šelih & partnerji op, doo by telephone (+386 1 300 7650), fax (+386 1 433 7098) or email ([email protected] or [email protected]).
(1) Decision U-I-257/09-22, Constitutional Court, April 14 2011 (Official Gazette 37/2011).
(2) Official Gazette 79/1999, as last amended by Official Gazette 37/2011.
(3) Official Gazette 33l/1991, as last amended by Official Gazette 68/2006.
(5) Articles 4 and 23b of the Energy Act.
(6) Article 87 of the Energy Act.
(7) Official Gazette 121/2006, 126/2008 and 113/2009 - the respective act has not been in force since June 24 2010, with exception of Article 84 and Appendix I, which are applicable until October 31 2011.