What does the new Act on helping economy in times of high electricity and natural gas prices provide for the companies in times of energy crisis?
Over the summer, we have already analysed what state aid measures the Republic of Slovenia can apply according to EU state aid rules to support the economy in the face of high energy price rises. On 31 August 2022, the National Assembly adopted the Act on helping economy in times of high electricity and natural gas prices[1] (“ZPGVCEP“), which largely follows the Communication from the Commission Temporary Crisis Framework for State Aid measures to support the economy following the aggression against Ukraine by Russia (“Temporary Framework“). The ZPGVCEP has been in force since 10 September 2022 and enables certain non-reimbursable State aid measures to companies due to the high costs of electricity and natural gas, for the time being (only) for the eligible period from 1 June 2022 to 31 December 2022.
What are the key points of the ZPGVCEP relevant for companies facing business challenges due to increased electricity and natural gas prices?
1. Who is eligible for the aid for the economy?
According to Article 3 of the ZPGVCEP, the beneficiary[2] shall only be a legal or a natural person that is organised in accordance with the law governing companies or the law governing cooperatives and was timely registered in the Republic of Slovenia to carry out an economic activity by 1 December 2021. Most of the companies or cooperatives established last December and this year are therefore excluded from the range of potential beneficiaries.
If the beneficiary is active in the primary production of agricultural products[3], or in the fisheries or aquaculture sector[4], he must be registered for one of the following main activities with category codes from A 01.1 to A 01.6 or from A 03.21 to A 03.22 according to the standard classification of activities.
In addition to the conditions stated above, the ZPGVCEP lays down additional general conditions for certain beneficiaries in order for a company to be eligible for State aid:
the beneficiary shall not be the subject to bankruptcy or liquidation proceedings at the date of submission of the application,
the beneficiary shall have no outstanding tax debts and no unfiled and unpaid withholding tax returns for employment income for the last year in the amount of EUR 50 or more;
the beneficiary is also not eligible for economic aid for the period from 1 September 2022 if he is a customer as defined in Article 1 of the Decree on setting gas prices from the system[5] or Article 1 of the Decree on setting the price of electricity[6] ;
Furthermore, a company cannot receive economic aid if it is subject to sanctions adopted by the European Union as a result of Russia’s aggression against Ukraine;
A specific rule of the ZPGVCEP, or its stricter condition compared to the Temporary Framework, is also the condition that the beneficiary cannot receive aid if it has already included the increase in the cost of electricity and natural gas in the price of its products or services. The ZPGVCEP does not explicitly set a cut-off date to which assessment period the verb “has already included” refers and, for the time being, leaves room for several possible interpretations[7] and foreshadows difficulties of implementing the ZPGVCEP in practice.
2. Which costs may a company claim aid under the ZPGVCEP?
The ZPGVCEP addresses the challenges of businesses by renumerating the costs of electricity and/or natural gas, but not other energy products.
Beneficiaries shall only be legal or natural persons, whose unit prices of electricity and/or natural gas have at least doubled during the eligible period (i.e. from 1.6.2022 to 31.12.2022) compared to the reference period (i.e. from 1.1.2021 to 31.12.2021).[8]
3. Type and amount of aid provided by ZPGVCEP
Article 4 of the ZPGVCEP regulates three types of State aid in the form of grants:
- simple aid for the economy[9], which limits the maximum total aid per beneficiary to EUR 50, 000 (or EUR 62,000 per beneficiary active in the primary production of agricultural products and EUR 75,000 per beneficiary active in the fisheries and aquaculture sectors)[10] ;
- specific aid for the economy,[11] which limits the maximum total aid per beneficiary to 2 million euros[12] ;
- aid for energy-intensive businesses, which limits the maximum total aid per beneficiary to €25 million[13] and €50 million[14].
The formula for calculating the aid amount provides for State aid (only) in the amount of 30 % of the eligible electricity/natural gas costs during the eligible period.
As regards the above caps on the total aid amounts, it should also be noted that they apply to an ‘undertaking’ within the meaning of the State aid rules. The caps are therefore assessed by taking into account all aid amounts received by all subsidiaries and parent undertakings of the beneficiary acting 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[15] and not only on a single company basis. Groups of undertakings will therefore be entitled to essentially the same maximum aid amount as a beneficiary which is a single undertaking.[16]
The beneficiary may only claim one type of aid, where the ZPGVCEP envisages certain declarations and supporting documents to be submitted with the application depending on the type of aid claimed by the beneficiary.
