Business activities in the energy field - licening step by step

1. 5. 2014 | Source: Point of Single Contact (PSC) Czech Republic

General guidelines for the procedure for obtaining the necessary authorization to engage in business activities related to energy in the fields of electrical power, gas and heat. You will find instructions here on how to proceed with making an application to engage, for example, in the distribution of electricity, in doing business with gas, and in producing thermal energy. This document clearly describes the legal requirements for conducting various business activities, specific locations for reporting activities, and the necessary forms are available for procurement.

Information for applicants for a license

Types of licenses

Electrical power

Heating industry

Gas industry

Download the guidelines for applying for granting, changing or canceling a license here (only in Czech).

Download forms and sample documents here (only in Czech).

What you should know before applying

Submitting an application

The applicant shall submit the application in writing or electronically (via data mailbox or by email provided with an electronic signature) to the registry of the Energy Regulatory Office (“ERO”) using the appropriate form.

Administrative fees

List of administrative fees

  • Granting a license
    • For a power/transmission output up to 1 MW inclusive: 1,000 CZK
    • For a power/transmission output over 1 MW: 10,000 CZK
    • For a trading license: 100,000 CZK
  • Changing a license
    • 1,000 CZK – does not apply to changes already made in the Commercial Register (e.g. change of registered address or company name)
  • Canceling a license
    • 500 CZK

Method of paying administrative fees

  • An administrative fee up to 5,000 CZK inclusive can be paid with one or more revenue stamps
  • By bank transfer to the account of the Office: information here (only in Czech) 

Identification of the applicant for a license

The applicant for a license must be duly and unmistakably identified as a legal entity. When supplying documents, we ask you to ensure there is no mistake about which entity the documents belong to. If you send a document that does not include mention of the applicant for the license (e.g. cadastral map, etc.) and the sender is not listed on the envelope, then make a note on the document or attach a cover letter. Thank you.

Natural Person

A natural person must be identified by name and surname, personal identification number and permanent residence according to the information on an identity card; for foreign nationals name and surname, date of birth, place of residence outside the Czech Republic, and any place of residence in the country. A natural person may substantiate his identification number with a copy of a business license or extract from the trade or similar register where it is kept.

Under the authority of ERO as one of the keepers of the register of persons (ROS), an identification number (hereinafter “ID”) can be arranged for applicants for licenses – natural persons. All economic entities must have an allocated ID, meaning licensees for doing business in the energy industry as well. For those applicants (natural persons) who were never given IDs, they can complete the form Application for the allocation or registration of ID (only in Czech).

Legal Person

These entities shall submit an updated extract from the Commercial Register (not older than three months). If the legal person is established but not yet registered in the Commercial Register, a copy of the agreement or founding charter or the establishment of a legal person with proof of submission to the appropriate regional office shall be sufficient for this purpose. If the applicant fails to make an application for entry in the Commercial Register within 90 days of the receipt of the license or this application is found unsuitable, the validity of the decision to grant the license shall expire.

The applicant for the license may be another legal entity (an association of persons under the law governing associations of citizens, state enterprises, communities, subsidized organizations, associations of legal persons under the Civil Code, an organizational unit of the state or government organization established under Act No. 219/2000 Coll., Public Benefit Corporations, etc.). These entities are also required to substantiate their legal existence with an extract from the register where they are entered or with founding documents.

Signing the application for a license, persons authorized to act with ERO in the matter of granting, changing or canceling licenses

License applications must be hand-signed by the applicant himself – a natural person or, for a legal person, by those who have such permission, e.g. in accordance with § 21 of Act No. 99/1963 Coll., Administrative Procedure Code, and according to the extract from the Commercial Register. The signature on the application need not be certified; in case of doubt, however, ERO may require official verification of the authenticity of the signature.

In the event that an application for granting, changing or canceling a license was signed by someone other than the applicant himself – a natural person or the statutory body of a legal entity or a member of it authorized to do so pursuant to § 21 of Act No. 99/1963 Coll., Administrative Procedure Code (see § 30 of the Administrative Procedure Code) – must be accompanied by a power of attorney or written authorization for another person to act in the application for granting, changing or canceling a license with ERO. In this case, ERO will usually require there be special authorization or a special power of attorney for all negotiations with ERO regarding granting, changing or canceling a license. The document is required by the Energy Regulatory Office in an original or certified copy.

Licensing power of attorney (sample, only in Czech) – please note that the sample licensing power of attorney is not binding and no claims can be asserted against ERO from any use of it. Carefully read the introductory note to the power of attorney.

