Electricity Market Regulations (Cogeneration), 5765-2004
The English version is a non-binding, unofficial translation from the original, binding,
Hebrew version and is posted here exclusively for the convenience of the Public. Only
the Hebrew version, as officially published in the official gazette (Reshumot) shall be
binding."
By virtue of my powers pursuant to sections 7, 20(b) and 63 of the Electricity Market Law,
5756-19961 (hereinafter – the Law), and in consultation with the Authority, I institute these
regulations:
1.
Definitions
In these regulations:
“Electrical
energy”
Electricity measured in kilowatts per hour, at the generator
terminals of the production unit, less the amount consumed
by the production unit (net electrical energy).
“Acceptance
tests”
Final tests of the cogeneration facility before its commercial
operation or after any material changes, including checks of
protections and control of the facility, test of the
synchronization system and other tests, in accordance with
the instructions of the Ministry or the Authority, as
applicable.
“Qualified
tester”
Holder of an electrician/ tester certificate type 3, as stated in
regulation 7(10) of the Electrical Regulations (Licenses),
5745-19852.
“Holder of a
transmission
license”
Holder of an essential service provider’s license who has
received a license to carry electricity from the production
facility, along cables of the electrical grid at very high and
ultra high voltage to a sub station and who controls more than
half of the transmission capacity in the electricity market.
“Funding party”
One of the following:
(1) A banking corporation or assisting corporation, as
defined in the Banking Law (Licensing), 5741-
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2
Book of Laws, 5756, p. 208; 5763, p. 388
Collected Regulations, 5745, p. 878
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19813;
(2) The following bodies, legally operating in Israel:
insurance companies, provident funds, pension
funds and any type of permanent investor in the
First Addendum of the Securities Law, 572819684;
(3) A banking corporation outside Israel operating
under a legal license or a company controlled by
it, and also a foreign insurance company or
company controlled by it or a financial institution
overseas that accepts deposits from the public, all
rated at least “A” or equivalent from Moody’s,
with a rating that is updated at least once a year,
from one of the following authorized rating
companies:
 Fitch Inc.
 Moody’s Investor Service
 Standard & Poor’s
and also the following international development banks:
EBRD, EIB, ADDB, ASDB, IADB, IBRD.
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“Holder of a
distribution
license”
Holder of an essential service provider license who has
received a license to transmit electricity from a sub station to
a consumer, over high and low voltage cables.
“The
Administration”
The Electricity Administration in the Ministry
“The Ministry”
The Ministry of National Infrastructures
“Gross capacity”
The electrical capacity of a production unit in cogeneration,
measured at the generator terminals in megawatts.
“Net capacity”
Gross capacity less the production unit’s own consumption,
measured in megawatts.
Book of Laws 5741, p. 232
Book of Laws 5728, p. 234
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“Installed
capacity”
The production capacity indicated on the production license
in megawatts
“Commercial
operation”
The date on which the holder of the production license first
began to input power into the grid, according to the reporting
format and by arrangement with the system manager and the
Authority.
“Land rights”
Within the meaning of the Land Law, 5729-19695.
“Production
Unit”
A technical system intended for conversion of energy from
any source to electrical energy or usable electrical and
thermal energy or usable electrical and mechanical energy; a
production unit may include more than one generator, if the
systems driving the generators are technologically linked to
obtain maximum utilization of that energy source.
“Dual fuel
production unit”
A production unit that can be powered with two kinds of fuel,
at least.
“Cogeneration
production unit”
A production unit that simultaneously generates electrical
energy and usable thermal energy from one energy source
and which meets the following conditions:
1)
Minimal annual energy utilization of 55% in a
production unit based on a diesel generator, and of
60% in a production unit based on any other
technology; annual energy utilization is calculated
by the following formula:
{(Total annual electrical energy generated (KW/H) x
860) + total annual usable thermal energy (kcal)}
Annual fuel total (units) x lower caloric value (kcal
per unit)
2)
The electrical energy and the usable thermal energy
shall each be no less than 20% of the total energy
produced in each of the production units, by annual
calculation.
In this definition:
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Book of Laws 5729, p.259
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“Electrical energy” – electricity measured in
kilowatts per hour at the generator terminals of the
cogeneration unit, less the cogeneration unit’s own
consumption (net electrical energy).
“Thermal energy” – heat energy measured in kilo
calories, produced in the electricity generating
process and used to make steam, hot water, hot air
and also for direct or indirect heating of any other
material, and measured at the entry point to
consumers of this type of energy; excluding energy
used for the needs of electricity production.
“Usable thermal energy” – thermal energy that is
not used for electricity production.
