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Czech markets  |  February 28, 2013 07:20:00

CEZ: Bulgaria, CEZ Group companies cede their positions to the country's regulator

Distribution company CEZ Razpredelenie and sales company today surrendered, CEZ Electro Bulgaria's regulatory authority (DKEVR) presented their views on the reasons on which the procedure was initiated withdrawal of the license mentioned companies. They neither case did not find any major errors in its current activities.

"Always We fulfilled all legal obligations, we therefore believe that the withdrawal of licenses is no single reason. This is also evidenced by the regulator in the cast of legal opinions and other documents, "said Tomas Pleskac, director of distribution and abroad.The reasons for the withdrawal of the license must be very serious, among them threats to security of electricity supply, the systematic violation of the license conditions, non-compliance with regulatory guidelines or providing false information when applying for a license. Mistakes which companies ČEZ regulator alleges are rather formal nature. For a complete list of complaints and response is given in the Annex.

"We believe that after examining our supplied materials and consideration of other circumstances independent regulatory authority reconsider its intention to terminate the proceedings and the withdrawal of the license. Bulgarian institutions and the entire population we want to continue to be transparent and trustworthy partner, "he added Pleskač.

Therefore, CEZ Bulgaria willing to take into account all recommendations regulator, despite the fact that in 2006 the set was their business model approved by the Council authorized authorities, as already mentioned, the regulator and the Ministry of economy, energy and tourism. CEZ Group fully supports the implementation of European standards and norms that lead to continuous improvement of customer service.

CEZ Group it is the current situation in Bulgaria understanding, but do not feel any responsibility for her, and for several reasons - higher bills for electricity caused by colder winters, higher consumption over Christmas and also the extension of the reading period due to holidays. Electricity prices earlier this year did not increase, its change was the decision of the Bulgarian Energy Regulatory Office (DKEVR) 1 7th2012, when it was increased by more than 13%, mainly due to the promotion of renewable sources. Prices to households in Bulgaria are fully regulated and incidentally also the lowest in the European Union. CEZ Bulgarian obtained from the total invoice less than 10%, the rest is electricity generators, transmission system and the tax office.

Decisions on administrative breaches

Number Subject violation Expression of The measures taken


/ 19.02.13.

CEZ Distribution Bulgaria AD

In accordance with Article 13, paragraph 1, section. 3 General Conditions of CEZ Distribution Bulgaria AD ("GTC"), representatives of CEZ Distribution Bulgaria AD performed some customers replacement and installation of new measuring device ("MZ"). The operation was carried exposed konstatační Protocol ("KP"). KP was exposed in the absence of customers and lacks the signatures of two witnesses who are not employees of the company. KP was not sent to customers, which is in contradiction with the GTC.

Article 58 does not contain an express obligation GTC konstatačního signing protocol by both parties at the same time, as well as provides a deadline by which it must be konstatační protocol signed by the customer.With konstatačním protocol in question was properly informed customer and the Protocol was signed properly without comments.

Replacing MZ and regular inspection is the responsibility arising from the license, its performance is routine and takes place on a large scale. The customer receives both the CP and the additional work performed comprehensive information. Therefore, there was no breach of statutory regulations or infringement of the customer complaint or express his dissatisfaction.

It follows that there was no infringement of obligations. Even assuming that there was a breach, it would be a violation of a minor nature.

In accordance with Part 2 of Decision No. 01-?-135-07 Company submitted SEWRC certified copy of the records. The company also submitted a certified copy of Instructions No. ????03/2011 effective from 1 June 2011 for dismantling, installation or replacement of metering equipment issued by the Department of measurement and data management department of CEZ Bulgaria ("OMSD"). We also send the head of OSMD, which provides all employees to comply with the Instructions from 01.06.2011 to dismantling, installing or replacing MZ.

However, the company intends to carry out internal audit regarding the preparation and writing of protocols for the exchange of measuring equipment - as is evident from the decision of the Board of Directors of 27 February 2013. Along with the issued regulation was initiated disciplinary action with employees who failed to comply with established procedure.

5, 6, 7/19 February 13.

CEZ Distribution Bulgaria AD

CEZ Electro Bulgaria AD

On 18 February 2013 to SEWRC requested from both companies to the deadline of 14:00 pm on 18 February 2013 to provide all the contracts concluded with CEZ Bulgaria EAD in the period 2011-2012, including information on the award of services to third parties by CEZ Bulgaria EAD.