General conditions for granting the license

The general requirements for granting the license include the applicant being at least 18 years old, having full legal capacity and good character. These requirements concern licensing applicants, natural persons, persons in the position of responsible representatives, and all statutory bodies or members of statutory bodies of licensing applicants – legal persons.

The good character of the applicant for a license

Within the meaning of § 5 paragraph 4 of the Energy Act, the good character requirement relates to:

  • the applicant for the license – natural  person
  • all members of the statutory body of the applicant for the license – legal person,
  • the responsible representative of the applicant for the license.

For this purpose, the requirement is an extract from the Crime Register of the applicant/all members of the statutory body/responsible representative not more than 6 months old (original or certified copy) or a form (only in Czech) with the data from the extract from the Crime Register.

If any of the above is a foreign national, § 7 paragraph 4 letter b) requires an extract from a foreign crime registry or equivalent document issued by the government of which he is a citizen, and of the state where the person resided continuously for at least 6 months during the past 3 years. If the state does not issue such documents, then a statement of good character made before the competent authority of that state will suffice. These documents or statements must not be older than 6 months, must be originals or certified copies (in required cases including a clause that demonstrates the verification of the signature and stamp on the document for the purpose of using it abroad, etc.), and must be provided with an official certified translation.

Professional qualifications (responsible representative)

The requirement of professional qualifications must be fulfilled by the:

  • applicant for the license – natural person – if he does not fulfill it, a responsible representative must be appointed;
  • applicant for the license – legal person – a responsible representative must always be appointed.

The professional qualifications of the applicant or a responsible representative need not be demonstrated for producing electricity from renewable sources with an installed output of 20 kW inclusive.

The professional qualifications can be met by this education and experience:

  • full secondary vocational education with an engineering focus and school-leaving examination and minimum of 6 years experience in the field;
  • university education with an engineering focus and minimum of 3 years experience in the field;
  • for producing electricity or thermal energy with an installed output of 1 MW inclusive and for a separate electrical distribution facility or a thermal energy distribution facility with an installed output up to 1 MW inclusive: apprenticeship and a minimum of 3 years experience in the field or certificate of retraining to operate small energy sources or an equivalent certificate issued in another country (this retraining and certification can be obtained from the Association of Entrepreneurs for the Use of Energy Resources);
  • for doing business with electricity or gas: professional qualifications need not be demonstrated.

Professional qualifications must be accompanied by a certified copy of a diploma or certificate of a particular school, vocational certificate or other proof of formal education issued by the school in accordance with the law and proof of professional experience issued by an employer in accordance with § 60 of the Labor Code or an employment reference; if it concerns your own business, then by an extract from the Trade Register, including proof that the trade was performed for the required period (e.g. tax returns on personal income tax for the required reporting period), or in any other way that does not give rise to reasonable doubts about competence.

Responsible Representative

The responsible representative must meet the general requirements, and those for good character and professional qualifications (see above).

The appointment of a responsible representative of the license holder shall be approved by the Energy Regulatory Office.

The application shall be submitted on Form B (only in Czech), accompanied by the form of the mandatory statement (only in Czech) of the responsible representative. The application must be signed by an authorized person; the signature on the statement of the responsible representative must be notarized.

Any conflict of interest on the part of the responsible representative is prevented by requiring that a certain person not be appointed as the responsible representative for more than one license holder (or holder of multiple licenses). The responsible representative of a legal entity must furthermore not be a member of the supervisory board or other supervisory body of this legal entity.

If the responsible representative concludes his activity or he no longer meets the conditions for exercising his position, the license holder is obliged to name a new responsible representative within 15 days of the end of this activity or from the time he ceased to meet the conditions for exercising his position. The license holder is responsible for exercising the licensed activity pending the approval of a new responsible representative.

Period of commencing the licensed activity, the expected duration of business activity

Authorization for the licensed activity

The authority to perform the licensed activity first arises:

  • on the effective date of the decision to grant the license;
  • authorization can be set for a later date, mainly because of the later effectiveness of agreements on the transfer of property rights to energy facilities;
  • in relation to the expiration date of the license for the preceding operator of the same energy plant.

The legal force of the decision to grant/change/cancel a license

It is in the interest of the license holder to include a force clause in the decision to grant/change/cancel a license. ERO shall indicate it at the request of the license holder after the decision to grant the license goes into force.

