A law to help the economy mitigate the effects of the energy crisis – what solutions does it bring?

Following the eager expectations of the economy for state support to help mitigate the unfavourable market trends in energy supply for 2023, on 16 December 2022 the National Assembly adopted the Act Determining the Aid to the Economy to Mitigate the Consequences of the Energy Crisis.

The Act Determining the Aid to the Economy to Mitigate the Consequences of the Energy Crisis (“the Energy Crisis Act” or »ZPGOPEK«) is a key piece of legislation to fight energy poverty and help the economy in 2023, and provides the basis for more than €1 billion in funding to be earmarked for various state aids.

The law was published on 27 December 2022 and entered into force on 28 December 2022, with some measures to be implemented only after the European Commission has decided that the State aid is compatible with Article 107 TFEU. ^[1]

The types of State aid that will be available under the ZPGOPEK are:

• Financial assistance to reimburse part of the costs of price increases for electricity, natural gas and steam
• The measure of partial reimbursement of salary compensation for a reduction in full-time working time  and the measure of partial reimbursement of the wage allowance for temporary waiting for work
• Liquidity measures

Below, we have provided brief explanations of each type of aid in the form of questions and answers.

Financial assistance to reimburse part of the costs of price increases for electricity, natural gas and steam

Who are the beneficiaries and who is not eligible?

Beneficiaries include legal persons established in accordance with the Law on legal persons (ZGD-1)^[2] , as well as cooperatives, chambers of commerce, associations, institutes and certain other legal forms of entities, all of which are subject to the condition that they must be registered to carry out their activities in the Republic of Slovenia by 30 November 2021 inclusive.

More importantly, which of the above entities are not eligible for aid, namely:

• a beneficiary who, on 31 December 2022, has a registered activity in Group K of the Standard Industrial Classification of Activities (financial and insurance activities),
• a beneficiary who is bankrupt or being wound up,
• a beneficiary who, at the date of submission of the application, has unpaid arrears of EUR 50 or more in respect of compulsory levies and other non-monetary non-tax liabilities under the law governing the financial administration, or who has not fulfilled his/her obligations to submit all withholding tax returns for employment income for the last year up to the date of submission of the application. If the beneficiary is the subject of an administration procedure, he or she must not have any outstanding tax liabilities which are not affected by the administration procedure and which arose after the opening of the administration procedure,
• a beneficiary who is a customer as defined in Article 1 of the Regulation on the fixing of prices for natural gas from the gas system (Official Gazette of the RS, No 98/22 and 138/22) or Article 1 of the Regulation on the fixing of prices for electricity (Official Gazette of the RS, No 95/22 and 98/22). Thus, inter alia, so-called small business customers are not eligible for aid, but the price of electricity and natural gas for them is in any event capped until 31 August 2023 on the basis of both Regulations,
• a beneficiary subject to sanctions imposed by the European Union as a result of Russian aggression against Ukraine.

What help is available?

Within the framework of the aid for energy price increases, the Energy Price Increases Act provides for 5 different types of aid, namely:

• simple help for the economy,
• basic specific aid for companies,
• special assistance in the event of reduced economic performance,
• specific aid for energy-intensive businesses; and
• specific aid for energy-intensive businesses in specific sectors.

Only one of the above types of aid may be claimed by a single beneficiary and cumulation is not allowed. If an undertaking considers that it qualifies for different aid, an informed decision on which aid to apply for is all the more important.

How will the aid be calculated and for what period can it be claimed?

The eligible period for the aid will be the whole year 2023.

To calculate the aid, it will first be necessary to calculate the amount of eligible expenditure in each month of the eligible period. In somewhat simplified terms, the eligible cost is the excess of the actual average monthly energy costs in 2023 over the reference period (which is 2021), where the cost in the reference period is increased by a factor of 1,5.

The actual cost in 2023 is capped at a maximum price of €510 per MWh for electricity and €160 per MWh for natural gas. In case the beneficiary has several energy suppliers, the average price per unit of energy of all suppliers and all tariffs shall be taken into account.

If a beneficiary estimates or leases electricity for 2023 at a price lower than EUR 150 per MWh, or if a beneficiary estimates or leases natural gas for 2023 at a price lower than EUR 79 per MWh, he/she is not eligible for special aid, but only for so-called ‘simple aid’. In this context, it is also worth mentioning the possibility of special aid only for the share of the estimated or leased electricity or natural gas exceeding the minimum prices described above, although it is not clear at this point in time how this possibility will be implemented in practice. In our view, it is probably correct to interpret that companies are eligible for proportional aid (only) in respect of quantities for which they will pay a price above EUR 150/MWh (irrespective of this average price for all quantities of the energy product).

