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Energy Law Update: Amendments to the Electricity Market Law

Energy Law Update: Amendments to the Electricity Market Law

Having been published on the Official Gazette No. 31322 dated 02.12.2020, the Law No. 7257 Regarding Amendments to the Electricity Market Law and Other Laws (the “Law”) brings important changes to the Value Added Tax Law No. 3065, Natural Gas Market Law No. 4646, Mining Law No. 3213, Public Procurement Law No. 4734, Law No. 5346 Regarding Utilization of Renewable Energy Sources For the Purpose of Generating Electricity Energy, Geothermal Resources and Natural Mineral Waters Law No. 5686 and Electricity Market Law No. 6446.

Important articles of the Electricity Market Law No. 6446 (the “Electricity Market Law”) that were amended by the Law are analysed in our article.

1. Regulations Regarding Allocation of Immovable Properties

The following principles and procedures are regulated for allocation of immovable properties as per the amendments made to the Article 19 of the Electricity Market Law by the Law.

  • Procedures regarding immovable property allocation requests by pre-license or license holder private legal entities that are engaged in power generation activities shall be carried out by Electricity Market Regulatory Authority (the “EMRA”) subject to the Expropriation Law No. 2942 and other relevant laws. Immovable property allocation requests shall be reviewed by the Authority and if such request is approved, the Electricity Market Regulatory Board shall render a decision accordingly. In this vein, such decisions shall replace public interest decisions and shall not be subject to any approval by any authority.
  • The title of the immovable properties gained by way of expropriation and/or transfer and/or associated limited real rights on the relevant properties shall be registered to the relevant public institution or authority that holds the ownership of the relevant power generation plant or to the Treasury in the absence of such public institution or authority.
  • The public institution that is responsible for management of immovable properties of the Treasury shall grant free easement right and/or use of usufruct to the license holder private legal entities on the immovable properties registered to the Treasury or cancelled in the land registry due to their characteristics limited to the license period. For those immovable properties that are not appropriate for such processes, leasing agreements shall be made accordingly.
  • Fees, compensations, and other expenses arising from expropriation, transfer, granting of easement rights, use of usufruct rights, leases shall be paid by the pre-license or license holder private legal entity. Contracts for granting of right of easement, lease or right of usufruct on the immovable properties of the Treasury or state-owned places shall include a clause restricting the validity of the relevant contract with the validity period of the pre-license or the license.
  • In the event of failure of the pre-license holder in obtaining a license or termination or cancellation of pre-license or license, if expropriated immovable properties are used by another pre-license or license holder by means of establishment of a right of easement, lease and/or right of usufruct on the relevant property,  expropriation fees shall be paid by the pre-license or license holder that was granted with right of easement, lease and/or right of usufruct to the legal entity that paid the expropriation fees.

Additionally, the following principles and procedures are determined in relation to the immovable property allocations regarding distribution activities in the electricity market:

  • Processes regarding immovable property allocation requests of the license holder private legal entities engaged in distribution activities shall be carried out by the Türkiye Elektrik Dağıtım Anonim Şirketi (the “TEDAŞ”) (in English:Turkish Electricity Distribution Company) according to the Expropartion Law and other relevant laws. TEDAŞ shall review immovable property allocation requests and shall render a decision if such request is approved. In this vein, such decisions shall replace public interest decisions and shall not be subject to any approval by any authority.
  • Title of and/or associated limited real rights on the immovable properties allocated shall be registered under the name of TEDAŞ and the immovable property and the associated rights shall be utilized by the license holder private legal entity, limited to the license period and distribution activities. 
  • If there are immovable properties for which expropriation decisions have not been rendered or  such decision was rendered but the expropriation processes have not been finalised yet in the distribution areas where private legal entities obtained rights to engage in activities and distribution plants are present as of the privatisation date, expropriation of such immovable properties shall be carried out by TEDAŞ and they shall be registered under the name of TEDAŞ in the land registry and expropriation fees and other associated expenses shall be paid by TEDAŞ.
  • Fees and associated expenses in relation to immovable property allocations for new distribution plants established in the distribution areas where private legal entities obtained rights to engage in activities after the date of privatisation shall be paid by the relevant license holder private entity and shall reimbursed by means of the tariffs accordingly.
  • In the event of expiration of a distribution license, immovable property allocation fees that could not been reimbursed by means of tariffs shall be refunded to the relevant private legal entity by TEDAŞ.

It should also be noted that, in the event of return of the expropriated immovable property to its owner or its heirs within the scope of the Expropriation Law,  the repayment fees shall be paid by the owner of the immovable property or its heirs to the legal entity that paid the expropriation fees.

Immovable property allocation processes of pre-license or license holder public legal entities that are engaged with generation, transmission and distribution activities in the electricity market shall be carried out by those public legal entities according to the Expropriation Law and other relevant laws and title to and limited real rights on the relevant immovable properties shall be registered under the name of these public legal entities and free easement rights, lease rights or rights of usufruct shall be granted to the pre-license or license holder public legal entities for the immovable properties of the Treasury or state-owned places, limited to the license period within the scope of the Electricity Market Law.

Additionally, the followings have been adopted for the ongoing procedures and processes in relation to immovable property allocation as of the date of the Law as per the Temporary Article 28 that has been added to the Electricity Market Law:

  • Processes regarding decisions rendered by the Board for allocation of immovable properties for electricity distribution plants shall be finalised by TEDAŞ,
  • Procedures regarding allocation of immovable properties for which expropriation decisions have not been rendered by the Ministry of Environment and Urbanisation yet and/or procedures for transfer have not been commenced yet in relation to allocation of properties for electricity generation plants shall be finalised by the Authority. 

2. Amendments to the Application Period of the Price-Equalisation Mechanism 

According to the amendments made to the Temporary Article 1 of the Electricity Market Law by the Law, price-equalisation mechanism that covers all public and private distribution companies and supply companies and aims to protect the consumers purchasing electricity energy subject to the tariffs from price differences arising from cost differences between distribution areas shall be applied until 31.12.2025. Application period of the price-equalisation mechanism used to be until 31.12.2015 before the Law and it has been extended for 10 more years by the Law.

3. Termination and Amendment Rights in relation to the Licenses and Pre-Licenses

Termination and amendment rights in relation to the licenses and pre-licenses are regulated under the Temporary Article 29 that has been added to the Electricity Market Law by the Law. In this vein, legal entities holding production or auto procedure licenses or pre-licenses or having ongoing license applications within the scope of the Electricity Market Law as of 02.12.2020, effective date of the law, may terminate their pre-licenses or license applications or amend them due to installed power failure by way of applying to the Authority until 02.02.2021. Upon such application, the Authority shall terminate or amend the pre-license or license applications and proceed with partial or full return of the relevant securities to the relevant legal entities.

@Sena Güngördü, LLM | Kesikli Law Firm

13:20 , 04/12/2020 Comments Off on Energy Law Update: Amendments to the Electricity Market Law