The decision to grant/change/cancel the license becomes final after the lapse of the 15-day deadline for filing an appeal against the decision to grant/change/cancel the license (if the last day for filing an appeal /day 15/ is a Saturday, Sunday or public holiday, then this day is moved up to the first working day and the decision becomes final on the following day).

The applicant shall waive the right to the appeal in writing, which remains in the administrative files of ERO.

  • The applicant (or his representative with power of attorney) shall personally and after prior agreement with the competent ERO official pick up the decision to grant/change/cancel the license at the ERO office in Ostrava, where the receipt of the decision shall be confirmed and the right to appeal waived. The legal force of the decision to grant/change/cancel the license will be marked on the original.
  • Waiving the right to appeal can also be done by post, but it is necessary to take the necessary administrative delay into consideration. The license holder can only waive this right after receiving the decision to grant/change/cancel the license!

Validity of the license

  • Licenses for doing business in the energy sector are granted for a maximum period of 25 years (from the date the decision to grant a license goes into force), but no longer than the period of ownership or right to use the energy plant for performing the licensed activity is documented.
  • Licenses for doing business with electricity and gas are awarded for a period of 5 years. These licenses are renewable for another 5 years if the renewal application is made between 6 months and 90 days before the expiration of the license.

Property relations to facilities that will be used for licensed activities

Property relations must be documented at the level of ownership or user rights. Leasing also applies to these property relations.

For articles of ownership, ERO requires the co-owner of the power plant to make a written statement that explicitly and positively supports the use of certain assets for the business.

Property relations must be substantiated by the title of acquisition, which can be e.g. a purchase agreement, contract for work, deed of gift, contract for the sale of a business or part of it, a court decision in the case of inheritance, a leasing agreement, a statement of investment in a company together with the appropriate agreement of association (founding charter) and its amendments.

The ownership of the applicant’s power plant is generally demonstrated by:

  • a valid extract from the Land Registry Office on the date of submitting the extract to ERO (the applicant may substitute the extract from the Land Registry Office with the reference number of the property deed and the cadastral area where the power plant is located);
  • a contract for the transfer of property unless the title to the property is subject to entry in the Land Registry;
  • a contract for the transfer of ownership of a movable power plant;
  • a contract that makes it clear that the applicant is the owner of the movable power plant;
  • an original or a certified copy of a decision of the court or administrative authority if the applicant acquired ownership of the power plant at the discretion of the court or administrative authority or its ownership rights are confirmed in such a decision;
  • confirmation of the acquisition of the property if the power plant is the subject of a public auction.

The right to use a power plant is generally demonstrated by:

  • an extract from the Land Registry Office if the right to use the property is based on the rights of easement enrolled in the Land Registry Office under a special law, on the status of enrollments in the Land Registry Office as of the date of the extract for the ERO (the applicant may substitute the extract from the Land Registry Office with the reference number of the property deed and the cadastral area where the power plant is located);
  • a lease agreement, loan agreement or other agreement under which the applicant is entitled to use the power plant;
  • an original or a certified copy of a decision of the court or administrative authority if the applicant acquired the right to use the power plant at the discretion of the court or administrative authority or this right has been confirmed in such a decision;
  • a certified copy of a foundation charter if the applicant, as a subsidized organization of the local authority, demonstrates the transfer of the power plant to the administration of that authority.

If the applicant for the license is not the owner of the power plant, he is also required to document the consent of the owner of the power plant to using it for the purpose defined under this law, at least for the period for which the license is to be granted; in case of doubt, for 25 years. (A sample of the consent for a photovoltaic plant here – only in Czech; adjustments required for other types of power plants.)

Financial prerequisites

Financial prerequisites mean the applicant’s ability to financially secure the activity for which the license is required, and the ability to secure both current and future obligations for at least 5 years.

Financial prerequisites need not be demonstrated for these activities:

  • producing electricity if the installed electrical output of the plant is less than 200 kW;
  • producing thermal energy if the installed thermal output of the plant is less than 1 MW;
  • for generating electricity for a total installed electrical capacity of production from 200 kW to 1 MW inclusive, a statement (only in Czech) attesting to no arrears for taxes or fees, duties or premiums for social security and the state employment policy can be submitted

The applicant for a license is not financially qualified if he has outstanding taxes, duties and fees, social security insurance premiums, contributions to the state employment policy, general health insurance premiums and fines.

