The energy sector has experienced a turbulent period over recent years. After the Covid-19 pandemic, Russia’s invasion of Ukraine put the energy market under extreme pressure. Energy prices soared, leading to bankruptcies among even large distributors – a previously unimaginable situation. Their clients were left fearing that they would end up without electricity or natural gas supplies. And while Slovak energy-related legislation is conservative, and the country lags in transposing some EU energy legislation, it features one legal instrument for which the European Commission has acknowledged Slovakia. The institute of last-resort supplier determines who will be the successor in the event of an energy distributor’s failure, and thus responsible for supplying its clients with electricity, gas or heat. The EC has followed Slovakia’s example in forming its own recommendations to other EU member states.“The European Commission instructed member countries that, at least during price fluctuations or crises, the designated entity, which is the last-resort supplier, should be determined,” said Barbora Balunová, a partner at the LRP law firm and an expert in energy-related legislation.The Slovak Spectator spoke with Balunová about the challenges of the energy crisis, decarbonisation, ESG reporting and more.

What questions did clients have for your law firm during the turbulence of the energy crisis?

The energy crisis was not just triggered by the Russian invasion of Ukraine in late February 2022. After the Covid pandemic ceased, the European Union saw that it was time to implement the decarbonisation package of green measures, which were to significantly change the rules of the energy market. The market responded with price fluctuations in electricity and gas markets. The first ones were already recorded in December 2021, when the implementation of these measures was announced. The invasion itself only escalated the surge in prices. Of course, prices escalated to heights we could never have imagined. Previously, by comparison, a megawatt of electricity cost about €60-€80 per MWh, in December it cost €112 due to green measures. The war pushed prices up further, to €500 or €600 per MWh in summer 2022.

If you would have told me at the time that some large energy suppliers would go bankrupt, I would have said that it can’t happen. But this actually happened in western Europe. So, the EU and individual countries had to react. Before, it took about two years to adopt new legislation at the European level, enabling all stakeholders to agree on it. During the energy crisis the period for passing a fully-fledged piece of legislation shortened to three to four months.

It was all the more challenging for us, because it is different to comment on the intention of new legislation and indicate the risks it may present to the client and to scrutinise a draft bill, where you have to be very careful about the individual wording. This was much more precise and time-consuming work. There was a big increase in work at that time.

Has the pace of work slowed down since then?

Yes. Decarbonisation regulations as well as the Energy Efficiency Directive have already been adopted. Earlier this year the Energy Performance of Buildings Directive was also adopted. This means that the legislative processes on European platforms are over and have now moved to national structures and states. It is a little easier there, as many of the requirements have already been communicated within the framework of European procedures and processes. On the other hand, in Slovakia it’s as if we have fallen asleep. It’s because we have sort of caught up with the fact that we have either inappropriately implemented previous green regulations or have gold-plated them.

Read more: Slovakia’s energy legislation serves as inspiration for EU peers