Hungary: Energy Efficiency In Hungary: Regulatory Requirements Force All Energy-Using Companies To Increase Energy Efficiency

The Act on Energy Efficiency in Hungary (Act no. LVII. of 2015, "AEE"), which entered into force in July 2015, and its Governmental Decree on the Enforcement of AEE, encompass the main rules to be observed in the field of energy efficiency. The AEE prescribes energy efficiency targets, political energy efficiency planning and monitoring mechanisms, including the National Action Plan, obligations of the state and public bodies, as well as the detailed rules pertaining to energy audits, which is the main topic of this article.

As of 5 December, 2015, large enterprises established in Hungary are obliged to conduct obligatory energy audits at least once every four years. Large enterprises are those companies (enterprises) that are not small or medium-sized enterprises ("SMEs") according to the applicable definition of the Hungarian SME Act similar to recommendation 2003/361/EC.

In Hungary, the Government and the Hungarian Energy and Public Regulatory Authority ("HEPURA") are in charge of supervision of the obligation, and HEPURA may impose sanctions in this regard if the required registration and energy audit obligations are not met.

An Act amending AEE (Act no. CXCVI. of 2015, the "Amending Act") entered into force on 26 December, 2015, and gives more precise rules on the exceptions. The Amending Act also takes those companies out from the SME definition in which the state or municipalities own more than a 25% share of the capital or the voting rights, making the definition more precise.

According to the changes and the effective text of the legal regulation, an energy audit can be set aside,

  • by introducing a certificate of an energy management system in compliance with EN ISO 50001 every four years, or
  • if a large enterprise is a member of a group of companies and the ISO 50001 certificate has been issued for this group of companies, and the certificate issued for the whole or a part of the group of companies extends to this particular enterprise. In this case, the member of the group of companies is not obliged to introduce the certificate to HEPURA if another member company has previously done so.

The Amending Act also changed the so-called five percent rule. In the event that the final energy consumption of the member enterprise, which would be regarded solely as an SME, but belongs to a group of companies, does not reach five percent of the enterprise consuming most of the energy in the group, such enterprise must not conduct an energy audit, and is not obliged to manage an ISO 50001 energy management system.

The Amending Act has introduced a new obligation in connection with the audit. A large company will be obliged to register on the website of HEPURA by 30 June every year. The initial registration had to be completed by 20 January, 2016.

The large enterprise must also regularly report the energy efficiency actions already taken, the measures to be taken in the future, and the energy consumption data in the year before the target year to HEPURA.

The Amending Act adds additional sections to AEE which regulate the connection between the landlord and the tenant in detail. Basically, the energy audit obligation to be concluded for the affected building burdens both landlord and tenant jointly and severally if they are both large companies, and if the tenant leases at least 50 % of the premises in the whole building. Agreements between the tenant and landlord in this regard are expected with special respect to the costs of the energy audit.

Sanctions in case of non-compliance with the regulatory requirements

  • According to the Amending Act, if the large company fails to meet its obligation of registration, HEPURA imposes a penalty in the maximum amount of HUF 1,000,000 (approx. EUR 3,200) and completes the registration. The amount of this penalty will be adjusted to the consolidated financial statement, or if such statement is not available, the net income or the total balance sheet of the defaulting large company. It is questionable to introduce a rule with such a short preparation period: the Amending Act entered into force on 26 December, 2015 and the first deadline to register was 20 January, 2016.
  • If the large enterprise fails to meet its reporting obligation, HEPURA imposes a penalty up to the amount of HUF 1,000,000 (approx. EUR 3,200).
  • Further to the above, an administrative penalty should be applied in the maximum of HUF 10,000,000 (approx. EUR 32,000) upon the large company which does not conduct an energy audit, after passing 90 days from the receipt of the relevant written notice of HEPURA proceeding as the inspecting authority. The above penalty may also be imposed if the large company does not perform its obligation to cooperate with HEPURA during the inspection. The penalty can be repeatedly imposed up to 150 per cent of the previously determined penalty, so the limit of the penalty is HUF 15,000,000 (approx. EUR 48,000).
  • HEPURA will not impose a penalty for not conducting the required energy audit until the end of a grace period ending on 31 December, 2016.

Hopefully the above rules will prove not to be simply administrative, and that performing the energy audits will have a positive effect on the real energy consumption of large companies.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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