Unbundling of Stredoslovenská energetika, a.s.
– principles and consequences
Content
Introduction of Stredoslovenská energetika, a.s.
(SSE)
Legal Background for Unbundling
Unbundling Principles
Key drivers for unbundling
Chronology
Unbundling Consequences
Introduction of SSE, a.s.
The Company integrating electricity supply and distribution
established in 1923
established in 1923
2002 - the establishment of SSE, join-stock company
October 31, 2002 - EDF International acquired 49 %
of SSE shares and the preference right to purchase
following 2 % of the company‘s stock
Introduction of SSE, a.s.
SSE operational territory 17 978 km 2
Number of inhabitants 1 600 000
Žilina
Bratislava
Košice
Wholesale take-off (A) no 22 1 834 159 MWh
Introduction of SSE, a.s.
Wholesale take-off (B) no 5 171
2 176 835 MWh
Small-scale take-off - entrepreneurs (C) no 79 529 651 366 MWh
Total small-scale take-off - households (D) no 607 487
1 614 077 MWh
Length of distribution network 31 720 km HV 2 625 km
Introduction of SSE, a.s.
MV 9 835 km LV 19 344 km
6 976 substations, transformer stations and distribution transformer stations
1 992 MVA installed power capacity
Legal Background for Unbundling
Directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in electricity
Electricity Act 656/2004 Coll.
Electricity Act 656/2004 Coll.
The Slovak Electricity Act („Act”) is in force from 1 January 2005. It is in line with the EU directive in terms of execution of unbundling of the distribution activity from the others.
It has been the intention of SSE to comply with the Act with the view of developing a
practical solution acceptable by the regulator (URSO), and to have a acceptable
solution by shareholders.
Unbundling Principles
The Board set the following principles for the functional unbundling:
1. Fulfilment of legislation
2. Consensus with the regulator URSO 2. Consensus with the regulator URSO 3. Least transformation costs
4. Least operation costs
5. Least organisational changes 6. Least changes for customers
7. Close control on the core distribution activity 8. Acceptable solution by shareholders
9. Flexibility to provide additional services or outsource services
Key drivers for unbundling
SSE to contribute the Distribution Business as going concern to a newly created fully owned subsidiary of SSE
That means:
Establishment of the Subsidiary
Maping and Splitting the Internal Processes Definition of the Part of the Business
Lean DSO Structure (approx. 200 people)
Contribution value acknowledged in the amount equal to local
valuer valuation
8.1 Unbundling Model
Chronology 1
December 2004 – decision about Distribution Restructuring Project with the target to prepare it for Unbundling
July 1, 2005 – first reorganization of the Distribution Division July 1, 2005 – first reorganization of the Distribution Division
- Establishment of Asset Management Section - Merging service activities
- Preparation of the Distribution Customer Services
November 15, 2005 – starting of the 3P Project (Unbundling + Regulation + Revaluation) with the close co-operation with Distribution restructuring project.
- Splitting the processes
Chronology 2
January 1, 2006 – second reorganization of the Distribution Division:
- Establishment of Distribution Customer Services Section - Establishment of Distribution Controlling
April 1, 2006 – third reorganization of the Distribution Division:
- Split of the Distribution Division into two ones - Split of the Distribution Division into two ones
- Introducing Internal Direction of Providing Services to the Distribution Service Operator
April 8, 2006 – the Subsidiary SSE-D, a.s. established and registered July 1, 2006 – revision of the Internal Direction of Providing Services to
the Distribution Service Operator
July 6, 2006 – approval of General Assembly for the Unbundling
Unbundling Consequences
The functions have to be allocated to legal entities by 1st July 2007.
Only assets closely relating to the distribution activity will be contributed to the DSO.
People whose activities closely relate to the distribution activity will be the employees of the DSO entity.
All support functions have to be supplied by SSE.
All customer contacts should be handled by SSE including the households customers who will request universal services.
A distribution customer service function has been created at the DSO entity for those customers who will request only distribution services from the SSE Group.
The fair value of assets may be reflected in the books of the DSO.
The pure distribution activity with its assets and people will be contributed to a newly formed legal entity thus giving the DSO management clear focus on distribution activities and
assets.
The distribution activity will be controlled via process of approval of OPEX and CAPEX plan and approval of above limit transactions.
The structure is approved by both shareholders