As regards specific aid, there is also a limitation that no more than 70 % of the beneficiary’s consumption in the same period in 2021 can be taken into account for the calculation of eligible costs. The law therefore indirectly encourages companies to save energy consumption.

The aid amount is then calculated according to the formula of the product of the eligible monthly costs multiplied by the proportion of eligible costs as provided for by each type of aid (see further answers). The total aid amount is calculated as the sum of all the monthly aid amounts.

What is the proportion of eligible costs and what are the maximum limits for each type of aid?

For each type of aid, the proportion of the calculated eligible costs for which State aid is granted is specified. Each type of aid is also limited to a maximum amount. However, it is essential for the calculation of the amount that all aid already received under the Temporary Framework is taken into account (i.e. aid under the Act on aid to the economy in the event of high increases in the prices of electricity and natural gas, which is to be regarded as aid under section 2.1 of the Temporary Framework if it was simple aid, or under section 2.2 of the Temporary Framework if it was aid under section 2.2 of the Act on aid under the Act on aid to the economy in the event of high increases in the prices of electricity and natural gas).4. of the Temporary Framework if it was specific aid or aid to energy-intensive undertakings) and that aid received under the Temporary Framework by all subsidiaries and parent undertakings of the beneficiary in the Republic of Slovenia which, together with the beneficiary, act as a single entity with a common source of control within the meaning of Article 3(3) of Annex I to Regulation 651/2014/EU shall also be taken into account.

Thus, the 2021 spending shares, the eligible cost shares and the limits on maximum aid amounts are set as:

 

Type of aid	Proportion of 2021 spending that can be taken into account for the calculation of eligible costs	Share of eligible costs	Maximum amount of aid
easy help	no limit	50 % of eligible costs	EUR 2 million, including all aid received under section 2.1 of the Temporary Framework.
basic special assistance	70 %	50 % of eligible costs	EUR 4 million, including all aid received under Sections 2.1 and 2.4 of the Temporary Framework.
special aid for reduced economic performance	70 %	40 % of eligible costs	EUR 100 million, including all aid received under Sections 2.1 and 2.4 of the Temporary Framework.
specific aid for energy-intensive businesses	70 %	65 % of eligible costs	EUR 50 million, including all aid received under Sections 2.1 and 2.4 of the Temporary Framework.
specific aid for energy-intensive enterprises in specific sectors	70 %	80 % of eligible costs	EUR 150 million, including all aid received under Sections 2.1 and 2.4 of the Temporary Framework.

 

The lower aid ceilings apply to beneficiaries active in the primary production of agricultural products and to beneficiaries active in the fisheries and aquaculture sector.

What are the conditions for each type of aid?

Simple aid for the economy (Article 7 of the PPGOPEK)

• Increase in energy prices in 2023 compared to the 2021 reference price: at least 1.5 times.
• Method of setting the reference price: the unit price for electricity for 2021 paid by the beneficiary on average over the reference period from 1 January 2021 to 31 December 2021 inclusive, but not more than EUR 62,26 per MWh for electricity and EUR 26,40 per MWh for natural gas.

Basic special economic aid (Article 8 of the PPPECA)

• Increase in energy prices in 2023 compared to the average price in 2021: at least 1.5 times.

Special assistance on grounds of reduced economic viability (Article 9 of the PRAGOPEK Act)

• Increase in energy prices in 2023 compared to the average price in 2021: at least 1.5 times.
• EBITDA reduction, excluding aid, over the eligible period compared to 2021: 10%.
• Additional limitation on the amount of aid: the EBITDA in 2023, including the total aid received, must not exceed 90 % of its EBITDA in 2021 (if the EBITDA in 2021 was negative, the receipt of aid may result in an increase of the EBITDA to a maximum of 0) – in this respect, the EGCCF departs from the Temporary Framework, and Article 55 of the EGCCF provides that, in the event of a negative decision by the European Commission, the beneficiary’s EBITDA in 2023, including the total aid received, must not exceed 70 % of its EBITDA in 2021.
• Proof of EBITDA decline: only an estimate at the time of application, to be provided annually on the basis of the submitted financial statements no later than 30 April 2024 for the period 1 January to 31 December 2023.
• Possibility of receiving aid totalling more than EUR 50 million: submission of a plan setting out how the beneficiary will reduce the carbon footprint of its energy consumption or how it will implement requirements relating to environmental protection or security of supply.

