Blackout

So, we have a new experience, a blackout. A disaster for every heat treater. And for foundries or glassworks? It can’t possibly be worse. And what is the interpretation of it? A bit contradictory. Some claim that it is a fallen cable transmitting one phase, others that it is a blackout with everything.

But the manufacturers of anything don’t need to care about that because it’s already happened. But what about possible recovery of damages? Well, I think that this is the main cause of the media meandering in all directions. How does it differ?

Here we can read: https://www.pravoprovsechny.cz/clanky/preruseni-dodavky-elektricke-energie/

If the distribution system operator followed the correct procedure required by law during a planned interruption of electricity supply, i.e. the distribution system operator notified the interruption of electricity supply in a timely manner and at a given location in the usual manner and subsequently restored the electricity supply in accordance with this notification, no claim for compensation for damages (or lost profits) can be made against the distribution system operator under the provisions of Section 25(7) of the Energy Act.

However, if the distribution system operator fails to comply with its notification obligation in cases stipulated by law and fails to inform customers properly and in a timely manner about the interruption of electricity supply or in the event of an electricity outage due to a fault that was demonstrably caused by the distribution system operator, you as a customer have the right to claim compensation from the distribution system operator for damages that you incurred as a result of such an interruption of electricity supply.

So the question is: Was this outage caused by a fault that was demonstrably caused by the distribution system operator?

What can be found in the laws?

A) Civil Code (NOZ – Act No. 89/2012 Coll.)

• The entrepreneur must prove specific damage, causal link and fault (e.g. network operator’s error)
• If negligence is proven (e.g. unmaintained infrastructure), compensation for damage can be claimed
• However, if it is an unavoidable event, compensation will not apply (e.g. natural disaster, state of emergency).

B) Energy Act (No. 458/2000 Coll.)

• This sets out the obligations of distributors (e.g. to maintain quality and continuity of supply).
• The Regulatory Authority (ERÚ) can impose fines, but this does not mean automatic compensation for entrepreneurs.

 C) Act on Crisis Management (No. 240/2000 Coll.)

• If a state of emergency is declared, it is possible to request compensation from the state for damage caused by the crisis measure – but there must be a direct causal connection
• Deadline for application: within 6 months from the occurrence of the damage (Section 36 of the Crisis Act).

D) Decree No. 80/2010 Coll. – Decree on a state of emergency in the electricity industry and on the content requirements of the emergency plan)

State of emergency

• (1) All restrictions on electricity consumption or changes in electricity supplies during a state of emergency are managed by the technical dispatching office of the transmission system operator or the technical dispatching office of the distribution system operator.
• (2) A state of emergency is usually declared and revoked in advance. In the event of a rapid breakdown of the electricity system, a state of emergency may be declared subsequently.

Each heat treatment plant has a concluded contract for the supply of electricity. The supplier undertakes to supply electricity in the contracted volume. The relationship between the entrepreneur and the energy supplier (e.g. ČEZ Prodej, Innogy, E.ON Energie, etc.) is based on an electricity supply contract, which is regulated by Section 50 of the Energy Act 458/2000 Coll. and concluded pursuant to Section 1746, paragraph 2 of Act No. 89/2012 Coll. This is a so-called energy purchase and delivery contract, i.e.:

• the supplier undertakes to supply energy,
• the customer (entrepreneur) undertakes to take energy and pay for it.

Therefore, if there has been a clearly demonstrable breach of this contract (failure to supply electricity), the supplier has formally breached the contractual obligation.

• But: suppliers often have exclusion clauses in these contracts that say that they are not liable for an outage caused by transmission, because transmission (high-voltage transmission network) is not within their competence – that is the role of ČEPS.
• In practice, the supplier will very likely defend itself by saying that it was not its failure and that the outage was caused by the transmission or distribution network operator.

ČEPS has a legal obligation to ensure safe, reliable and stable operation of the transmission system.

This follows directly from:

• Section 24 of the Energy Act (No. 458/2000 Coll.)
• EU regulations and rules for the operation of transmission systems (e.g. ENTSO-E rules)

ČEPS must ensure:

• network protection against frequency fluctuations, overvoltage, undervoltage,
• provision of alternative flows (redispatching),
• coordination with cross-border flows (e.g. Germany – Austria)

So, we have a lot of laws here, and two basic variants of blackout. A downed cable and overvoltage or network instability due to the action of FE in Germany. What is the difference between them?

So, if the version that it was a fallen cable is true, then we have some chance. We will make claims against our electricity supplier, and they will have to deal with ČEPS. Any lawsuit has a chance of success.

Why the cable fell is not so important. It could really be material fatigue, poor maintenance, but it is certainly not the first phase conductor to fall in history. What is more important is the consequence. Why did the interruption of one phase conductor lead to a cascade effect and half of the Czech Republic went out?

But since power overflows from Germany were recorded at the time of the failure, the explanation is more likely that the connection holding the cable overheated and burned due to network overload. But because the protection against electric arc burning is tied to an overcurrent circuit breaker, it is not like with plasma nitriding that we can turn off the arc discharge in milliseconds. It could be seconds, so the network instability could have continued. That’s my private hypothesis.

What is important, however, is the status of this disorder. No matter how much I have examined the laws from all sides, blackout as such is not mentioned anywhere in them. Only Decree 80/2010 Coll. states in §6:

§ 6

State of emergency

(1) All restrictions on electricity consumption or changes in electricity supplies during a state of emergency are managed by the technical dispatching office of the transmission system operator or the technical dispatching office of the distribution system operator.

