Report on the Fulfilment of Measures Adopted in the Compliance Programme

1. Introduction
   
   1.1 Purpose of the Report
   The Distribution System Operator is obliged to develop a compliance programme to establish measures ensuring non-discriminatory conduct of integrated undertakings. The Programme gives specific obligations to employees to eliminate potentially discriminatory conduct of integrated undertakings.
   
   Every year the Distribution System is obliged to draft an annual report on the fulfilment of measures adopted in its Compliance Programme. This report is an integral part of the annual report of the Distribution System Operator of its integrated undertaking. The Distribution System Operator submits this report to the Regulatory Office for Network Industries and publishes it together with its annual report.
   
   1.2 Legal Framework of the Report
   The legal framework of the Compliance Programme and of the distribution system functional unbundling (from activities not related to the electricity distribution) is determined by Directive of the European Parliament and of the Council 2003/54/EC concerning common rules for the internal market in electricity and repealing Directive 96/92/EC (hereinafter only as “Directive”). The Directive was transposed to the Slovak legal system through Law No. 656/2004, Coll. of Laws, on energy and amendments of certain laws (hereinafter only as “Law on Energy”).
   
   The Compliance Programme is a document containing measures to ensure non-discriminatory conduct by integrated undertakings.
   
   
2. Compliance Programme of Západoslovenská energetika, a.s.
   Until 30th June 2007 operations of distribution system was managed as the Operations Distribution System Department of the Company. Its organisation and accounting activities were separated from other activities not related to the distribution.
   
   The Distribution System Operations Department – DSO of Západoslovenská energetika, a.s. was preparing for legal unbundling of the distribution system operation into an independent company ZSE Distribúcia, a.s. prior to June 30, 2007. At that time all decisions were specified which were stipulated by law which had to be made by relevant state authorities in order to execute the unbundling of the Distribution System Operator (for example: the permit to perform the energy business, namely the electricity distribution, regulated prices, the operation code of the Distribution System Operator and so forth which became effective on July 1, 2007).
   
   The legal unbundling of the distribution system operations into a separate company ZSE Distribúcia, a.s. was done on July 1, 2007. The unbundling of the distribution system operations into a separate company ZSE Distribúcia, a.s. was approved by the relevant bodies of Západoslovenská energetika, a.s.
   
   In order to ensure the obligations under §§ 24 and 25 of the Law No. 656/2004, Coll. of Laws, on energy, concerning non-discriminatory conduct vis-à-vis market participants and concerning development of the Compliance Programme, the following internal acts were adopted:
   
   
   • Board of Directors’ order No. 4.2.0.10 “Compliance Programme to Ensure Non-discriminatory Conduct (Compliance Programme)”
   • Boards of Directors’ order No. 4.2.0.7 “Implementation of Functional Unbundling and the Compliance Programme of ZSE”
   • Board of Directors’ order No. 4.2.0.11 “Supervision over Fulfillment of the Compliance Programme”
   • Board of Directors’ order No. 4.2.0.9 “Ensuring Non-discriminatory Conduct of the Distribution System Operator in ZSE”
   • Directive No. 6.102.1 “Protection of the Business Secrets under Circumstances of ZSE”
     
     
   The above mentioned specified acts are binding legal documents for performance of all activities by employees, divisions and sections ensuring the fulfilment of tasks of Západoslovenská energetika, a.s.
   
   The Compliance Programme for ensuring non-discriminatory conduct whose purpose is to ensure an equal position for all entities participating in the electric energy market contains a set of measures focused on the following areas:
   
   
   • Access to the distribution system and use of the Distribution System Operator’s services
   • Transparent and non-discriminatory manner of information provision to all authorized persons
   • Managerial independence
     
     
   The implementation of measures adopted in the Compliance Programme was supervised by a Compliance Officer.
   
   
3. Implementation monitoring of measures in the Compliance Programme
   Prior to June 30, 2007 attention was focused particularly on monitoring the efficacy of previously implemented measures and completion of remaining implementation measures. All members of the statutory body, all managing employees as well as employees who were nominated by their superiors were acquainted with this programme.
   
   The Compliance Officer received information about instances whether the Distribution System Operator had observed the non-discriminatory rules of conduct and the compliance officer was responsible for resolving these instances. The Compliance Officer, in order to assure non-discriminatory conduct by the Distribution System Operator, concurrently and continuously provided methodological guidance to resolve current situations that arose which indicated the possible occurrence of discriminatory conduct of the Distribution System Operator. These instances were related to issues such as access of users to information systems, publishing information about the distribution system, project management and so on.