**1. Introduction**

The start of electricity usage reaches the end of the 19th century. First, electricity has begun to be used for lighting, and later as a source of power for mechanical drives. Further, its use has gradually spread to other sectors, too. Today, electricity has penetrated all areas of the economy and the social spheres. The production and consumption of electricity places demands on the reliability of the elements of the power system and the creation of capacity reserves at the same time. Energy needs to have enough primary energy resources and the availability of flexible technologies. Whereas, in the past, the regulatory reserves have been dimensioned and activated to compensate for the deviations in the consumption or for bridging the failures of production capacities. Resource reserves must now also be activated in balancing the variations in the change in the volume of electricity production to sources with unpredictable direct production in the direct conversion of solar and wind energy. Such production, due to the preferential connection with the power system, requires back-up with predictive sources in the full potential of its installed power.

The availability of electricity is taken for granted and the break-up of the system is not allowed in the European Union (EU). Electricity has become available to subscribers, of course, so almost nobody is interested in the technical nature of its production and distribution. The consequence of this interpretation is the misconception that it is necessary to pay "exorbitant" high bills for an ordinary socket and switch. The electricity bill in the family budget, even in the corporate budget, accounts for a fraction of the cost of mobile operator services, the Internet, licenses for software, hardware, car leasing, and other substantially less important items that would be "non-functional scrap" without electricity.

Overall, it is forgotten that electricity in the socket and switch is continuously available thanks to the reliable operation of the power grid, which is the most important, the most extensive, and most expensive infrastructure in each EU country, while the transmission system connections are subjected to the Union for the Co-ordination of Transmission of Electricity (UCTE) in the EU and North Africa, the rules of which must be strictly observed by national operators both dispatching and commercial dealers. The life of a civilized society without electricity is impossible. Of course, the consequences of a power failure are sometimes perceived during natural disasters quite differently to the ones that are directly affected by the failure. Power-supply engineers warn that reliable operation is not a matter of course. Since the beginning of the millennium, nine large disruptions of the power systems ("blackouts") had occurred in the world, and even the smallest had impact on more inhabitants, as it lives in the whole Slovakia. Overall, more than a billion inhabitants of the planet have been affected by the disruption of the power system since the beginning of this century. Five of the all disruptions have taken place in the EU in the last 18 years.

The largest electricity failure in the EU in this century occurred at the end of September 2003. It initiates a series of network failures in northern Italy, which were caused by the fall of a tree on the electric power transmission line in Switzerland during a storm. Within four seconds, the failure spread to Italy, Slovenia, and Croatia. The disruption of the electricity power system has affected 55 million people; fortunately it only lasted for a short time, one day. Life in Italy, except Sardinia, has stopped. Rail and air travel completely collapsed, cars were moving sharply across the streets while the traffic lights were not operating, and thousands of them stood without fuel at the edge of the road due to the non-operating filling stations. The mass media and the internet ceased to exist. The public did not know what had happened. Banks, ATMs, shops, restaurants, and offices were totally collapsing. The lives of people in hospitals saved electricity from backup sources. Fortunately, the disintegration of the electric system occurred at the end of summer at 2.00 pm at night. If the failure would occur in the winter, during a cold weather, the consequences would be catastrophic when the outside temperature can fall below the freezing point in the temperate climatic zone.

#### **2. European and Slovak Legislation Governing the Energy Sector**

In January 2007, the European Commission (EC) published the Communication "An Energy Policy for Europe" [1]. This Communication outlined the developments in the energy sector by 2010, as well as the 2020 targets. This Communication, while respecting the sovereignty and energy mix of the individual EU countries, integrated energy policy with climate change policy and clearly formulated the three basic pillars of EU energy policy that were: energy security; competitiveness; and, sustainability.

Subsequently, in March 2007, the European Council adopted the Energy Efficiency Action Plan 2007–2010 [2], which is an important element of climate change commitments: reducing greenhouse gas emissions by 20% by 2020 as compared to 1990; increasing the share of renewable energy to 20% by 2020; achieve a 10% share of renewable energy in transport by 2020; and, achieve 20% energy savings as compared to projections by 2020.