(2) A state of emergency is usually declared and revoked in advance. In the event of a rapid breakdown of the electricity system, a state of emergency may be declared subsequently.

If everything were left to chance, then the legal protection of the state, or ČEPS, would be significantly weakened and ČEPS would have to perform. It is irrelevant whether this is due to corrosion, fatigue or incorrect calculation of transmission capacity. However, the state, or ČEPS, would not pay for this.

Only under Section 2894 et seq. of the Civil Code (NOZ) would each injured party have to file a claim for damages and prove a causal connection between the power outage and the damage.

Damage compensation is possible if there is:

• unlawful conduct or omission,
• damage,
• causal connection between the conduct and the damage,
• fault (at least negligence).

In this case, the result is practically unquestionable. Neither a meteorite nor a tree fell on the wires.

The second option is to additionally declare a state of emergency. According to the above-mentioned paragraph 6, however, the Decree on a state of emergency in the electric power industry and on the content requirements of the emergency plan) does not recognize a blackout. It only says that in a state of emergency there will be

(3) Limitations of electricity consumption and changes in electricity supply during an emergency are carried out

 automatically according to the frequency plan,

1. according to the shutdown plan,
2. according to the regulation plan within the scope of regulation stages No. 1 to No. 7,
3. by operationally switching off parts of the equipment to the extent necessary to balance the power balance of the affected part of the electricity system,
4. by using free generation capacities,
5. by limiting the supplied power.

And in point 2) it is then claimed that in the event of a rapid breakdown of the electricity system, a state of emergency may be declared additionally. It is not stated how long after. However, the reality was that the state of emergency was declared by ČEPS approximately 4 hours after the network breakdown. The picture shows the situation at 11:59, and the declaration of a state of emergency at 15:59. The ČEPS press release is here:

 “As a result of a phase conductor failure, the V411 transmission system line was disconnected today, July 4, 2025, shortly before 12:00, and the sixth unit of the Ledvice power plant was subsequently out of service. As a result of these outages, the V208 line was overloaded and the V401 line was disconnected in the Krasíkov substation. Subsequently, part of the transmission system was disconnected, which made its operation impossible. The event affected 9 transmission system stations and power outages affected the Liberec, Ústí nad Labem, Hradec Králové and Central Bohemian regions and part of Prague.

 Production was reduced by approximately 1,500 MW and consumption by 2,700 MW. Based on Section 54 of Act No. 458/2000 Coll., the Energy Act, the ČEPS dispatch center declared a state of emergency for the entire Czech Republic with effect from July 4, 2025 at 12:00. ČEPS power engineers immediately began work to restore electricity supplies.

 At 14:00, the transmission system substations supplying the Prague area (Malešice, Chodov, Čechy střed and Řeporyje) were fully put into operation. Shortly before 15:00, all remaining transmission system substations were put under voltage.

 Repairs to the V411 line were also immediately started, and were completed shortly after 22:00. Subsequently, the ČEPS dispatch center ended the state of emergency for the entire Czech Republic with effect from 5. 7. 2025 00:00.”

Section 24, para. 7) of Act 458/2000 Coll. states

(7) In the cases referred to in paragraph 3 letters c) and d), the right to compensation for damage is excluded. This does not apply if the transmission system operator fails to comply with the notification obligation imposed under paragraph 5 or in cases where the fault was demonstrably caused by the transmission system operator.

This fundamentally changes the legal assessment, because compensation for damage is excluded from the possibility of claiming compensation for the outage. However, I cannot assess whether the notification obligation for the state of emergency was fulfilled when this state was declared 4 hours after the blackout, and whether the transmission system operator is truly without fault. Personally, I think not, because the stability of the transmission system is not just about the wires, but about the system. Here, ČEPS has such a monopoly position that if it designs it badly, it has no competitor who would do it better. But my opinion does not matter. A good lawyer would probably be able to handle this too.

In any case, retroactively from 12:00 it is not possible to claim compensation for damage to ČEPS, and everything then depends on Act 240/2020 Coll., Act on Crisis Management and on Amendments to Certain Acts (Crisis Act), where Section 36 states:

Compensation for damage

(1) The state is obliged to compensate for damage caused to legal entities and individuals in a causal connection with crisis measures and exercises (Section 39(5)) carried out in accordance with this Act. The state can be exempted from this liability only if it is proven that the injured party caused the damage himself.

Yesterday’s statement by Minister Lukáš Vlček is here: https://www.irozhlas.cz/zpravy-domov/o-nahradach-skody-za-vypadek-proudu-se-rozhodne-podle-priciny-v-pripade_2507071633_epo.

 If the state finds fault, compensation is possible. I guess everyone can imagine what that statement means. After all, the state has no incentive to find fault to have to pay. However, it completely ignores the second part of the sentence: The state can be exempted from this liability only if it is proven that the injured party caused the damage himself.

It is of course clear to everyone that we did not cause the blackout ourselves. So, the state should pay.

There is no choice but to prepare for further blackouts. The state-appointed network administrator, ČEPS, probably did everything it could, but what it did led to the blackout. But none of us have the right to interfere with it, and moreover, none of us even understand it. We only relied on ČEPS to do it properly. It did not.

So, we must rely on ourselves. And the only solution is insurance contracts. We have to supplement our insurance contract for blackout and insurance for the goods taken over. No one will pay us anything for breakdowns in the furnaces, except that we would burn out because of such a breakdown.

Jiří Stanislav

July 7,  2025