The applicant does not meet the financial prerequisites if during the past 3 years a court has nullified bankruptcy proceedings on his assets because the schedule of resolution was met or the court dismissed the bankruptcy petition because the debtor’s assets were not sufficient to cover the costs of the bankruptcy proceedings or it decided to nullify the bankruptcy proceedings because the debtor’s assets were completely inadequate.

The above conditions are met by confirmation by (original or certified copy):

  • the financial authority (arrears on taxes) not older than 3 months;
  • the customs office (arrears on duties) not older than 3 months;
  • the district social security administration (arrears on social security insurance and contributions to the state employment policy) not older than 3 months;
  • an extract from the Insolvency Register not older than 3 months (demonstrating that in the past 3 years from the date of application, the courts did not nullify the bankruptcy of the applicant’s assets because the schedule of resolution was met, or that the court did not dismiss the bankruptcy petition because the debtor’s assets were not sufficient to cover the costs of the insolvency proceedings or it decided to nullify bankruptcy because the debtor’s assets were completely inadequate). If the case involves an applicant who performs this activity but is not entered in the Commercial Register or in a trade or similar register, or if the applicant has not been performing the business activity even during the relevant period, all of the above items in the parentheses can be substantiated by statement only;
  • and by a statement (arrears on fees and fines, arrears on universal health insurance).

Under the relevant laws, prescribed fines are considered arrears. The existence of arrears is not affected by the conclusion of any schedule of payments.

Other applicants shall demonstrate the financial prerequisites by:

  • the volume of available funds:
    • monthly statements from the bank account with initial and final balances for the last one current year or for a shorter period if the applicant has not been performing the business activity for at least one year, OR
    • statement from the bank where the applicant has a current account regarding the applicant’s ability to meet his financial obligations and regarding movements in the account for the last one current year or for a shorter period if he has not been performing the business activity for at least one year, OR
    • loan agreement or an agreement of a similar type if the applicant does not have adequate resources, and by a schedule of payments for all existing loans;
  • the latest audited financial statements if the applicant has the obligation to conduct an audit, including its complete annex if the applicant performed the business activity or kept tax records or records of income and expenditure under the law regulating income tax during the previous reporting period;
  • data on business assets and net business assets if not compiled in the financial statements, and these business assets for the purposes of this decree shall be calculated as the sum of fixed assets, of funds in cash and valuables, cash in bank accounts, inventories, receivables, including loans and credit provided, and other assets; these business assets do not include the value of liabilities, including loans and credit received, payrolls and reserves; an applicant who keeps tax records shall demonstrate his financial qualifications with business assets calculated from the data presented in the tax return on personal income for the last tax period;
  • a business plan containing a description of the long-term financing capability of the licensed activity and the anticipated costs and revenues from the licensed activity
  • the form financial balance (only in Czech) of the applicant

Technical prerequisites

The applicant shall demonstrate compliance with the technical prerequisites of the power plant with a document certifying the safety of the power plant, which is:

  • for power plants newly put into operation, a report on the initial inspection of the power plant if another law imposes this obligation or a technical standard provides for performing an initial inspection prior to startup.
  • for power plants that are already operating, a report on the initial inspection if there is an obligation to make regular or operational inspections of the power plant, otherwise a report on making regular or operational inspections of the power plant, a record of testing the power plant unless another law or technical standard imposes the obligation to inspect the power plant or test the power equipment. The inspection report must especially include:
    • determining the type of inspection (initial, regular, special)
    • defining the scope of the inspected power plant,
    • date of commencing and concluding the inspection, preparing and delivering the inspection report,
    • name and signature of the inspecting technician with his registration number,
    • in the conclusion of the inspection report, it must be noted whether the power plant is capable of operating from a safety viewpoint; if defects were found during the inspection, the inspection report must note them along with the provisions of the standard or regulation they are inconsistent with. (Source ČSN 331500.)

Please note that any alterations in inspection reports require the original and altered versions be distinguished by changing the identifiers – two absolutely identical inspection reports (date, inspection number, etc.) differing only in data are illogical and unacceptable!

  • In the case of a low-pressure boiler room, a professional boiler room inspection report: The tour can only be performed by a person who understands the rules of operation, service and maintenance of boiler equipment and boiler rooms and related regulations, such as those for heating equipment, boiler inspectors, and power engineers. A report shall be prepared documenting the inspection results. The inspection shall especially determine the condition of the boiler room, the internal and external condition of the boilers, the condition of safety equipment, burners, pumps, tanks, water treatment equipment, and coal handling and flu dust collecting equipment, flue ducts and chimneys. (Cited Decree No. 91/1993 Coll., COHSA, on ensuring occupational safety in low-pressure boiler rooms.)