The Energy Efficiency Action Plan has become the basic document for the development of the legislative framework in the upcoming period. It was followed by the other strategic and legislative documents that covered the different areas of the Action Plan: Strategic Energy Technology Plan (2007) [3], Third Liberalization Package (2007) [4], Climate-Energy Package (2008) [5] and Energy Efficiency Plan (2006–2011) [6]. The Second Strategic Energy Review—An EU Energy Security and Solidarity Action Plan (2008) [7] focused on the least developed energy policy pillar—energy security, just in gas crisis time in January 2009. The European Economic Recovery Plan (2008) [8] included a proposal to support the development of energy infrastructure, with the support of specific projects in the area of gas infrastructure development in the Slovak Republic.

An important milestone in the development of energy policy was the adoption of the Treaty of Lisbon [9] in 2009. The Treaty on the functioning of the EU defined a new legal basis for EU energy policy measures and its Article. 194 defined the basic objectives and principles of EU energy policy. The main objectives of the European energy policy are to ensure the functioning of the energy market; ensuring security of energy supply in the EU; enhancing energy efficiency and energy savings and developing new technologies for electricity production and promoting the production of electricity from renewable energy sources, as well as supporting the interconnection of energy systems and networks. The sovereignty of the Member States in the composition of the energy mix as well as in ensuring their energy security are enshrined in the basic principles of European energy policy.

The 2020 energy principles and targets were based on the Europe 2020 Strategy [10] and they are further elaborated in the Energy 2020 strategy: A Strategy for a Competitive, Sustainable, and Secure Energy [11]. The key energy priorities included: to make effective use of energy resources in the EU, to complete a pan-European integrated energy market by 2015, to increase the rights of consumers and to achieve an increase in energy security, to maintain the EU's leading role in energy technology, and to strengthen the external dimension of the EU energy market.

The energy efficiency demands have been gradually becoming a centre of interest, as evidenced by the revision of the EU's energy efficiency policy in the form of the adoption of the Energy Efficiency Directive 2012/27/EU [12]. This Directive established a common framework for measures to promote energy efficiency in the EU in order to secure the EU's main energy efficiency target of a 20% reduction in energy consumption by 2020 under the Europe 2020 Strategy [10].

In the field of energy infrastructure, in November 2010, the Communication "Energy Infrastructure Priorities for 2020 and Beyond" [13] identified the key roles for the needs of infrastructure development in the oil, gas, and electricity sectors by 2020 and the basic long-term and short-term (by 2020) priorities in the field of European energy infrastructure that are needed to complete the interconnection of the internal market. These include the North-South Gas and Electricity Interconnections, the oil connections in Central Europe, and the Southern Gas Corridor, regarding the development of energy infrastructure in Central Eastern and South-Eastern Europe, with relevance to the Slovak Republic. These priority corridors of the European Energy Infrastructure were further elaborated in the "Energy Infrastructure Package" that was proposed in 2011 and adopted in 2013 by the European Parliament and Council (EP and C) no. 347/2013 on the Guidelines for Trans-European Energy Infrastructure (TEN-E) [14] and Regulation 1316/2013 [15] establishing the Connecting Europe Facility (CEF). The decision-making body adopted in July 2013 a European list of projects of common interest in the electricity, gas, and oil sectors.

The EC in the Roadmap to a Competitive Low Carbon Economy in 2050 (03/2011) [16] analysed the implications of a commitment to reduce greenhouse gas emissions by 80–95% by 1990 and indicated the extent of emission reductions in the key sectors for the years 2030 and 2050. Electricity will play a central role in the low-carbon economy. The Commission's analysis shows that, by 2050, it can contribute to almost complete elimination of CO2 emissions and offers prospective partial replacement of fossil fuels in transport and heating. The EC calls on the other European institutions and the Member States to take this plan into account in the further development of European, national, and regional policies that are aimed at building a low carbon economy by 2050.