The letter was sent by fax and received it at 10.20 pm The requested information was not until 14:00 pm at the registry SEWRC sent.

Contract for services that were requested SEWRC have already been provided in connection with their approval of the Ministry of Economy, Energy and Tourism ('MEET") Within, which to them was SEWRC notified. Companies also very strictly adhere to the rules on the implementation of the annual reporting obligations to SEWRC, as is evident from the reports submitted to SEWRC for 2011. Of the contract are also included in this report. SEWRC term was not only very short of providing such a large volume of information, but also illegal. According to the Bulgarian legislation, the shortest possible deadline is set in days, ie it is not possible to set a date in hours. The company has developed despite all possible efforts to timely provide requested information. In accordance with the provisions of No. 2 Decision No 01-?-135-07, submitted a letter SEWRC Company, which was informed about service contracts, as well as meet the annual reporting requirements in the proposed time.
8/19.02.13. On 31 July 2012, CEZ Electro Bulgaria AD performed due credit receivables of NEK EAD against his claim against the company NEK EAD. Specifically, CEZ Electro Bulgaria AD performed on your credit debt to NEK EAD under the Treaty on the purchase of electricity from NEK EAD's debt to the company CEZ Electro Bulgaria AD based on Methodologies compensate costs of renewable and high-efficiency cogeneration, which was due in July 2012.

Design credit is in the interest of both parties in order to save time and costs. Netting is acceptable way of meeting the obligation and in this way have previously been with the company NEK EAD settled these mutual commitments.Parties have the right to choose the method of payment and SEWRC is not entitled to interfere with that of a commercial relationship.

This approach is supported by a letter from SERVC, which has indicated that it will not interfere in the selection and allocation of costs.

Penalties administrative measures should be imposed only in cases of violation of administrative rules. In this case, such a breach is not, and should be discontinued procedure.

The company CEZ Electro Bulgaria AD NEK EAD company paid the disputed amount, which has taken steps to correct the credits made during the period between July and December 2012. This way was to eliminate the counting, though NEK EAD longer meets its obligations under the Methodology compensate for the cost of renewable and high-efficiency cogeneration.


15 to 18/19 February 13.

SEWRC accused the company CEZ Distribution Bulgaria AD to carry out its licensed activities in accordance with the Law on Public Procurement and the Decree on Public Procurement of small scale / VZVZMR /, at the conclusion of contracts for the postal service, notary services, auditing services, physical security, services on airfare, security services and alarm (alarm) systems, technical maintenance services for automobiles and telephone service.

CEZ Distribution Bulgaria AD held a tender for direct negotiation with one supplier with the subject "Measures to improve SAIDI and SAIFI indicators and automating selected medium-voltage feeders", without the reason for using this type ofmanagement.

Decisions on administrative offenses are illegal for reasons of limitation. This decision should be issued within one year of the violation, as follows from the fundamental provisions for penalties for administrative offenses. Decisions on administrative offenses beyond a general reference to "2011" do not contain the exact date of the commission of the alleged administrative offense should occur.

To allow the application of the provisions of the Energy Act no 80 issue of the violation, the legal basis may be only the final decision in a separate document. As follows from the law, the report of the Agency for State Financial Control is not the ultimate, final and binding specific document, so that it could replace the protocol violation within the meaning of 80 of the Energy Act. For this reason, the decisions issued illegal.

Administrative offenses stemming from the Law on Public Procurement, moreover, would not be penalized and SEWRC proceeding should be terminated since the alleged infringement would not be penalized under the Energy Act, but on the basis of the Law on Public Procurement.

Competent authority in this case is the State Agency for Financial Control, which has already initiated appropriate proceedings. In accordance with the principle that no one may be punished twice for the same thing, is not competent to initiate SEWRC further proceedings.

In order to meet the conditions of Decision No. 2 ?-01-135-07, the company has taken steps to start procurement in accordance with the Law on Public Procurement.
14/19.02.13 SEWRC accused the company CEZ Distribution Bulgaria AD to carry out its licensed activities in accordance with the Law on Public Procurement by 31 August 2011 concluded with CEZ Bulgaria EAD service contract ? SLA_CEZ_BG_CEZ_DI-2011_001, which circumvented the law on public procurement. As a result, 83% of expenditure on external services in 2011 and 92% of the expenditure charged on the material in 2011, located between CEZ Distribution Bulgaria AD and CEZ Bulgaria EAD - related party as defined in clause 1, paragraph 24 of the Law on Public Procurement. The data are taken from the report of the Agency for State Financial Control. Licensee agreed to this related company used the services of subcontractors, thereby circumvent the Public Procurement Act and paragraph 21 license, under which licenses must be operated in accordance with applicable legislation.