“Energy utilization” – the ratio between the
annual production of electrical energy and usable
thermal energy and the annual consumption of fuel
used in the production of these types of energy.
“Capacity”
The amount of electricity fed from the connection point into
the electrical grid.
“Producer”
A private producer of electricity who has a license for a
cogeneration facility, including the holder of a license that is
provisional on erecting a cogeneration facility.
“Cluster of
demand times”
A group of hours in which the electricity tariff is uniform,
based on the Authority’s decisions from time to time.
“System
manager”
The manager of the center for supervision, control and
command of loads on the electricity grid, for the holder of a
transmission license or whoever has received a license to
supervise, control and command loads on the electricity grid.
“Production
facility”
A facility used to produce electrical energy, including inter
alia, production units, buildings, machinery, instruments,
accumulators, conductors, accessories and fixed or mobile
electrical equipment, relating to the facility.
“Cogeneration
facility”
A facility used for combined production of electrical energy
and thermal energy, including inter alia, production units,
buildings, machinery, instruments, accumulators, conductors,
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accessories and fixed or mobile electrical equipment, relating
to the facility.
“Reporting
formats”
Types of reporting to which the producer or holder of a
transmission license is committed, including in connection
with gross capacity, net capacity, available capacity,
quantities of electrical energy to be transmitted or sold to the
holder of a transmission license or other consumer by means
of the electrical grid, including maintenance plans,
production plans and so forth.
“Connection
procedures”
Procedures published by the Ministry from time to time, to
regulate inter alia the subject of connection of cogeneration
facilities to the electrical grid.
“Connection
point”
The meeting point between the cogeneration facility and the
grid, at the exit terminals of the meter that measures the
quantity of electricity fed into the grid.
“Financial
closure”
Provision by the financing party of all the credit and financial
means, including any financial protections required, as
necessary for the erection of a cogeneration facility until it is
synchronized with the electrical grid.
“Synchronization
of the
cogeneration
facility”
The end of the acceptance test process, when a qualified
tester working on behalf of the holder of a transmission
license or the holder of a distribution license, as applicable,
confirms that the cogeneration facility meets all the
conditions for feeding electrical energy from the facility into
the electrical grid.
“Purchasing
deal”
An arrangement between the holder of a transmission license
and a consumer for purchase of electricity.
“Production
component”
The tariff for purchasing electrical energy by the holder of a
transmission license in a purchasing deal, as published by the
Authority; this tariff may change according to the clusters of
demand hours and times, or according to the type of source of
the energy production and its availability or the technology.
“Normative
guarantee
component”
An amount in New Shekels equal to 600 US dollars per
kilowatt of installed capacity of a production unit.
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2.
“Provisional
license”
A temporary license given by the Minister to a person who
shall receive a production license when the conditions
stipulated in it and the provisions of the Law are met.
“Associated
services”
Services required in order to maintain the reliability and
quality of the electrical supply over the grid, including
voltage stability, frequency stability, reserves of various
kinds.
“Production
plan”
A plan in which the producer specifies the planned capacity
of the production unit, in megawatts, for defined periods of
time, in the reporting format.
Purpose
The purpose of these regulations is to encourage and provide incentives for the
erection and operation of cogeneration facilities, while retaining the utilization
specified in these regulations and retaining the other benefits to the public embodied in
production by means of a cogeneration facility compared to other electrical production
facilities using the same technology and of similar size, including simultaneous
production of usable thermal energy in the same facilities and with the environmental
benefits of operating these facilities.
3.
Methods for the purchasing deal
The purchasing deal may be carried out by the following methods:
(1) Sale of energy – a purchasing deal whereby a producer of electrical energy sells
all or part of it to the holder of a transmission license, according to the conditions
in these regulations and the appropriate production plan, whose format is
determined by the Authority; the Authority shall determine a mechanism for
cases where the producer deviates from the production plan submitted according
to the appropriate reporting format for an energy sale deal (non dispatchable).
(2) Sale of available energy and capacity – a purchasing deal whereby the producer
places his capacity at the disposal of the holder of a transmission license
according to a suitable production plan, and sells him electrical energy or part of
it, according to the requirement from the system manager, all with the approval of
the Authority (dispatchable); in contracts where the producer wishes to sell
energy and capacity greater than 50 MW, the Administration’s approval is also
required.
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4.
Obligation to purchase electrical energy
(a) A producer may sell electrical energy generated in his facility to any consumer, subject
to the contents of regulation 16 for the price paid by a voluntary purchaser to a
voluntary seller, subject to the provisions of any law. If the producer elects to sell to
the holder of a transmission license according to these Regulations, the provisions of
these Regulations shall apply.