In the Energy Roadmap 2050 (12/2011) [16], in several scenarios, the EC is exploring ways of decarbonizing the energy system and ways of securing energy supply and competitiveness by 2050. The plan seeks to develop a long-term, technologically neutral European framework for energy policies, thereby achieving the necessary certainty and stability in investing in the energy system. The Roadmap does not replace the national, regional, and local efforts to modernize energy supply, it but seeks to develop a long-term, technologically neutral, European framework, in which these policies will be more effective.

The EC published the Communication "Renewable Energy: A Major Player in the European Energy Market" (06/2012) [17], which is aimed at ensuring the growth of sustainability beyond 2020. The Communication set out key priorities, such as increased coordination of support systems, strengthening the role of the Southern Mediterranean, the use of cooperative mechanisms, and progress in the field of energy technologies.

In March 2013, the EC issued the Green Paper: A 2030 Framework for Climate Change Policy and Energy Policies [18], and it launched a debate on the Energy and Climate Framework Policy Post-2020 at the same time. On 22 January 2014, the EC published the EC's Communication on an EU policy: 2030 Climate and Energy Framework [19], following the Green Paper from March 2013. In March 2014, EC accepted the commitment to adopt the 2030 Climate and Energy Framework policy by October 2014. The Slovak Republic still does not have a definitive position in this respect, although the coordination of positions takes place between the ministries concerned (Ministry of Finance SR, Ministry of Environment SR, and Ministry of Economy SR). During the negotiations on the future framework, the Ministry of Economy emphasized the need to preserve sovereignty in the field of energy mix, the non-binding character of the 2020 renewable energy sources (RES) and energy efficiency targets, the need to respect the national specifics, and the need to develop RES in a cost-effective way. It is a binding target for reducing greenhouse gas emissions by 2030, which was subjected to certain conditions.

The EC identified in the Communication "Progress towards Completing the Internal Energy Market" [20] (11/2012), the obstacles, and measures that are needed to meet the objective of completing the EU internal energy market (IEM) by 2014 and removing the isolation of Member States by the year 2015. The Communication also contained recommendations for the Slovak Republic concerning the elimination of the regulation of energy supply prices, the solution of round-the-clock issues, and the development of North-South connections in the gas and electricity sectors.

At the end of 2018, the EC concluded negotiations on all aspects of the new energy legislative framework "Clean Energy for All Europeans package" [21]. This is a significant step towards the creation of the Energy Union and delivering on the EU's Paris Agreement commitments. The package includes eight different legislative acts: "Energy Performance in Buildings Directive"; "Renewable Energy Directive"; "Energy Efficiency Directive"; "Governance Regulation"; "Electricity Directive"; "Electricity Regulation"; "Risk-Preparedness Regulation"; and, "Regulation for the Agency for the Cooperation of Energy Regulators (ACER)". This new policy framework brings regulatory certainty, through the introduction of the first national energy and climate plans. It will encourage essential investments to take place in the energy sector. It empowers European consumers to become fully active players in the energy transition and it fixes two new targets for the EU for 2030: a binding renewable energy target of at least 32% and an energy efficiency target of at least 32.5%—with a possible upward revision in 2023. For the electricity market, it confirms the 2030 interconnection target of 15%, following on from the 10% target for 2020. When these policies are fully implemented, they will lead to steeper emission reductions for the whole EU than anticipated—some 45% by 2030 relative to 1990 (as compared to the existing target of a 40% reduction).

