The Government has responded to the unusual increase in electricity and natural gas prices, which is the result of many factors, including the economic recovery from the pandemic and the Russian invasion of Ukraine, by taking a number of measures to mitigate the negative social and economic impact of the energy price increase, and will continue to do so in the future.
- Retail price regulation for electricity and natural gas and reduced VAT
In the field of electricity supply, on 14 July 2022 the Government of the Republic of Slovenia (hereinafter: “the Government”) adopted Decree on the determination of electricity prices and on 21 July 2022 a Decree amending the Decree on the determination of electricity prices (hereinafter: “the Decree on the determination of electricity prices”), on the basis of which it set the maximum retail electricity price for household customers, for small business customers, for consumption in common areas of multi-apartment buildings and for common areas in mixed multi-apartment and commercial buildings.
The definition of small business customers includes customers whose total connection capacity of metering points is equal to or less than 86 kW and for whom a connection approval has been granted up to and including 21 July 2022.
The maximum electricity price allowed for customers with a connection capacity equal to or less than 43 kW who are not household customers will be:
- for the higher daily tariff rate EUR 0,13800/kWh,
- for the lower daily tariff rate EUR 0,09900/kWh,
- for a single daily tariff rate EUR 0,12400/kWh.
The maximum retail selling price for electricity for household customers and for consumption in common areas of multi-apartment buildings and common areas in mixed multi-apartment buildings will be:
- for the higher daily tariff rate EUR 0,11800/kWh,
- for the lower daily tariff rate EUR 0,08200/kWh,
- for a single daily tariff rate EUR 0,09800/kWh.
On 21 July 2022 the Government adopted a Decree on setting gas prices from the system and on 28 October 2022 it adopted a Decree amending the Decree on setting natural gas prices from the system (hereinafter: the “Gas Price Setting Decree”), under which it limited the maximum permitted retail prices for natural gas for the period from 1 September 2022 to 31 August 2023. The Gas Price Setting Decree sets a maximum retail price for natural gas which:
- for household and common household customers 0,073 EUR/kWh,
- for basic social services, kindergartens, primary schools, health centres and small business customers 0,079 EUR /kWh,
- the maximum retail price of natural gas required for the production of heat for household customers will amount to EUR 0.073/kWh for heat distributors.
The regulated retail prices for electricity and natural gas will remain in force until 31 August 2023.
As a follow-up to the measures to regulate the prices of electricity and natural gas, on 23 August 2022 the National Assembly of the Republic of Slovenia (hereinafter: “the National Assembly”) adopted the Determining Intervention Measure in the Field of Value Added Tax for Mitigating of Rising the Energy Prices (VAT) to mitigate the increase in energy prices, reducing the VAT rate to 9.5% for all consumers of electricity, natural gas, district heating and purchasers of wood for the period from 1 September 2022 to 31 May 2023.
The lower tax rate applies to both households and businesses
- Measures to overcome the impact of high energy prices on business in 2022
2.1. State aid in the form of co-financing of high energy costs for businesses
In response to the difficult economic situation, on 24 March 2022 the European Commission adopted the Temporary Crisis Framework for state Aid measures to support the economy following the aggression against Ukraine by Russia and in basis of second amendment of Temporary Crisis Framework on 9 November 2022 European Commission adopted a new Temporary Framework. On the basis abovementioned Crisis Framework, the National Assembly adopted two acts setting out state aid schemes in the form of co-financing for electricity and natural gas costs arising in 2022 and for costs arising in 2023. The act setting out the state aid scheme for 2023 will be presented in detail in the third point of this article.
On 31 August 2022, the National Assembly adopted the Act Determining the Aid to the Economy Due to High Electricity and Natural Gas Prices due to high increases in the prices of electricity and natural gas (ZPGVCEP) which provides state aid in the form of subsidies for the costs of consumption of electricity and natural gas in 2022 to business entities.
According to the Act, the state will subsidise 30 % of the cost of electricity and natural gas in 2022 above twice their price increase in 2021, for which it will allocate 80 million EUR. The Act provides three types of aid: (1) simple aid for the economy of up to 500,000 EUR and up to 30 % of eligible costs; (2) special aid for the economy of up to 2,000,000 EUR and up to 30 % of eligible costs, with a cap on the calculation of costs at up to 70 % of consumption in 2021; and (3) aid for energy-intensive businesses of up to 2,000,000 EUR and up to 50 % or, in some cases, up to 70 % of eligible costs.
Applicants could submit their applications for state aid in the electronic application of the Public Agency SPIRIT Slovenia until 15 November 2022.