(b) If the producer so wishes, and subject to the terms of these Regulations, the holder of a
transmission license shall be obliged to purchase electrical energy from the producer
according to the method described in regulation 3(1), and subject to the terms of the
producer’s license, to these Regulations, to the criteria, to the tariffs and to any law.
(c) These Regulations constitute an integral part of the transmission license, the
distribution license, and the production license.
(d) A producer may sell, with the approval of the Authority which shall not refuse such
approval unless the matter is contrary to the purposes of the Law and these
Regulations, to the holder of the transmission license under the energy & capacity
method described in regulation 3(2), and if the purchase is for more than 50 MW, also
with the approval of the Administration; such sale shall be in an amount no greater
than the difference between the total electrical energy produced in the cogeneration
facility and the electrical energy supplied from the cogeneration facility as stated in
regulation 7.
(e) Sale of electricity to parties outside the borders of the State of Israel requires the
approval of the Minister.
(f) Notwithstanding the foregoing in sub regulation (a), the system manager may give
instructions to the producer on the matter of feeding energy into the system in order to
prevent damage to the system and for reasons of safety, including survivability of the
electrical production system and the national grid and prevention of any risk to persons
or property.
5.
The price to be paid by the transmission license holder
(a) For the deal as stated in regulation 4(a) the holder of the transmission license shall pay
to the producer, starting from the date when acceptance tests begin, a price based on
the value of the production component in the electricity tariff according to the cluster
of demand hours.
(b) The production component as determined by the Authority shall reflect the terms
specified in the definition of the production unit in cogeneration.
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(c) From the date of determination of the production component that forms the basis of the
purchasing deal entered into by the producer, and to ensure the producer’s certainty,
there shall be no changes in the production component for that producer, except for the
regular update of its elements as determined by the Authority.
(d) A producer can make deals to sell available energy and capacity with a transmission
license holder, according to the consent between a voluntary seller and a voluntary
buyer, and all subject to the contents of regulation 4(d).
6.
Economic principles
In order to achieve its purposes, the Authority shall determine and publish economic
conditions for encouraging purchase deals from a cogeneration facility based on the
following principles:
(1) A cost no less than the cost of erecting an existing facility of similar size, used to
convert energy from any source to electrical energy only, using the same
technology.
(2) A mechanism for distribution between the producer and the consumer of any
surplus benefit deriving from the cogeneration facility.
(3) Notwithstanding the contents of paragraph (1), if such surplus benefit is created
by the cogeneration facility, implementation of the distribution mechanism could
lead to a change of the tariff as determined in paragraph (1), due to the
assimilation of the surplus benefit into the tariff.
On this matter, “surplus benefit” – the difference created by deducting the cost of
erecting the cogeneration facility from the total cost as stated in paragraph (1) and
of the proceeds of selling usable thermal energy from the cogeneration facility.
7.
Duration of the arrangement
(a) The duration of the purchasing arrangement with the holder of a transmission license
shall be decided by the producer as specified below, and it shall be limited to 18 years
from the date of commercial operation.
(1) The production license for a cogeneration facility connected to a very high or
ultra high voltage grid shall permit selling to the holder of a transmission license,
and the transmission license holder shall be obliged to purchase electrical energy
as follows:
(a) At peak and shoulder times, one of the following shall apply:
1.
The producer may sell to the transmission license
holder, each year, up to 70% of the total electrical
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energy, calculated annually, produced in his facility
– for up to 12 years from the grant of the license.
2.
The producer may sell to the transmission license
holder, each year, up to 50% of the total electrical
energy, calculated annually, produced in his facility
– for up to 18 years from the grant of the license.
(b) At low demand times, in units with installed capacity of –
1.
over 175 megawatts, the producer may sell to the
transmission license holder, each year, up to 20% of
the total electrical energy, calculated annually,
produced in his facility;
2.
up to 175 megawatts, the producer may sell
electrical energy with a capacity of up to 35
megawatts, calculated annually, of the energy
produced in his facility.
The duration in each of the alternatives in this sub paragraph
shall be identical to the duration chosen by the producer with
respect to peak and shoulder times.
(2) In the production license for a cogeneration facility connected to a low or high
voltage grid, sale to the holder of a transmission license shall be permitted, and
the transmission license holder shall be obliged to purchase electricity, at any
time, of up to 100% of the total electrical energy produced in the facility,
calculated annually, and this sale shall be for no more than 18 years from the grant
of the license, as elected by the producer.
