Report on Fulfillment of the Compliance Program

  1. Introduction

    1.1 Purpose of the Report
    The Distribution System Operator is required to develop the Compliance Program outlining measures for non-discriminatory practices by integrated companies. The Program determines specific conduct of the employees with the aim to eliminate possible discriminatory practices by integrated companies.
    Every year the Distribution System Operator is required to prepare a report on how the measures in the Compliance Program are met. This report is an integral part of the operator’s annual report and must be submitted to the Office for Regulation of Network Industries. This report is published together with an annual report as required by Art. 24, paragraph 5 of Act No. 656/2004 Coll. on energy.

    1.2 Legal Framework for the Report
    The legal framework of the Compliance Program and of the functional unbundling is determined by Directive 2003/54/EC of the European Parliament and the Council, dated 26th June 2003, that outlines common rules for the internal market in electricity and repeals their Directive 96/92/EC (hereinafter referred to as "Directive"). The Directive has been implemented into Slovak legislation by Act No. 656/2004 Coll. on energy. The Compliance Program is the document containing measures required to be performed to ensure non-discriminatory practices by integrated companies.
  2. Implementation of the Compliance Program in Západoslovenská energetika, a.s.
    To implement requirements outlined in Arts. 24 and 25 of Act No. 656/2004 Coll. on energy, Západoslovenská energetika, a.s ("the Company", "ZSE"), established measures that correspond with its internal management regulations. The following regulations came to force in 2006 or 2005 respectively and represent the mandatory legal norms that regulate activities of all ZSE employees:
    • Regulation of the Board of Directors No. 4.2.0.10 called "Compliance Program to Ensure Non-discriminatory Behaviour (Compliance Program)"
    • Regulation of the Board of Directors No. 4.2.0.7 "Implementation of Functional Unbundling and the Compliance Program of ZSE"
    • Regulation of the Board of Directors No. 4.2.0.11 "Supervision over the Compliance Program"
    • Regulation of the Board of Directors No. 4.2.0.9 "Ensurance of Non-discriminatory Behaviour of Operator of Distribution System in ZSE, a.s."
    • Regulation No. 6.102.1 "Protection of Trade Secrets in ZSE"

    The Compliance Program to ensure non-discriminatory practices that equalises all companies operating on the market with electric power contains measures that encompass the following areas:
    - access to the distribution system and utilisation of services provided by the system operator,
    - transparent and non-discriminatory access to information for all designated personnel,
    - managerial independence.

    To ensure that requirements for non-discriminatory practices are met, in particular by following the provision of the Compliance Program, the position of the Compliance Officer was set up on 1st January 2006 and staffed on 1st May 2006 to provide support to the Board of Directors and across all management levels.

    Supervision over the Compliance Program is performed by the Compliance Officer who uses reports on compliance from individual company departments and executes the controlling function. The compliance officer submitted quarterly reports on the Compliance Program to the Board of Directors. The Board acknowledged and approved the following reports:
    • 24th July 2006 – Progress Report on the Compliance Program Performance for 2005 and for the 1st Quarter 2006
    • 4th September 2006 – Progress Report on the Compliance Program Performance for the 2nd Quarter 2006
    • 6th November 2006 – Progress Report on the Compliance Program Performance for the 3rd Quarter 2006
    • 12th February 2007 – Progress Report on the Compliance Program Performance for the 4th Quarter 2006

  3. Organizational Changes
    Based on requirements to separate operations of distribution systems and to ensure non-discriminatory practices of the operator of the distribution system, several organizational changes have been implemented, that create conditions for legal separation of distribution systems operations:
    • Board of Directors approved a resolution to form a new organizational unit in ZSE named Distribution System Operations Department - DSO that is under the direct management of the Board of Directors. For this purpose the Board of Directors issued Order No. 4.2.0.8 - "Change in the Organizational Structure". As a result, the Team Network Distribution Services and the Team Operations of Distribution System were spun off from the Distribution of Electric Energy division and incorporated into the Distribution System Operations Department - DSO.

    • Following the directives of the Board of Directors concerning expansion of Distribution System Operations Department - DSO with dispatching services of the operator of the distribution system, the director of the division of Distribution of Electric Energy issued the directive No. 5.3.28 "Organizational Changes in the Division of the Electric Power Distribution".

  4. Legal separation of the Distribution System Operations Department - DSO
    The overview of the directives of Board of Directors and directives of division directors concerning organizational changes, optimisation of processes, work contracts and measures required by the transfer of rights and duties, as stipulated in the legislation, indicates that conditions for the legal separation of the distribution system operations and for non-discriminatory practices of the operator of the distribution system have been established.
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