That legislative framework also played an important part in the EC's preparations for its long-term strategy for a climate neutral Europe by 2050 ("Climate Neutral Economy by 2050" [22]), which was published in November 2018. The strategy shows how Europe can lead the way to climate neutrality by investing into realistic technological solutions, empowering citizens, and aligning action in key areas, such as industrial policy, finance, or research—while ensuring social fairness for a just transition. It is in line with the Paris Agreement objective to keep the global temperature increase to well below 2 ◦C and to pursue efforts to keep it to 1.5 ◦C. The purpose of this long-term strategy is not to set targets, but to create a vision and sense of direction, plan for it, and inspire as well as enable stakeholders, researchers, entrepreneurs, and citizens alike to develop new and innovative industries, businesses, and associated jobs. It investigates the portfolio of options that are available for Member States, business, and citizens, and how these can contribute to the modernisation of our economy and improve the quality of life of Europeans. The long-term strategy also seeks to ensure that this transition is socially fair and it enhances the competitiveness of EU economy and industry on global markets, securing high quality jobs and sustainable growth in Europe, while also helping to address other environmental challenges, such as air quality or biodiversity loss. The road to a climate neutral economy would require joint action in seven strategic areas: energy efficiency; deployment of renewables; clean, safe and connected mobility; competitive industry and circular economy, infrastructure, and interconnections; bio-economy and natural carbon sinks; and, carbon capture and storage to address remaining emissions.

The energy legislative framework in the Slovak Republic is based on several documents that can be divided into three groups in general. The first group consists of primary legislation. There are the acts that were adopted by the National Council of the Slovak Republic. The second group of documents (secondary legislation) consists of generally binding legal regulations (decrees) of the Ministry of Economy of the Slovak Republic, the Regulatory Office for Network Industries (URSO), or the Slovak Government. The last group of legislative documents is tertiary legislation, which includes the operating rules, technical conditions for access, and connection to the system and networks, dispatching orders and documents that are drawn up and published in accordance with the provisions of Act no. 251/2012 Coll. on Energy [23] and Act no. 250/2012 Coll. on Regulation in Network Industries [24].

The primary electricity legislation is represented by Act no. 251/2012 Coll. on Energy, Act no. 250/2012 Coll. on Regulation in Network Industries, and Act no. 476/2008 Coll. on Energy Efficiency.

The EU's third energy package was implemented in 2009 by issuing Act no. 250/2012 Coll. [25]. The Act provides greater independence and power for the regulatory authority to determine regulated prices as well as control activities in regulated entities. By implementing the EU's third liberalization package in the Slovak legislation, space for reducing the regulatory burden in the energy sector has been opened for the future. The Act in question regulates: the subject, scope, conditions, and method of regulation in network industries; the conditions for carrying out regulated activities and the rights and obligations of regulated entities; the rules for the functioning of the electricity and gas markets; establishment, status, and competence of the Regulatory Office for Network Industries (URSO) and the Regulatory Council; proceedings under this Act; and, administrative offenses for breach of obligations that are specified by this Act. The subject of regulation under this Act is the determination or approval of the method, procedures, and conditions for: connection and access to the transmission system, distribution system, transmission network and distribution network; electricity transmission and distribution in a defined area; gas transmission and gas distribution in a defined area; providing support services in the electricity and gas industries; providing transmission system operator and distribution system operator services, accessing and connecting new electricity and gas producers to the system or network, producing and distributing heat.

Act no. 251/2012 Coll. on Energy [23] is the basic legislative document of the Slovak energy sector. The Act regulates: the conditions for the functioning of the open energy market; the rights and obligations of individual electricity market participants and gas market participants; network and systems management issues, i.e., power dispatching and gas dispatching centres; issues of separation of regulated activities, i.e., unbundling; special forms of electricity production; network access conditions; rules for market behaviour of energy market participants; and, performance of state administration and supervision in the energy sector. From 1 July 2007, all customers, including households, have the option of choosing their energy supplier (electricity and gas) based on the open market.

Act no. 476/2008 Coll. on Energy Efficiency [25] sets out: the concept and action plans for energy use; evaluation of transmission, transport and distribution; energy consumption obligations in buildings; an obligation on the manufacturer to operate, reconstruct and build energy-efficient energy conversion equipment; for a manufacturer to carry out an energy audit to demonstrate the possibility of supplying usable heat; and, consumers of energy in industry and in agriculture the obligation to evaluate energy intensity of production by energy audits, conditions of operation of the monitoring system.