(b) At the end of the period of the arrangement according to one of the options in sub
regulation (a)(1) or at the end of the period specified in sub regulation (a)(2), the
producer may take his place in the future circle of producers, according to the laws,
terms and procedures applying to the electricity market at that time and the terms of his
license.
(c) The cogeneration production unit in a facility that no longer meets the conditions in the
definition of a “cogeneration production unit” – due to an omission on the part of the
producer or his consumers, a deviation by the producer from the terms of his license,
or for any other reason, all according to the Administration’s decision, the Electricity
Market Regulations (Private Cogenerational Electricity Producer), 5765-20046
(hereinafter – PEP Regulations).
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Collected Regulations, 5765, p. ___
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In this case, the period of the arrangement according to the PEP Regulations shall
be calculated according to these provisions:
(1) The period of the arrangement that actually existed under these Regulations shall
be multiplied by 1.7 for a 12 year deal and by 1.1 for an 18 year deal.
(2) The product as stated in sub regulation (a) shall be set against the period of the
arrangement according to the PEP Regulations for the purpose of calculating the
period of eligibility according to the aforesaid Regulations.
(d) If the conditions for the definition of a cogeneration production unit are once again met
by one of the production units in the facility, in accordance with the Administration’s
decision, it shall once again be subject to these Regulations. In that case the period of
the arrangement under these Regulations shall be deemed to begin on the starting date
of the original arrangement under these Regulations.
(e) On the matter of this regulation, the period of the arrangement shall be deemed to
begin on the date when commercial operation of the facility begins, and it includes any
period of early release and renewal of the deal as specified in regulations 8 and 9.
8.
Early release from the deal
(a) Notwithstanding the contents of regulation 7, the producer may be released from all or
part of the purchasing deal before the end of the period prescribed for the deal, in order
to carry out deals for the sale of electricity to consumers (hereinafter – early release),
and providing that he has given the transmission license holder prior notice, and all in
coordination with the Authority, and if the scope of the deal is greater than 50
megawatts – also in coordination with the Administration.
(b) Notwithstanding the contents of sub regulation (a), the release of the producer from
some or all of the purchasing arrangement before the end of the prescribed period,
which is not for the purpose of selling electricity to consumers, shall be done after the
Administration’s approval and by prior written notice of no less than the following
(hereinafter – “prior notice”):
(1) For a facility with a capacity of no more than 50 megawatts – one month;
(2) For a facility with a capacity greater than 50 megawatts but no more than 250
megawatts – three months.
(3) For a facility with a capacity greater than 250 megawatts – six months.
(b1) If a producer has taken early release from the purchasing deal, that producer shall
not be entitled to proceeds according to regulation 5; however, a change in the
capacity for sale of electrical energy or in the method of selling energy derived
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from the sale of electrical energy to consumers shall not be deemed early release
from the purchasing deal.
(c) The holder of the transmission license shall not be entitled to compensation or any
payment whatsoever only for the reason that the producer has taken early release from
the purchasing deal.
(d) The Minister may, at the request of a producer or holder of a transmission license,
change the early notice period, based on considerations of the reliability of regular and
efficient supply of electricity; and all subject to the provisions of section 17(a)(1) of
the Law.
9.
Renewal of the deal
(a) If a producer has taken early release from a purchasing deal and wishes to resume
selling electricity to the transmission license holder, the aforesaid license holder must
renew the deal on the same terms as the original deal, providing that 5 years have not
passed from the start of commercial operation of the cogeneration facility to the actual
renewal of the purchasing deal.
(b) If 5 years have passed since the early release date to the actual renewal of the deal, the
Authority may determine in the criteria, if this accords with the purposes of the Law
and these Regulations, a reduction in the price that shall be no greater than 5% of the
price in the original purchasing deal.
(c) Renewal of the deal under this regulation is conditional on:
(1) The producer notifying the Authority and the transmission license holder of his
intention to renew the deal – one month in advance, in the case of cogeneration
production units with an installed capacity no greater than 50 megawatts, and
three months in advance, in the case of cogeneration production units with an
installed capacity greater than 50 megawatts; and in the case of cogeneration
production units with an installed capacity greater than 50 megawatts, also
notifying the Administration.
(2) For a facility with an installed capacity greater than 50 megawatts, the producer
has also acted in coordination with the holder of the transmission license, insofar
as this affects the operating and maintenance plans of the facility, during the
whole period of the early release;
If the parties are unable to reach agreement regarding renewal of the deal, the
Administration or the Authority will decide, as applicable, within 30 days of being
approached on the matter.