The documents attesting to inspections, professional inspection tours or tests or expert opinions may not be older than 6 months on the date they are submitted to ERO, unless a special law or technical standard provides a different period for their performance.

The documents listed in the section “Technical Prerequisites” must validate the safety of the entire power plant. For requests relating to power plants of greater output capacity, applicants usually demonstrate their safety with several inspection reports.

If the power plant in question contains products that have undergone conformity assessment pursuant to Act No. 22/1997 Coll., on the technical requirements for products (bearing the CE symbol), the applicant shall provide the declaration of conformity for this equipment.

For applications for a power plant license according to type the applicant shall furthermore submit:

  • solar power: the sum of the nameplate output of each PV panel (quantity x unit output on the panel);
  • cogeneration plant (internal combustion): photo of the nameplate of the aggregate, technical data sheet;
  • hydroelectric power: photo of the nameplate of the electrical generator;
  • combined steam and gas power plant: photo of the nameplate of the turbine set, if none, photo of the nameplate of the electrical generator;
  • wind turbine: photo of the nameplate of the electrical generator and technical data sheet;
  • steam power plant (water, ORC): photo of the nameplate of the entire turbine set, if none, photo of the nameplate of the electrical generator;
  • boiler: photo of the nameplate of the boiler, or specifications, technical data sheet (if the output is given in tons (steam)/hour – submit the power calculation in MW).

The applicant shall further demonstrate compliance with the technical prerequisites:

  • For hydroelectric plants, authorization to work with water when the authorization is subject to the operation of a power plant under the Water Act.
  • For transmitting electricity or transporting gas:
    • Itemization of the grid or transport system; the applicant shall indicate the specifications of transfer or offtake points between grids and transport systems and other electrical or gas power plants, the length of the transmission lines and transport system and plotting these lines on a cadastral map.
    • Data on interconnecting transmission and transport networks to systems operating in countries bordering the Czech Republic and data on interconnecting transmission and transport networks to electricity or gas production plants, distribution systems and gas storage facilities; the applicant shall indicate the names of municipalities, or parts of them, the names and numeric codes of cadastral areas in which connection points or interconnections with transmission and transport systems are located.

If the power plant is a building under the Building Act the applicant shall demonstrate the compliance of the technical prerequisites of the power plant below:

  • For the early startup of a power plant, a permit from the building authority for the early startup of the plant prior to its final completion.
  • For a power plant in operational testing by:
    • building permit if the operational testing was ordered by the building authority in the building permit;
    • decision of the building authority under which an occupancy permit can be issued after the test run.
  • For other power plants recently put into operation by:
    • planning decision unless the building or plant requires a building permit or notification;
    • planning approval unless the building or plant requires a building permit or notification;
    • public contract unless the building or plant requires a building permit or notification;
    • regulatory plan unless the building or plant requires a building permit or notification;
    • notification to the building authority of the intention to start using the plant unless the authority has already issued one of the documents above; after 30 days the applicant shall submit an affidavit that the building authority did not prohibit the use of the plant;
    • final inspection approval.
  • For power plants already operating by:
    • planning decision unless the building authority determines that the building or plant requires notification or a building permit;
    • planning approval unless the building or plant requires a building permit or notification;
    • notification to the building authority of the intention to start using the plant unless the authority has already issued one of the documents above; after 30 days the applicant shall submit an affidavit that the building authority did not prohibit the use of the plant;
    • final inspection decision or approval granted under the Building Act, or documentation of the actual construction or simplified documentation;
    • different opinion of the relevant building authority or other credible action demonstrating that the conditions for using or operating the plant have been met under the Building Act.

All documents submitted to the local building authorities and other administrative authorities must be marked with a clause indicating their legal force, if possible.

For buildings with an installed output of 20 kW with the exception of water works ERO does not require proof of a building permit or notification, unless the notification, building permit or other document is required by the building authority. Otherwise, the applicant for the license is required to submit such document to ERO without being summoned.

If the license is granted on the basis of a document from the building authority, certifying the authorization of the applicant to use or otherwise operate a power plant, it shall be of limited duration (e.g. permission for early startup, operational testing, etc.). The applicant must subsequently submit final inspection approval, perhaps another document renewing the authorization to use or otherwise operate the power plant, prior to the expiration of the permit.

Discussion

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