Special aid for energy-intensive enterprises (Article 10 of the Energy and Climate Change Act)

• The beneficiary is an energy-intensive undertaking as defined in the Excise Duty Act.
• Increase in energy prices in 2023 compared to the average price in 2021: at least 1.5 times.
• EBITDA reduction, excluding aid, over the eligible period compared to 2021: 40 % or EBITDA negative
• Additional limit on the amount of aid: the EBITDA in 2023, together with the total aid received, must not exceed 70 % of its EBITDA in 2021 (if the EBITDA in 2021 was negative, the receipt of aid may result in an increase in EBITDA to a maximum of 0).
• Proof of EBITDA decline: only an estimate at the time of application, to be provided annually on the basis of the submitted financial statements no later than 30 April 2024 for the period 1 January to 31 December 2023.

 Special aid for energy-intensive enterprises in specific sectors (Article 11 of the PPPECL)

The same conditions as in Article 10 of the PDPAEC, with the additional condition that the beneficiary must be active in one of the sectors or sub-sectors as set out in Article 11(1) of the PDPAEC.

With regard to activity in one of the sectors or sub-sectors identified, unlike the Temporary Framework, the CCCT does not impose the condition that the beneficiary must generate at least 50 % of its annual turnover from this activity. This inconsistency could be the subject of an amendment of the CPCGOPEC in the near future.

What will be the procedure for granting the aid and how will the aid be monitored after it has been granted?

The application must be submitted by 28 February 2023 at 12.00. The application will only be submitted electronically via the application, and only by signing with a qualified digital certificate. Applications submitted contrary to this rule will be rejected.

The application can be prepared and submitted by anyone who has the beneficiary’s authorisation to use the application, but the application can only be signed by the beneficiary’s legal representative with a qualified digital certificate. It is our understanding that it will not be possible to provide a power of attorney to sign the application. It is therefore important that the legal representative of the beneficiary ensures that he/she has the possibility to sign the application with a qualified digital signature in good time, if he/she does not already have one. Please also take note of any internal rules on joint representation of several persons, as these rules must also be respected when signing the application.

The competent authority will have the application in place by 13 February 2023, so it is important that the beneficiary has staff available to prepare the application between 13 February 2023 and 28 February 2023 (12:00) and that the legal representative (or more than one in the case of joint representation) is available to sign the application with a qualified digital certificate during this period.

In the application, the beneficiary will estimate the aid using an online calculator which will be published on the competent authority’s website. Those costs that are not yet known at the time of the application will be estimated by the beneficiary, but it is important to note that in any case the beneficiary will not be entitled to a higher amount of aid than it has estimated (for example, if at the end of 2023 the actual costs were higher than the estimated costs, the beneficiary would not be entitled to the difference). In this context, it is reasonable that the cost estimate is not too restrictive but is given in a realistic-pessimistic way.

Depending on the eligibility of each type of aid, the beneficiary will be required to make various declarations of eligibility and to provide the relevant supporting documents.

Aid payments will be made at a rate of 80 % of the aid amount for each month of payment. The first payments are expected (only) in March, which should be taken into account in the liquidity of the beneficiaries.

In the second half of 2023, the competent authority will carry out a correction procedure comparing the actual costs incurred in the first half of 2023 with the estimated costs in the beneficiary’s application and taking this into account for the payments in the second half of 2023. In early 2023, the authority will carry out another procedure to review the actual costs against the estimated costs and will make a final payment by 28 February 2024 inclusive. The retained funds of 20%, or the amount corresponding to the findings of the correction procedure, will also be disbursed by 28 February 2024.

How will the aid be recovered if it subsequently transpires that the beneficiary was not eligible?

If the beneficiary subsequently discovers that he has been granted aid which is excessive in relation to the costs actually incurred or that he did not comply with the conditions for receiving it, he must inform the competent authority in writing without delay or at the latest by 30 April 2024 at the latest. In this case, the aid overpaid will be repaid without interest.

May the beneficiary make distributions of profits in or for 2023, or may there be purchases of own shares or interests, payments of management bonuses or performance-related salaries?

No, if this situation arises, the beneficiary will have to repay the aid plus interest for late payment.

Are there any restrictions on the resale of energy products?

So, the PEGGOPEC provides in Article 19 that no aid can be claimed for energy products that have been sold by the beneficiary.