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10. Provisional license
(a) These are the conditions for granting a provisional license for the purpose of a
purchasing deal according to these Regulations:
(1) The applicant for a provisional license must prove rights to the land on which he
intends to erect the facility, for the whole term of the requested license; if the
land is leased, the applicant may prove rights to the land for the whole license
term, subject to extending the lease for the appropriate period, at the end of the
lease agreement; in addition the applicant for a provisional license must show the
ability to connect to the electricity grid, and in production units powered by
natural gas with installed capacity greater than 50 megawatts – also to the gas
grid, and deposit a guarantee as stipulated in regulation 15.
(2) The applicant for a provisional license must give details, inter alia, of the
applicant’s identity, the requested activity, the installed capacity, the location, the
technology, the facility’s equipment, the planned connections to infrastructures,
sources of funding, a business plan and the dates for achieving the milestones
specified in sub regulation (c).
(b) If the Minister considers that the applicant for a provisional license has complied with
the requirements of the Law and these Regulations on the matter of obtaining the said
license, the Minister shall grant him the provisional license no later than 60 days
following submission of all the details enumerated in sub regulation (a), unless the
Minister shall decide, for reasons to be recorded, to extend the aforesaid period and
providing that it is no longer than a further 60 days.
(c) The provisional license shall stipulate, inter alia, the dates for financial closure,
obtaining a building permit pursuant to the Planning and Building Law, 5725-19657,
completing the foundations of the facility, connecting to the gas and electricity grids,
and synchronization of the production unit with the electricity grid (hereinafter – the
milestones).
(d) If the producer fails to meet the dates specified in sub regulation (c), the provisional
license shall expire, unless the Minister has extended the dates, for the reasons and on
the terms to be recorded and without derogating from the provisions of regulation 15.
(e) A license on the basis of a provisional license shall be granted to anyone who requests
it, if he meets the conditions of the Law, these Regulations, and the Regulations of the
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Book of Laws, 5725, p. 307.
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Electricity Market (Terms and Procedures for Granting a License and Duties of the
License Holder), 5758-19978.
11. Contracts
(a) The holder of a transmission license shall be obliged to make an arrangement with a
producer, at the producer’s request, with a purchasing agreement, and the holder of a
transmission or distribution license, as applicable, shall also be obliged to enter into an
agreement for the provision of infrastructure services, backup services, and associated
services according to the provisions of the Authority, and all subject to provisions
according to the Law, the Ministry’s procedures, the criteria published by the Authority
from time to time, and any law.
(b) The purchasing agreement shall stipulate, inter alia, the term of the deal, the starting
date, the price, associated services according to the instructions of the Authority from
time to time, arrangements for emergencies, and matters of liability, indemnity and
reporting formats.
12. Technical and commercial requirements
(a) The holder of a transmission or distribution license, as applicable, and the producer
shall reach agreement between them:
(1) Regarding the technical terms, according to the connection procedures, and in
their absence, according to the terms as prescribed by the Manager for Electricity
Matters within the meaning of section 3 of the Electricity Law, 5714-19549, no
later than 3 months from the date of obtaining the building permit for the facility,
unless the Administration, in a particular case and for the reasons to be recorded,
decides to extend the dates for reaching agreement.
(2) Regarding the commercial terms (purchasing agreement, the agreement to provide
infrastructure services, backup services and associated services) involved in the
connection of the facility to the electricity grid and the start of its operation – no
later than 6 months from the date of obtaining the provisional license, unless the
Authority or the head of the Administration, as applicable, decide in a particular
case and for the recorded reasons, to extend the dates for reaching agreement.
(b) If the parties fail to reach agreement as stated in sub regulation (a), the Manager of
Electricity Matters, the Manager of the Electricity Administration or the Authority, as
applicable, shall decide the matter within 45 days of the dates specified in the aforesaid
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9
Collected Regulations, 5758, p. 40
Book of Laws 5714, p. 190.
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sub regulation, and the parties must act according to the instructions of the aforesaid
Manager of Electricity Matters, Manager of the Electricity Administration or
Authority, as applicable.
(c) The Authority shall regularize the coordination and accounting mechanism between the
producer and the holder of the transmission or distribution license, from the starting
date of acceptance tests until the start of the facility’s commercial operation.
(d) Regarding synchronization of the facility – if an authorized tester representing the
holder of the transmission or distribution license fails to arrive within 10 days of being
called – the license holder, by arrangement with the Manager, may invite his own
authorized tester for the purpose of obtaining approval of the facility’s
synchronization.
(e) The Authority shall determine a mechanism for compensation for cases where the
producer is unable to supply electricity to its consumers or the electrical grid due to its
non connection to the grid as a result of obstacles caused by the holder of the
transmission or distribution license.