Another important act from the energy point of view is the Act no. 309/2009 Coll. on the Promotion of Renewable Energy Sources and High Efficiency Cogeneration and on Amendments to Certain Acts [26]. This Act specifies: the method of support and conditions for the promotion of electricity production from renewable energy sources, electricity by high-efficiency cogeneration, biomethane; rights and obligations of producers of electricity from renewable energy sources, electricity from cogeneration, electricity from high-efficiency cogeneration, biomethane; the rights and obligations of other electricity and gas market participants; and, the rights and obligations of the legal person or the natural person who places on the market fuels and other energy products used for transport purposes.

The secondary legislation is primarily represented by the Decree of the Office for Regulation of Network Industries no. 24/2013 Coll., laying down the rules for the functioning of the domestic market in electricity and the rules for the functioning of the domestic gas market [27] (including the Decree of the Office for Regulation of Network Industries no. 423/2013 Coll.).

This Decree lays down detailed rules for the functioning of the electricity and gas markets when the electricity market participant is connected to the system, the electricity market participant's access to the system, electricity transmission, cross-border electricity exchange, electricity distribution, electricity supply, including supply of regulation electricity and electricity supply to households, providing support services, providing system services, assuming responsibility for deviation, evaluating, clearing and settlement of electricity market participant's deviation and system deviations, and how to prevent system overloading and system overload solutions. It also discusses the procedure for changing the electricity supplier, the conditions, and the date of its implementation in detail.

Other important regulations are:


From January 2019 an amendment to the Act no. 309/2009 Coll. on the Promotion of Renewable Energy Sources and High-Efficiency Cogeneration and on Amendments to Certain Acts is in force [26]. In connection with this amendment, the Act No. 251/2012 Coll. on Energy was also amended. The biggest changes concern the payment for access to the distribution system (so-called G-component). This payment was introduced with effect from January 2014 by the Decree of the Office for Regulation of Network Industries focusing prices. In 2016, the Constitutional Court annulled the G-component and declared that part of the Decree imposing an obligation on the G-components to pay electricity producers to be unconstitutional. According to the Constitutional Court, the legal basis for the payment of the G-component can only be the agreement on access to the distribution system and the distribution of electricity. The amendment of this Act responds to this decision in several points. The first change is the modification of access to the distribution system definition. Access to the distribution system also means the supply of electricity to the system. The essential requirements of the agreement regarding access to the distribution system and electricity distribution are also changed. If the contract is concluded by the electricity producer, the transmission of electricity is not an essential requirement of the contract. Another change is the introduction of a definition of unauthorized supply. Unauthorized supply is the supply of electricity to the system without a contract on access to the distribution system and the distribution of electricity. If the producer delivers electricity without an access agreement, it will be an unauthorized delivery and the distribution company will be able to disconnect it. The last important change is the obligation for electricity producers to conclude a contract on access to the distribution system and electricity distribution system to with a system operator when they supply electricity to the system.

Act no. 250/2012 Coll. on the Regulation in Network Industries was also amended. The amendment introduces a statutory definition of tariffs for system operation and tariffs for system services. So far, these terms have only been governed by legal regulations. At the same time, there is a legal definition of one of the components of the tariff for operating the system, which is the tariff to produce electricity from renewable energy sources. There are also individual tariffs for operating the system for businesses with a consumption of at least 1GWh (energy-intensive businesses). The extended competences of the Office for Regulation of Network Industries to issue a price decision for RES and CHP electricity generation activities for the entire period of support by a supplement or surcharge, i.e., for a period of 15 years, are introduced. The amendment also ensures the effective implementation of the decisions of the Agency for the Cooperation of Energy Regulators (ACER). As a rule, ACER decisions have the character of methodologies and conditions. The amendment introduces an obligation for the Office for Regulation of Network Industries to publish these decisions on its website in order to ensure that electricity market participants and gas market participants are properly informed regarding their issue. It also provides for the possibility for the Office for Regulation of Network Industries to stop the price proceedings, if, by issuing a price decision, the total installed capacity of the new electricity generation facilities from RES and CHP would be exceeded. The Ministry of Economy of the SR for the relevant calendar year will publish the total installed capacity of new equipment.