In addition, the PPGOPEC completely denies aid to a beneficiary who would sell electricity for 2023 on speculation. The PPGIPEC defines speculative sales as the behaviour of a beneficiary claiming aid for the economy for 2023 and having sold at least part of the electricity for 2023 on the organised market at a higher price than the purchase price. The sanction for speculative sales of electricity is the recovery of all State aid received and a substantial fine of EUR 100 000.

In the case of resale of energy products, the beneficiary will have to notify the competent authority of each sale of energy products within 30 days of the sale, giving details of the buyer, the quantity sold and the price per unit of energy product. 

Measures to safeguard jobs

What measures will be available?

Measures to preserve jobs are similar to those we know from the times of the epidemic.

The measure of partial reimbursement of salary compensation for a reduction in full-time working time (“Reduced Working Time Measure”)

Employers may, in order to preserve jobs because of the temporary impossibility of providing work due to the exception of high increases in energy prices (business reason), order full-time workers to work part-time (minimum 20 hours and maximum 35 hours per week) and at the same time partially assign them to temporary waiting periods (from 5 hours to 20 hours per week). This is a measure which represents a possible departure from the employer’s fundamental obligation to provide the worker with work to the extent agreed in the employment contract.

Notwithstanding the imposition of this measure, the worker’s employment status remains unchanged, the full-time employment contract remains unchanged and the worker continues to be fully covered by all social security schemes and retains all rights and obligations under the employment relationship (unless expressly provided otherwise). While the worker is working, he shall be entitled to a salary. For the time he is waiting for work, he is entitled to a wage allowance according to the provisions of ZDR-1 (80% of the base), provided that the sum of the wage and the allowance paid may not be less than the minimum wage.

At the same time, employers will be able to claim partial reimbursement of the wage compensation paid for the period of partial waiting for work from the Employment Service.

The measure of partial reimbursement of the wage allowance for temporary waiting for work (“Waiting for work measure”)

In addition, the PECL allows employers to place workers on temporary lay-off for up to 30 days in order to preserve jobs. Again, employers are entitled to a partial reimbursement of the wage compensation paid for the period of waiting for work. During the waiting period, workers are entitled to compensation according to the provisions of the ZDR-1 (80%), which may not be lower than the minimum wage.

Workers on temporary lay-off retain all rights and obligations under the employment relationship and are obliged to return to work within seven days of the employer’s request in the current month. The employer must give the workers at least one day’s notice of the request to return to work.

Who are the beneficiaries and who is not eligible?

Primarily, beneficiaries of job creation measures must fulfil the same conditions as other beneficiaries for receiving assistance under the EGFREG. In addition, direct or indirect budget users are not eligible for the measure.

Temporal validity of measures to safeguard jobs

The measure of ordering part-time work while partially placing the worker on temporary standby duty is available for a period from 1 January 2023 to a maximum of 31 March 2023, although the Government may extend this period by a decision for a maximum of two periods of one month each time.

Employers may post workers on temporary standby from 1 January 2023 to 30 June 2023.

Amount of partial reimbursement of salary compensation

Employers will be entitled to a reimbursement of wage benefits paid equal to 80% of the benefits paid, including all taxes and employer contributions (gross II), but no more than the average gross wage in the RS for October 2022.

What is the procedure for claiming reimbursement of salary compensation?

The employer claims partial reimbursement of the wage benefits paid by submitting an electronic application to the ZRSZ within 15 days of the part-time work being ordered.

ZRSZ will decide on the employer’s application with a decision within 15 days of receiving the (complete) application. Such a decision by the ZRSZ will be subject only to an administrative dispute.

The employer will then claim back the benefits paid by submitting a claim to the Employment and Social Insurance Fund.

What are the employer’s obligations when using reduced working time?

a. During the period of receipt of the salary allowance

Employers must pay regular wages and wage compensation, or wage compensation only, to workers who are ordered to work part-time or who are placed on temporary standby, in accordance with the LPGOPEK.

During the period of partial reimbursement of the wage indemnity and for six months thereafter, the employer is prohibited from initiating dismissal proceedings on business grounds for workers for whom the employer is applying measures under the CPRECA, or from dismissing a large number of workers on business grounds.

It also prohibits the ordering of overtime work, unequal distribution or temporary reassignment of working time, if this work can be carried out with workers who are ordered to work part-time or on temporary standby.

b. In general, the imposition of a measure

The employer must keep records of the use of working time by a worker who is ordered to work part-time in such a way that the records show the time of arrival and departure from work according to the time of the worker’s actual arrival and departure (at the time of actual arrival and departure; not only at the end of the working day).

c. Additional obligations and consequences of receiving funding

Conduct contrary to the obligations described under a. and b. means that the employer will have to repay the funds received in full and is an offence punishable by a fine.