(f) A producer with a cogeneration facility working on natural gas and with an installed
capacity greater than 100 megawatts, shall be obliged to install a dual fuel unit. The
said producer shall ensure a backup stock of fuel for 100 consecutive hours of
operation of his facility at full production load.
13. Infrastructure services and associated services
(a) Electricity shall be transmitted from a facility over the electricity grid belonging to the
holder of the transmission or distribution license, as applicable.
(b) Holders of transmission or distribution licenses shall collect from a private producer or
an electricity producer who transmits electrical energy over their grid to be sold to
another party, infrastructure tariffs, as determined by the Authority from time to time,
all subject to the terms of the license of the private producer or the electricity producer,
to the criteria and to any law.
(c) On the matter of backup services and associated services, the Authority shall arrange a
mechanism for the purchase and sale of such services, between holders of a
transmission or distribution license, as applicable, and private producers or electricity
producers, and shall determine the tariff for the purchase and sale of such services.
(d) Subject to the provisions of the law on this matter, nothing in the contents of sub
regulations (b) and (c) derogates from the performance of the deals for the purchase
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and sale of these services between a private producer or an electricity producer, among
themselves, and all with prior reporting to the system manager according to the
reporting format.
(e) Holders of transmission or distribution licenses will begin providing infrastructure
services, backup services and associated services, from the expected date for the start
of the facility’s commercial operation, subject to the provisions of the Law, the
licenses, the criteria and any law.
(f) Notwithstanding the foregoing in sub regulations (a) to (e), in the cases specified
below, the holder of a license for a cogeneration facility may decide whether to use the
infrastructure services, providing that if he decides not to use the infrastructure or
backup services, this will be done with the Minister’s approval, in consultation with the
Authority, and for the reasons to be recorded.
(1) The electricity is distributed to a corporation that is a member of a concern, within
the meaning of the Securities Law, 5728-1968, on whose land the cogeneration
facility is located, and the electricity is not transmitted through land where that
concern has no rights.
(2) The license holder has a commercial agreement with a consumer of steam to
supply steam from the cogeneration facility and for that purpose has set up, with a
permit, an infrastructure to transmit steam, providing that the infrastructure for
electric cables from the facility has been laid along the route of the steam and
electrical energy infrastructure, that is basically intended for the use of the steam
consumer or of the concern of which that consumer is a member, and all subject to
the prior written approval of the Minister and in consultation with the Authority.
Nothing in the contents of this sub regulation derogates from the producer’s
obligation to obtain a distribution and supply license, as applicable.
14. Services to the consumer
(a) The existence of an agreement to sell electricity between one producer and another
does not derogate from any or all of the obligations of the holder of the transmission or
distribution license, as applicable, towards the consumer, according to the provisions
of any law, including the obligation to provide the consumer with a continuous supply
of electricity at the proper standard of quality and reliability.
(b) Without detracting from the foregoing in sub regulation (a), the holder of a
transmission license must supply electricity, backup services and other associated
services, in accordance with the instructions of the Administration or the Authority as
applicable, to every consumer, pursuant to the provisions of any law, and at the
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standard of quality and service at which the holder of the transmission or distribution
license supplies electrical power and services to all his consumers, in those cases
where the producer from whom the consumer purchases electricity is not active.
(c) The Authority may prescribe a mechanism for compensation to the holder of a
transmission or distribution license for those cases where the producer is prevented
from supplying electricity to his consumers for reasons depending on him or his agents.
15. Guarantee
(a) A person who has received a provisional license for a facility with a capacity greater
than 1 megawatt shall deposit with the Ministry, on receiving the provisional license,
an irrevocable Ottoman bank guarantee (hereinafter: the guarantee), in the format
given in the Addendum, equal to 0.1% of the product of the installed capacity in
kilowatts times the normative guarantee component but no less than an amount in New
Shekels equal to 2,000 US dollars.
(b) On the financial closure date, but no later than 18 months after the date of receiving the
provisional license, a producer who holds a provisional license for a facility with a
capacity of 50 megawatts and more, shall be required to increase the guarantee to 0.9%
of the product of the installed capacity in kilowatts times the normative guarantee
component.
(c) If a producer fails to reach financial closure by 18 months from the date of receiving
the provisional license, the provisional license shall expire and the guarantee shall be
returned to the depositor, unless the producer has submitted a request to postpone the
date for financial closure and the Administration has approved such postponement
subject to increasing the guarantee, all as specified below:
(1) For a producer with a facility with a capacity of up to 50 megawatts – subject to
increasing the guarantee to 0.2% of the product of the installed capacity in
kilowatts times the normative guarantee component.