2.2. Electricity pricing mechanism for large business customers
On 29 November 2022 the Government adopted the Regulation on the determination of the electricity pricing mechanism for business customers and on 6 December 2022 it adopted the Regulation amending the Regulation on establishing the electricity pricing mechanism for business customers, (hereinafter referred to as the ‘Regulation’), by which it established the electricity pricing mechanism for large business customers, which include those economic operators not eligible for measures under the Decree on the determination of electricity prices.
Business customers are defined by the Electricity Supply Act (“ESPA”) as natural or legal persons who purchase electricity not intended for their own household use, and include producers, industrial customers, small and medium-sized enterprises, business entities and wholesalers.
The Regulation establishes the electricity pricing mechanism for the supply of electricity to business customers for the year 2023, for electricity supply contracts and all transactions concluded on the basis of existing supply contracts, whereby the parties to the contract agree on the total or partial quantities to be supplied in 2023, all concluded in the period from 30. 11. 2022 to 31. 12. 2022.
The electricity supplier is thus obliged to offer fixed prices for the higher and lower daily tariff rates for the maximum amount of electricity consumption of the customer. The way in which these prices are set depends on the calculation of a specific formula, which is specified in the Regulation. It consists of the annual price of the forward product of banded electricity on the German power exchange, the price of the annual forward product of trapezoidal electricity on the German power exchange and the upward capped cost of the supplier.
Suppliers that were supplying electricity to large business customers on 29. 11. 2022 may not cease to supply them during the period of validity of the Regulation and are obliged to provide business customers, upon their request, with offers complying with the terms and conditions of the Regulation. This provision is necessary to ensure that suppliers do not evade the obligation by not issuing offers and not concluding supply contracts or by ceasing to carry out their activities
- State aid to businesses in 2023
In 2023, the Government will continue to co-finance businesses to pay the high cost of energy. The state aid scheme is laid down in the Act on aid to the economy to mitigate the effects of the energy crisis, adopted by the National Assembly in the second half of December 2022, where two new types of aid are added in addition to the three types of aid set out in the Aid to the Economy Due to High Electricity and Natural Gas Prices due to high increases in the prices of electricity and natural gas.
The state aids defined by the Act are set out below.
3.1. Act on economic aid to mitigate the effects of the energy crisis
On 16 December 2022, the National Assembly adopted the Act on aid to the economy to mitigate the effects of the energy crisis (hereinafter »ZPGOPEK« or »the Act«), which entered into force on 28 December 2022, nevertheless the state aid scheme set out in the Act is still subject to approval by the European Commission. The economic state aid includes (1) subsidies for high prices of electricity, natural gas and process steam, (2) subsidies to preserve jobs, and (3) measures to ensure the liquidity of companies. The subsidies for high prices of energy products will be described in more detail below.
3.1.1. Subsidising energy prices
The Government will subsidise the costs of energy prices for companies in the period between 1 January 2023 and 31 December 2023. The Act adds two new aids to the existing three types of aid, and sets a relaxed entry condition for eligibility. The estimated financial value of the aid measures to subsidise high energy prices for 2023 is estimated at 850 EUR million, which is ten times higher than in 2022.
The beneficiaries of the aid will be companies, sole traders, economic interest associations and cooperatives, private institutions and associations, chambers of commerce and trade unions, provided that the beneficiaries are registered in the Republic of Slovenia to carry out an economic activity up to and including 30 November 2021.
The following will not be eligible for aid:
- small business customers as defined in the Decrees on the fixing of the prices of natural gas (100 MW) and electricity (43 kW and 86 kW respectively for all metering points),
- entities with a registered K activity (financial and insurance institutions),
- legal and natural persons who have outstanding liabilities to the Government of 50 EUR or more,
- entities in liquidation or bankruptcy,
- entities subject to sanctions adopted by the European Union as a result of the Russian aggression against Ukraine.
3.1.3. State aid
Beneficiaries will be able to apply for aid of between 40 % and 80 % of eligible costs above 1.5 times the price increase for electricity, natural gas and process steam in 2023. The price comparison will be calculated by reference to the average price in 2021.
The eligible period is from 1 January 2023 to 31 December 2023.
The eligible cost is charged according to a formula by deducting 1.5 times the average price for 2021 from the price in a given month in 2023, except where the actual average unit price of the beneficiary in 2021 is lower than the regulatory price.
For simple aid, the average price for electricity and natural gas is set by law (62,26 EUR for electricity, 26,49 EUR for natural gas), unless the actual price was lower than the set price, in which case the latter is taken into account. For process steam, the average price of the beneficiary in 2023 shall be taken into account.
For all types of specific aid, the average unit price per beneficiary in 2021 is taken into account.
The resulting difference is multiplied by the quantity consumed in a given month in 2023 to get the eligible cost.
