When planning to launch their operations, entrepreneurs often focus on issues related to obtaining a license. At the same time, they plan operational, business, and technical matters. It is worth knowing that actually becoming a distribution system operator is a long process that should be carefully planned. Any missteps or ambiguities can significantly delay the start of operations and thus have negative consequences. One of the most important milestones is obtaining a decision to designate a distribution system operator – today I am writing about the practical aspects of applying for this decision.
1. Preparation is half the battle
Obtaining a license and a decision to designate a distribution system operator is a lengthy, multi-stage process that is worth preparing for well in advance. Good planning and coordination of activities are key:
1. One of the most important issues is to provide a framework for future activities so that any adjustments do not result in significant modifications. For example, if the network lessee does not properly verify the condition of the network, it may turn out that the costs of its maintenance will be significantly higher than previously planned. For this reason, it is worth taking care of the following first:
- Choosing the right location.
- Shaping the organizational structure.
- Preparing a realistic business plan.
- Identifying personnel, technical, and operational needs.
2. Preparing to submit a license application requires gathering a number of documents. It is worth seeking the support of experienced advisors in this regard. Although the Energy Regulatory Office publishes so-called information packages, some issues relevant to the examination of the application only come to light after the proceedings have been initiated. Due to the short time available to remedy formal deficiencies, there is little time to react, and such surprises can be avoided by seeking professional assistance.
3. Once your application for an electricity distribution license has been approved, it is not the time to rest on your laurels. During this period, you need to prepare a number of documents and “prove” your readiness to start operating. It is necessary to conclude agreements with the superior operator, ensure the implementation and technical acceptance of the connection (network connection), prepare the IRiESD and tariffs, and establish the rules for the operation of the network and the collection of fees until they are approved by the President of the Energy Regulatory Office. And these are just some of the obligations!
2. Important deadlines
It is worth submitting an application for designation as a distribution system operator while the proceedings for granting a license (or its extension) are still ongoing. Not only because some of the documents are still “fresh” and it is easier to prepare all the formalities at once than to return to them after a few months. Above all, we give ourselves and the Office time to familiarize ourselves with the content of the application and attachments, which allows time for any corrections. Furthermore, once the license has been granted, there are only 30 days left to apply for a decision to designate an operator—there is no time to waste, as at the same time it is necessary to apply for tariff approval (30 days from obtaining the license) and network traffic and operation instructions (immediately). In addition, operational processes are ongoing in the background – concluding contracts, organizing documentation, updating the website, implementing software, technical analyses, acceptance procedures… The list of tasks is endless, so it is certainly a good idea to start the process of obtaining a decision to designate an operator earlier. On the first day of operation as a DSO, everything must be buttoned up, because from that day on, the entity is responsible for the proper operation of the network and the supply of electricity to end users.
3. Practical tips
In cases where an entrepreneur is only planning to start operating, it is rare for the initial number of end users in “his” network to exceed 300. In such cases, the application for an electricity distribution license is reviewed by the relevant regional branch of the Energy Regulatory Office, but the application for designation as a distribution system operator is submitted to the “head office.” If such an application is submitted while the licensing procedure is still ongoing, it will be possible to coordinate activities between the two departments of the Energy Regulatory Office, which will certainly facilitate not only the start of operating activities as planned, but above all mutual communication between the Office’s employees.
In order to successfully obtain a decision on the designation of a DSO, it is also necessary to coordinate activities with the parent operator and end users who will be supplied from the newly created or acquired network. First and foremost, this involves concluding the necessary distribution service agreements, adjusting metering and billing systems, and preparing the entire process of acquiring and processing metering data. In practice, decisions in these areas are made much earlier than the formal decision to appoint an operator, which is why it is so important that everything starts working smoothly at the zero hour.
At Raczyński Skalski & Partners, we provide comprehensive services related to obtaining electricity distribution licenses and decisions appointing distribution system operators. We also advise on other areas of operator activity, both from a contractual and regulatory perspective.