(2) For a producer with a facility with a capacity of 50 megawatts or more – subject
to increasing the guarantee to 1.2% of the product of the installed capacity in
kilowatts times the normative guarantee component, but no less than an amount in
New Shekels equal to 4,000 US dollars.
(3) The Administration may, after examining the application, grant the producer, for
reasons to be recorded, an extension of the period for obtaining financial closure
by 12 more months, subject to increasing the guarantee as specified in this
regulation, and providing that the total period from obtaining the provisional
license until the date of financial closure shall be no more than 30 months.
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(d) If the producer fails to achieve financial closure within 30 months of receiving the
provisional license – an amount shall be forfeited equal to 5% of the bank guarantee
deposited pursuant to sub regulation (c) but no less than an amount in New Shekels
equal to 4,000 US dollars for owners of facilities with a capacity of up to 50
megawatts, and the producer shall be required to submit a new application for a
provisional license.
(e) If the provisional license has expired, since the producer failed to achieve financial
closure within 18 months of receiving the provisional license, and he did not extend the
period for obtaining financial closure by a further 12 months, the producer or anyone
acting for him or linked to him who is applying for a new provisional license must
deposit a guarantee as stated in regulation (c) plus an additional amount equal to 5% of
the deposited guarantee, but no less than an amount in New Shekels equal to 4,000 US
dollars.
In this case, the producer must reach financial closure no later than 12 months
from the date of obtaining the new provisional license, otherwise 5% of the bank
guarantee shall be forfeit, but no less than an amount in New Shekels equal to
4,000 US dollars, and the producer shall be required to submit a new application
for a provisional license, and the terms of sub regulations (a) to (d) respectively
shall apply.
(f) After financial closure and on presenting confirmation that construction of the
foundations is complete, and subject to the Administration’s approval on this matter,
the producer shall be entitled to reduce the amount of the guarantee accumulated by
that date by 30%, so that the Ministry shall be left with a guarantee equal to 70% of the
amount of the guarantee up to the aforesaid date.
(g) After financial closure and on presenting documents showing orders for the main
equipment serving the production unit covered by the provisional license, with an
irrevocable undertaking by the producer to the supplier to pay for that main equipment
and subject to the Administration’s approval for this matter, the producer shall be
entitled to reduce the guarantee by the first or a further 30%, as applicable, so that the
accumulated reduction by that date shall be no more than 60% of the guarantee, and
the Ministry shall be left with a guarantee equal to 40% at least of the guarantee, and
for facilities with an installed capacity of up to 50 megawatts, the guarantee shall be
returned in full, when the requirements specified in sub regulation (f) and this sub
regulation are met.
(h) On synchronization of the facility with the electricity grid, the producer shall be
entitled to return of the remaining guarantee.
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(i)
Notwithstanding the foregoing in sub regulation (g), if the producer submits, to the
satisfaction of the Authority, a protocol of the handover of the production unit serving
the facility, signed with signatures confirmed by representatives of the producer and
the party that set up the production units, and 3 months have elapsed at the end of
which the connection of the gas infrastructure to the production unit is not yet
complete, and as a result it is impossible to carry out acceptance tests for the facility,
on that date the guarantee shall be reduced by a further 30%, so that the accumulated
reduction by the said date shall be 90% of the guarantee before the reduction specified
in sub regulation (f), and the Ministry shall be left with a guarantee equal to 10% of the
guarantee before the reduction.
(j)
If the producer fails to meet the date prescribed for synchronization of the facility with
the grid, and without detracting from the provisions of sub regulation (i), 1/6 of the
guarantee shall be forfeited for every 3 months in arrears from the date prescribed for
the aforesaid synchronization, so that at the end of 18 months from the aforesaid date
the whole of the guarantee shall be forfeited.
(k)
The cost of normative capacity for guarantee purposes shall be updated from time to
time at the Administration’s decision and with the Minister’s approval.
16. Restrictions on sales to consumers
The sale of electricity to consumers according to these regulations shall be permitted only to
consumers whose annual consumption of electricity is no less than as determined by the
Authority, from time to time, for load and time tariff (LTT) consumers, within the meaning
of the criteria.
17. Metering and supervision
(a) The Administration shall supervise compliance of the cogeneration production unit
with the terms of these regulations.
(b) For the purpose of checking and measuring the net electrical energy and the usable
thermal energy, plus fuel consumption, metering systems shall be installed, all
according to the requirements of the Ministry, and regarding the sale of electrical
energy – according to the requirements of the Authority.