The amount of state aid is calculated by multiplying the eligible cost in a given month in 2023 by the proportion of eligible costs laid down by law for each type of aid.
The beneficiary will be able to choose between five types of aid: (1) simple aid up to 50 % of eligible costs and up to a maximum of 2 million EUR in total aid, (2) basic special aid up to 50 % of eligible costs and up to a maximum of 4 million EUR in total aid, (3) special aid for reduced economic performance up to 40 % of eligible costs and up to a maximum of 100 million EUR, (4) special aid for energy-intensive enterprises up to 65 % of eligible costs and up to a maximum of 50 million EUR, (5) special aid in specific sectors up to 80 % of eligible costs and up to a maximum of 150 million EUR.
220.127.116.11. Simple aid
The beneficiary is eligible for simple aid to the economy of 50 % of eligible costs up to a maximum total of 2 million EUR if, in 2023, the price of energy prices increases by at least 1.5 times of the reference price for 2021, whereas the reference price per unit for year 2021
- for electricity, is the price paid by the beneficiary on average over the reference period from 1. 1. 2021 to 31. 12. 2021 (in EUR/MWh) excluding refunds of taxes and duties, up to a maximum of 62,26 EUR per MWh,
- for natural gas, is the price paid by the beneficiary on average over the reference period from 1.1.2021 to 31.12.2021 (in EUR/MWh) excluding refunds of taxes and duties, up to a maximum of 26,40 EUR per MWh,
- for process steam, is the price paid by the beneficiary on average over the reference period from 1. 1. 2021 to 31. 12. 2021 (in EUR/MWh) excluding refunds of taxes and duties.
18.104.22.168. Basic special aid
The beneficiary is entitled to basic special economic aid of 50 % of eligible costs up to a maximum total of 4 million EUR, if the energy price of the beneficiary’s energy use increases in 2023 by at least 1.5 times the average price in 2021.
22.214.171.124. Specific aid for reduced economic viability
The beneficiary is eligible for special aid for reduced economic performance of 40 % of eligible costs up to a total maximum of 100 million EUR if: (1) its energy price increases in 2023 by at least 1.5 times the beneficiary’s average price in 2021 and (2) its EBITDA without aid decreases by at least 10 % in the eligible period compared to 2021.
EBITDA is the total operating result plus depreciation, amortisation and interest expenses. It is calculated as the difference between the sum of all income and the sum of all expenditure, excluding depreciation, amortisation and interest expense.
126.96.36.199. Specific aid for energy-intensive businesses
The beneficiary is entitled to special aid for energy-intensive enterprises of 65 % of eligible costs up to a maximum total of 100 million EUR if: (1) it is an undertaking which is exempt from excise duty or has been eligible for a refund of excise duty paid for energy-intensive undertakings in accordance with the provisions of the law governing excise duties (‘energy-intensive undertaking’), (2) in 2023 the price of energy products increases by at least 1.5 times the beneficiary’s average price in 2021, (3) its EBITDA without aid during the eligible period decreases by at least 40 % compared to 2021 or is negative.
188.8.131.52. Specific aid for energy-intensive enterprises in specific sectors
The beneficiary is eligible for special aid for energy-intensive enterprises in specific sectors of 65 % of the eligible costs up to a maximum total amount of 150 million EUR, provided that: (1) it is an undertaking which is exempt from excise duty or has been eligible for a refund of excise duty paid for energy-intensive undertakings in accordance with the provisions of the law governing excise duties (‘energy-intensive undertaking’), (2) it experiences an increase in the price of energy products in 2023 of at least 1.5 times the beneficiary’s average price in 2021, (3) its EBITDA excluding aid has decreased by at least 40 % in the eligible period compared to 2021 or is negative, (4) it is active in one of the NACE special sectors (coal mining, crude oil extraction, production of oils and fats, production of sugar, production of fibres, production of cement, production of plastics in primary form, production of pharmaceutical raw materials,…).
3.1.4. Application for and payment of state aid
The beneficiary shall claim the state aid by submitting an application to the Public Agency of the Republic of Slovenia for the Promotion of Entrepreneurship, Internationalisation, Foreign Investment and Technology (hereinafter referred to as “the Agency”) by 28 February 2023. The application shall be submitted electronically via an application to be set up by the Agency.
Payments will be made at a rate of 80 % of the aid per payment for each month of the eligible period, up to one-twelfth of the estimated aid amount for the entire eligible period. The first payment will be made up to and including 31 March 2023 for the period from January 2023 to March 2023, and subsequent payments for the period from April 2023 to December 2023 will be made monthly up to and including the 30th of the month for the current month.
By 28 February 2024, the withheld funds will be paid to the beneficiaries at a rate of 20 % of the aid amount.