If the employer will make any profit payments, purchases of own shares or business holdings, management bonuses or performance-related salary payments to management in or for 2023, the employer must inform the Employment Service. The funds received will have to be repaid with statutory default interest.

In addition, employers who will receive partial reimbursement of temporary layover benefits are obliged to make investments in the Green Gateway within 30 months of the date of the first payment claim, failing which the employer must repay the funds received.

General overview of part-time working arrangements

The PPSL introduces the possibility of ordering part-time work while at the same time placing the worker on temporary standby in order to preserve jobs. It is important that the business reasons why the employer is unable to provide full-time work are due to the exceptionally high increases in the price of energy products.

Employers can only apply the measure to workers:

• who have a full-time contract,
• who have been employed by the employer for more than three months and have been in full-time employment for the last three months,
• for which they do not receive a salary subsidy from programmes co-financed by the budget or cohesion funds.

An employer who, in his own assessment, is unable to provide at least 90 % of the work to at least 10 % of the workers per month and who provides work to the worker for at least 20 hours per week, but for the rest of the full-time working time the worker is partially placed on standby, may claim partial reimbursement of the wage allowance for the time spent on standby (i.e. between 5 and 20 hours per week).

Which employees cannot be ordered to work part-time?

Part-time work cannot be ordered under the PDPAEC:

• during the period of notice for business reasons,
• a worker with social security rights, i.e. a worker who is entitled to part-time work and receives partial compensation under pension and invalidity insurance rules, or who is entitled to part-time work under health insurance or parental care rules.

What is the procedure for an employer to order part-time work?

a. Mandatory prior consultation and written opinion of the trade union or works council

Before taking a decision to impose part-time work, the employer must consult the employer’s trade union or, if there is no trade union, the works council. o

• the extent of part-time work,
• the number of staff to be ordered to carry out such work, and
• the duration of the injunction.

The employer must also obtain the written opinion of the trade union or works council.

If the employer does not have an organised trade union or works council, the employer must inform the workers in the employer’s usual way before taking a decision.

The Labour Inspectorate must also be informed of the decision.

If the circumstances of the part-time work order change, a new consultation must be carried out.

There are no time limits within which the consultation must take place, nor are there any time limits within which the trade union or works council should give its written opinion. The time limits for notification and consultation should take account of any time limits laid down in collective agreements at sectoral and company level. In any event, consultation should take place before the employer’s decision is taken. We also consider that the employer is obliged to allow the trade union or works council a reasonable period of time to prepare for the consultation.

b. Written order from the employer

The employer orders the worker to work part-time in writing (the order can also be sent by email). The order must be sent to the worker at least one day before the part-time work starts.

The written order shall specify:

• the amount of part-time work, which must not be less than half full-time (i.e. not less than 20 hours per week),
• the duration of the part-time work,
• the organisation of working time or the way in which working time is organised,
• the duration of breaks between work,
• the amount of reimbursement of work-related expenses,
• the possibility and manner of inviting the worker to resume full-time work; and
• the amount of the salary allowance.

Liquidity measures

What measures will be available?

The legislator has included measures in the ZPGOPEK that will enable the Slovenian Enterprise Fund and the Slovenian Regional Development Fund to provide soft loans, and SID Bank to provide financial engineering and establish a loan fund for road hauliers.

To this end, the ZPGOPEK provides for measures that will increase the earmarked assets of the Slovenian Enterprise Fund and the Slovenian Regional Development Fund and allow for a different earmarking of the funds available to SID Bank.

The details of these measures and the benefits that beneficiaries will be able to receive are not yet known at the level of SID Bank and the two Funds.

We understand that in times of adverse and volatile market conditions, it is all the more important that you are informed about such measures in a timely and thorough manner.

We hope you find the above explanations on the new intervention law and the State aids it provides helpful.

We are available for any further clarifications and questions.

 

[1]      Obtaining the approval of the European Commission could be somewhat less obvious, as the PDAPEC departs in part from the Temporary Framework for crisis State aid measures in support of the economy following the Russian aggression against Ukraine (2022/C 426/01) (“Temporary Framework“), in which the European Commission defined the conditions for assessing the compatibility of State aid measures to mitigate the consequences of the energy crisis resulting from the Russian aggression against Ukraine with the internal market.

[2] Companies             Act (Journal of Laws of the RS, No 42/06, as amended, “ZGD-1“).