18. Maintenance plan
A producer shall submit to the system manager a maintenance plan in the report format as
prescribed by the Authority; any dispute between a producer and the system manager
regarding the maintenance plan shall be decided by the Authority.
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19. Reporting obligations
Producers, system managers and holders of transmission licenses shall report to the
Administration or the Authority about deals done according to these regulations, in the
appropriate report format prescribed by the Administration or the Authority, as applicable.
20. Preserving laws
Nothing in these regulations shall detract from the Electricity Market Regulations (Terms
and Procedures for Granting Licenses and Duties of the License Holder), 5758-199710.
21. Commencement and application
(a) These regulations shall commence 30 days following their publication (hereinafter: the
commencement date).
(b) These regulations shall only apply to a party that shall receive on or after the
commencement date a provisional license and after that a license, but regulations 3(f),
4(a) and 5 shall only apply to a party that shall receive a provisional license by the 23 rd
of Tevet 5768 (1st November 2008) and on that basis shall receive a license to produce
electricity by 15th Tevet 5770 (1st January 2010).
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Collected Regulations 5758, p. 40
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Addendum
(Regulation 16(a))
Bank: ________________
Branch: _______________
Address: ________________
The Ministry of National Infrastructures
216 Jaffa Street, POB 36148
Jerusalem 91360
Re: Guarantee
1.
At the request of ______________ (hereinafter: the Applicant) we hereby
guarantee to you payment of any amount up to a total of NIS ___________ (in
words: __________________ New Shekels only), linked to the rate of the US
dollar (hereinafter: the guarantee amount).
For the purposes of this guarantee, “the rate of the US dollar” – the representative
exchange rate of the US dollar published by the Bank of Israel from time to time.
“The basic rate” – the rate of the dollar published by the Bank of Israel on
_________, that is, NIS ________ to 1 US dollar.
If on the payment date of any amount according to this guarantee, the determining
rate is higher than the basic rate, the amount of the guarantee shall be increased by
the same rate as the increase in the determining rate over the basic rate
(hereinafter: the increased guarantee amount).
To remove any doubt, if it emerges that the determining rate is equal to the basic
rate or lower than it, there shall be no change in the guarantee amount.
2.
a.
We undertake to pay you any amount demanded by you up to the
guarantee amount or the increased guarantee amount, as applicable,
within 7 days of receipt of your first written demand, and this without
any demand from us that you explain or establish your demand or
prove it in any way whatsoever and without our demanding prior
clearance of the aforesaid amount by the applicant. In addition, it is
hereby explicitly agreed that you shall not be obliged to undertake any
legal proceedings against the applicant or to address any prior demand
to the applicant or to exercise all or any other collateral, as a
precondition for payment of the guarantee amount or the increased
guarantee amount, as applicable, by us.
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b.
Payment under this guarantee may be demanded in installments,
providing that the total of all demands paid by us under the terms of
this guarantee shall not be greater than the guarantee amount.
Therefore, if you do not fully exercise this guarantee from time to
time, this guarantee shall remain in full force with regard to the
remaining unexercised amount of the guarantee.
c.
The guarantee amount shall be reduced automatically each time by the
amount of any payment made under it.
a.
The payment demand must be in writing and signed, and the original
delivered to the bank branch indicated in this document at the address
given, and all during the hours of business when the branch is open to
the public.
b.
In every demand, the amount demanded must be indicated, up to the
guaranteed amount.
c.
A demand sent by fax, telegram, computer or other such method shall
not be deemed sufficient for the purposes of this guarantee and shall
not be paid.
d.
If this guarantee is issued in favor of a number of beneficiaries, then
any demand under it must be made by all together and we shall make
the payment to all of them together.
3.
4.
We may not cancel this guarantee for any reason whatsoever, nor may we refrain
from making any payment under this guarantee for any reason whatsoever, and we
hereby waive explicitly and in advance any claim, including any choice granted to
the applicant by law.
5.
In addition to all the foregoing, this guarantee is not conditional on the validity of
the applicant’s liability towards you or of the contract between you or on the
validity of the applicant’s contract with or liability towards any third party linked
to you, and it is irrevocable, unconditional and independent.
6.
The guarantee shall be in force until __________ or until it is paid in full,
whichever is the sooner, and any demand for payment under it must be received
by us no later than the said date. After this date the guarantee shall be null and
void and any demand for payment received by us shall not be answered.
7.
This guarantee cannot be transferred or assigned or both.
Regar
ds,
_______________________
Eliezer (Modi) Zandberg
Minister of National Infrastructures
______________________
Bank Branch
21
_________________ 5765
(________________, 2004)
(HM 3-3444)
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