(Electricity) Turkısh Experıence – 30 March 2012, Rome

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EFET GENERAL
AGREEMENT(ELECTRICITY)
TURKISH EXPERIENCE
Değer Boden
BODEN LAW OFFICE
EFET Members’ Meeting
Rome, 30 March 2012
EFET GENERAL AGREEMENT (ELECTRICITY) TURKISH
EXPERIENCE
CURRENT STATUS ON MARKET OPENING
 Current Market Structure
 Draft Electricity Market Law
LICENSE REQUIREMENTS
 Licensing
 Minimum company share capital
ANALYSIS UNDER TURKISH LAW
 Language
 Applicable Law
 Jurisdiction and Arbitration
 Formation of Individual Contracts (Written Confirmation
Forms)
 Individual Contracts
AMENDMENTS ON THE EFET AGREEMENT
CURRENT STATUS ON MARKET OPENING/
Current Market Structure
Electricity Market Activities
Generation
Transmission
Distribution
Retail and Retail Services
Wholesale
Import and Export
Generation
-
-
-
Turkish Electricity Generation Company
(EUAS)
Private companies operating under
BOO, BOT, TOOR models
Other private generators
Auto-producers, auto-producer groups
Transmission
State owned monopoly, TEIAS
Distribution and Retail
-
-
-
Division of the distribution network into 21 distribution
region
A separate distribution company for each distribution region
Privatization process
Distribution companies’ exclusive authority to sell electricity
to non-eligible consumers (consumers below the eligible
consumer threshold- 25,000 KWh in 2012) until 1 January
2013
Separate legal entities for distribution and retail as of 1
January 2013
Wholesale
-Turkish
Electricity Wholesale Company (TETAS),
state owned wholesale company:
- Activities regulated
- Taken over existing BOO, BOT, TOOR
contracts
- Purchase of generation of EUAS and/or its
affiliates
- Sale to the distribution companies
-Private wholesale companies
Turkish Power Trade Market
-
Balancing Mechanism
Bilateral Agreements’ Market
Cross-Border Electricity Trade
Limited financial futures market
Balancing Mechanism
-
-
-
Balancing power mechanism
Day ahead market
Hourly settlement
Market operator, financial settlement of balancing
power market, day ahead market---Market Financial
Settlement Center (MFSC / PMUM) within TEİAS
System operator- real time balancing ---National Load
Dispatch Center (NLDC) within TEIAS
Bilateral Agreements’ Market
-
-
Non regulated
Electricity sale/purchase agreements between:
Generation companies
Distribution companies holding retail license
Wholesale companies
Eligible consumers (eligible consumer threshold
25,000 KwH for 2012)
Notification of agreement quantities to the (MFSC /
PMUM)
Cross-Border Electricity Trade
-
-
-
Parallel and synchronized operation of countries
Limited import and export activity at the moment
Synchronization with ENTSO-E as of 18 September 2010
Connection to Bulgarian system by Bulgarian system by
two 400 kV lines
Connection with Greek system by one 400 kV line
Limited capacity allocation (third phase) started on June
2011
Third phase is determined to last for 11 months.
Amendments on the regulations such as import and export
regulation were made accordingly
DRAFT ELECTRICITY MARKET
LAW

Abolishment of PMUM and establishment of a new entity,
separate from TEIAS, the Energy Markets Operation Joint
Stock Company (EPIAS)

EPIAS to operate the organized wholesale markets, except
for the balancing power market and ancillary services
market which will still be operated by TEIAS.
DRAFT ELECTRICITY MARKET LAW

Definition of “organized wholesale markets”:
“day-ahead market, real-time market, balancing power market,
ancillary services market, over-the-counter (OTC) markets and
derivative markets where wholesale and retail sale and purchase of
power and capacity, and derivate products of these will be made and
which are organized and operated by an intermediary legal entity
which holds a market operation license, and power markets such as
balancing power market and ancillary services market which are
organized and operated by TEIAS”.


Critiques on inclusion of the OTC markets into the definition of the
organized wholesale markets
Stamp duty exemption for the transactions made in the organized
wholesale markets (written and executed documents such as
contracts, letters of commitment including a monetary amount
are subject to stamp duty of 0.825 %)

In other words, trade in non-organized markets are not exempt from
stamp duty
DRAFT ELECTRICITY MARKET LAW


Merger of wholesale and retail sales
activities into one license type, the “supply
license”
Market Restriction for suppliers:


Under the current EML, a real person or entity through the
wholesales companies that it controls cannot sell more than
10 percent of the total electricity consumed in the market
during the preceding year.
The Draft Law provides that the total electrical power amount
supplied by a real person or a private sector legal entity
through supply companies controlled by them (wholesale or
retail sale companies) cannot exceed 20% of the total
electricity energy consumed in the market in the previous
year.
LICENCE REQUIREMENTS
Licensing
-
-
Separate license for each activity
No separate license requirement for import and
export, but regulation of import and export activities
under wholesale or retail licenses
Licensing fees and annual license fees (wholesale
licensing fee circa Euro 115,000 for 2012/ annual
license fee Euro cent 0,00125 per KWh sold in the
preceding year)
Company Establishment Requirements
-
-
Joint stock or limited liability company establishment
requirement
The minimum share capital requirements:
Generation companies: 20% of the envisaged
investment amount
Distribution companies: 15% of the transfer or
purchase price of the right to operate the
distribution region
Wholesale companies: circa Euro 835,000
Retail companies: circa Euro 415,000
Retail services companies: circa Euro 83,500 for
each distribution region
ANALYSIS UNDER TURKISH LAW
Language of the Contract
Turkish Language Requirement under the Law No.
805
-An agreement between two Turkish companies
(national trade/bilateral agreements): Turkish
language
-An agreement between a Turkish company and a
foreign company (cross – border trade): Foreign
language
RECOMMENDATION: Turkish version to be binding
between two Turkish entities
ANALYSIS UNDER TURKISH LAW
Applicable Law
Freedom to chose a foreign law as applicable law
- Court of Cassation Decision No. 1008/325: The
mere fact that the parties choose a foreign
applicable law constitutes a foreign element
-
RECOMMENDATION:
-An agreement between two Turkish companies
(national trade/bilateral agreements): Turkish law
An agreement between a Turkish company and a
foreign company (cross – border trade): Foreign or
Turkish law
ANALYSIS UNDER TURKISH LAW
Jurisdiction and Arbitration
-No
restriction regarding selection of foreign courts
or arbitration
-Enforcement of foreign arbitral awards subject to
the New York Convention
RECOMMENDATION:
-An agreement between two Turkish companies
(national trade/bilateral agreements): Turkish courts
An agreement between a Turkish company and a
foreign company (cross – border trade): Foreign
courts, arbitration or Turkish courts
ANALYSIS UNDER TURKISH LAW
Formation of Individual Contracts
No written contract requirement for validity
Evidence with written document for transactions
above circa Euro 1050
Electronic signature
Evidence agreement
RECOMMENDATION: Written individual contracts /
written confirmations or evidence agreement
-
ANALYSIS UNDER TURKISH LAW
Individual Contracts
Turkey specific provisions:
- Notifications to MFSC (effect of
notification)
- Compensation provisions (difference
between Contract Quantity and quantity
notified to MFSC)
AMENDMENTS ON THE EFET
AGREEMENT
Article 3.1 Inserting the phrase “unless otherwise
specified in the Election Sheet” into the General
Agreement and inserting the optional right to the
Election Sheet regarding Article 3.1 that
Individual Contracts shall be concluded in written
form (additionally, specifying that the exchange
of written Confirmations will be also considered
as written agreement)
Broadening the definition of Network Operator in
General Agreement to cover Market Operator in
Annex 1
AMENDMENTS ON THE EFET
AGREEMENT


Article 4 Specifying in the Individual Contract that the Seller
is responsible for notifying the electricity quantity to PMUM
and in case of a conflict between the amount in the
notification made to PMUM and the Contract Quantity, the
latter will prevail
Article 8 Determination of a reference price as the market
price: (i) system marginal price; (ii) system day-ahead price;
(iii) the average of system marginal price and system dayahead price or (iv) the higher price among system marginal
price and system day-ahead price
AMENDMENTS ON THE EFET
AGREEMENT




Article 13.1: Inserting a standard invoicing date
to Part Two of the Election Sheet (last day of the
month)
Article 13.2 and 13.3: Changing the currency as
TL in the General Agreement; providing the
option to choose Euro in the Election Sheet
Article 17: references to the German Law to be
removed
Article 22: Selection of the Turkish law and
arbitration mechanism in Turkey in the Election
Sheet
AMENDMENTS ON THE EFET
AGREEMENT


Article 23: Inserting a provision in Part Two of the
Election
Sheet
stating
that
notices
and
notifications will be made in accordance with the
Article 20(3) of the Turkish Commercial Code or
Article 18/3 of the new Turkish Commercial Code
Article 23: Inserting a provision in the Part Two of
the Election Sheet stating that the «Turkish
version shall prevail» in contracts between
Turkish companies
Meşrutiyet Cad. No. 98/10
Beyoğlu/İstanbul
www.boden-law.com
T (90) (212) 251 1500
F (90) (212) 251 1501
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