Although the decision on an administrative offense refers to the report of the Agency for State Financial Control does not take into account the absence of an explicit statement of violation of the law on public procurement set out in that report. Due to the fact that the matter concerns the Public Procurement Act, the competent authority to determine whether a violation has occurred or not, the Agency for State Financial Control and SEWRC in this regard devoid of any competence.

A service contract was also signed after negotiations with both MEET, and the SEWRC. While MEET contract approved, Chairman SEWRC explicitly stated that SEWRC lacks jurisdiction to approve such contracts, and has not given any instruction regarding any changes.For this reason, the contract does not violate any provision of applicable law.

In order to be able to legally apply Article 80 § 3 of the Energy Act, and the fact that it is not necessary to prepare a fact-finding report, the official legal document showing the official confirmation procedure document. By law, the report of the Agency for State Financial Control does not constitute a final and final official confirmation document, which is binding in terms of the facts contained therein, and which could replace the screening protocol according to § 80 paragraph 1 LE. For this reason, this decision issued on the basis thereof is unlawful.

In accordance with paragraph 2 of Decision 01-?-135-07 regarding the decision on administrative breaches 14 CEZ Distribution provides evidence of the absence of infringement. In addition, the Company, as a first step, organized a tender for the supply of materials.

It was decided that the call for tenders for the supply of materials - it is clear from the Decision of the Board of Directors on 27 February 2013. Due to the necessary preparatory acts according to the Law on Public Procurement tentatively tosses the tender for the supply of materials for the Company will be announced at the end of May.

23 to 24/19 February 13

SEWRC claims that CEZ Electro Bulgaria AD carry out its licensed activities in accordance with the Law on Public Procurement at the conclusion of two service contracts with CEZ Bulgaria AD of 29 April 2011 and 1 June 2011, which resulted in the circumvention of the Law on Public Procurement.

CEZ Electro Bulgaria AD and CEZ Bulgaria EAD are related parties within the meaning of § 1 paragraph 24 of the Law on Public Procurement. By CEZ Electro Bulgaria AD mince supplier, but a contract with a related party, under which the related party has selected vendor company rounded provisions of the Public Procurement Act, and because of that the company CEZ Bulgaria EAD is not a contracting authority within the meaning of the Act 7 on Public Procurement.

Licensed entity agreed with the option of sub-affiliates, which represents a circumvention of the Public Procurement Act and breach of clause 2.1 license, under which the licensed activity is to be conducted in accordance with applicable laws.

CEZ Electro Bulgaria AD, as a provider of public services, did not initiate any activity and not as a contracting authority within the meaning of the public procurement. For this reason, free to enter into any contract without having to follow the provisions of the Law on Public Procurement. Therefore, the alleged violation of the Public Procurement Act occurred.

A service contract was also signed after negotiations with both the MEET and with SEWRC. MEET contract approved as chairman SEWRC explicitly stated that SEWRC lacked jurisdiction to approve such contracts, and has not given any instruction regarding any changes. For this reason, the conclusion of contracts does not violate any provision of applicable law.

Decisions on administrative breaches are illegal due to the expiry of the statutory period for determining violations. Under the general provisions for such decisions to be published this decision within one year from the time when the breach occurred, and within three months from the finding body that has been committed. The evidence shows that both deadlines have passed, in which case there is no other specific time period. For this reason, the administrative proceeding terminated.

Decisions on administrative breaches are also not inconsistent with the substantive provisions of the Act, because SEWRC lacks jurisdiction to determine whether those infringements occurred or not. For this reason, therefore belonging to the Agency for State Financial Control and the National Audit Office, but not SEWRC.

Since the preparation and conclusion of the maintenance contracts given under proper authorization and in coordination with MEET SEWRC; conclusion of these agreements can not constitute a violation of law, especially the Law on Public Procurement and the provisions of § 206 paragraph 1 of the Energy Act.

It is therefore clear that there was no violation of the law.

For this reason, it is inappropriate to implement the measures set out in Part 2 of the Decision ? 01-?-135-11.

Barbora Půlpánová, ČEZ spokesman

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