4. How shall a beneficiary claim the aid for the economy?
The Ministry of Economic Development and Technology (“MGRT“) as the supervisory authority and the Public Agency for Entrepreneurship, Internationalization, Foreign Investments and Technology (“SPIRIT“) as the implementing authority are responsible for the implementation of the ZPGVCEP. [17]
The beneficiary shall be able to claim the aid for the economy by submitting the application until 15 November 2022. The application shall be submitted electronically via an application to be set up by SPIRIT until 31 October 2022. By 31 October 2022 more detailed instructions on how to access the application and how to submit applications shall also be published on the website.[18]
Some of the evidence provided by the beneficiary will be verifiable on the basis of public records, while others will be supported by the beneficiary’s own declarations. The key difference between claiming simple aid as opposed to special aid is only in the proof of payments and other evidence of the correctness of the actual cost data for the calculation of the eligible costs and, consequently, the State aid to which the beneficiary is entitled, according to Article 5 of the ZPGVCEP – this is a requirement only for claiming special economic aid, but not for simple aid as referred to in Article 5 of the ZPGVCEP.[19] Also, not all recipients of simple aid will be subject to monitoring (as should be the case for recipients of special economic aid), but monitoring will only be carried out on a sample of beneficiaries, in accordance with a risk assessment prepared by the MGRT.[20]
Article 11 of the ZPGVCEP provides for relatively severe penalties if the MGRT considers that the beneficiary has deliberately submitted incorrect or untrustworthy information. The sanction thus consists not only of reimbursement of the amount of aid unduly received within 30 days of notification of the decision, in some cases even with statutory interest from the date the rights to reimbursement were exercised[21], but also grounds for listing to the list of ineligible recipients, which means that in the future such companies would not be able to access any payments under the Temporary Framework or the Slovenian regulations based on the Temporary Framework. Given that the energy crisis is likely to become even more acute in 2023, ineligibility for further aid under the Temporary Framework is a consequence which it is certainly sensible to avoid.
5. Conclusion
The ZPGVCEP is one of the measures the State can take to help the economy with mitigating the energy price increases, which should not be overlooked by the beneficiaries. The support shall help to ensure at least a partial improvement in their business performance, which is especially important, given that the factors that increased the commodity prices in 2021 (supply chain disruptions, the COVID-19 and the recovery in global demand) are still relevant in 2022, and are accompanied by the consequences of war in Ukraine and the resulting sanctions against Russia, restricting the supply of energy products and raw materials.[22]
[1] Act on helping economy in times of high electricity and natural gas prices (Slo. Zakon o pomoči gospodarstvu zaradi visokih povišanj cen električne energije in zemeljskega plina, Official Gazette of the RS, No 117/22, “ZPGVCEP“).
[2] As defined in Article 3 of the CEQAP.
[3] A 01 according to the standard classification of activities.
[4] A 03 according to the standard classification of activities.
[5] Decree on setting gas prices from the system, Official Gazette of the Republic of Slovenia 98-2461/2022, page 7419.
[6] Decree on setting the electricity prices, Official Gazette of the Republic of Slovenia 95-2384/2022, page 7267.
[7] For example, whether it is the period before the application is submitted and, if so, how far back; whether it is part or all of the eligible period during which the State covers the costs, or even the whole period until 1 April 2023, when the control period is set, and so on.
[8] See Article 5 of the ZPGVCEP.
[9] As defined in section 2.1 of the Temporary Framework.
[10] The total amount of simple aid to the economy is the sum of all the monthly amounts of aid granted to the beneficiary during the eligible period.
[11] As defined in Section 2.4, point 52 of the Temporary Framework.
[12] The total amount of special farm aid is the sum of all the monthly amounts of aid granted to the beneficiary during the eligible period.
[13] As defined in point 53 of section 2.4 of the Temporary Framework. Energy-intensive undertaking according to the third indent of Article 2 of the ZPGVCEP means an undertaking which is exempted from excise duty or has been entitled to a refund of excise duty paid for energy-intensive undertakings in accordance with the provisions of the law governing excise duties.
[14] As defined in point 53 of section 2.4 of the Temporary Framework in relation to NACE code sectors or sub-sectors in the ZPGVCEP.
[15] See Article 6(5) of the ZPGVCEP.
[16] This raises the question of the permissible cumulation of aid, where Article 5(6) of the ZPGVCEP expressly provides that simple and specific aid may be cumulated with aid under the de minimis Regulation or aid under Regulation 651/2014/EU, provided that the provisions and rules on cumulation laid down in those Regulations are complied with, or with aid under the Commission Communication Temporary Framework for State aid measures to support the economy in the event of an outbreak of COVID-19, last amended by the Commission Communication – Sixth amendment of the Temporary Framework for State aid measures to support the economy in the event of an outbreak of COVID-19 and amendment of the Annex to the Commission Communication to Member States on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to short-term export-credit insurance, subject to cumulation provisions and rules. It also follows from point 39 of the Temporary Framework that State aid measures falling within the scope of the Temporary Framework may be cumulated in accordance with the requirements of the individual sections of the Temporary Framework. State aid measures covered by this Communication may be cumulated with aid under the de minimis Regulations or with aid under the Block Exemption Regulations, provided that the provisions and cumulation rules of those Regulations are respected. State aid measures covered by this Communication may be cumulated with aid granted under the Temporary Framework at the time of the outbreak of COVID-19, provided that their cumulation rules are respected. Similarly, aid under this Communication may be cumulated with aid under Article 107(2)(b) TFEU, but the beneficiary must not be overcompensated for the damage suffered.
[17] Legislative proposal of the ZPGVCEP, Urgent Procedure, EPA 0223-IX of 18.8.2022.
[18] Article 13 of the ZPGVCEP.
[19] See Article 8(5) of the ZPGVCEP.
[20] See Article 10 of the ZPGVCEP.
[21] Article 10(7) of the ZPGVCEP.
[22] Legislative proposal of the ZPGVCEP, Urgent Procedure, EPA 0223-IX of 18.8.2022.
