Electricity Market Regulations (Conventional Private Electricity
Producer), 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:
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“Electrical
energy”
Electricity measured in kilowatts per hour, at the generator
terminals of the production unit, less the amount consumed
by the production unit itself (net electrical energy).
“Stored energy”
Energy received in a loading process through electricity
consumption, at low and shoulder demand times as defined
by the Authority
“Acceptance
tests”
Final tests of the 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
Book of Laws, 5756, p. 208; 5763, p. 388
Collected Regulations, 5745, p. 878
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half of the transmission capacity in the electricity market.
“Holder of a
distribution
license”
Holder of an essential service provider’s license who has
received a license to carry electricity from a sub station to the
consumer, along high and low voltage cables.
“Funding party”
One of the following:
(1) A banking corporation or assisting corporation, as
defined in the Banking Law (Licensing), 5741-19813;
(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, 5728-19684;
(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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“The
Administration”
The Electricity Administration in the Ministry
“The Ministry”
The Ministry of National Infrastructures
“Gross capacity”
The electrical capacity of a production unit, measured at the
generator terminals in megawatts.
“Installed
The production capacity indicated on the production license
Book of Laws 5741, p. 232
Book of Laws 5728, p. 234
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capacity”
in megawatts
“Net capacity”
Gross capacity less the production unit’s own consumption,
measured 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, and also
rights to use the land.
"Minimum
operational
availability”
The minimum ratio between the hours in which the
production unit was synchronized with the electricity grid and
was available to the electricity grid, and the hours in a year,
in percentages.
“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.
“Available
Capacity”
Net capacity less consumption of electrical energy by the
private producer’s consumers.
"Minimal
capacity”
Available capacity that is no greater than 50 megawatts or
25% of the facility’s net capacity, whichever is the greater.
“Private
Producer”
A private producer of electricity who has a production license
including the holder of a license that is provisional on a
production facility, also the winner of a tender.
“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.
“Facility”
A facility used to produce electrical energy including, inter
alia, production units, buildings, machinery, instruments,
Book of Laws 5729, p.259
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accumulators, conductors, accessories and fixed or mobile
electrical equipment, relating to the facility.
“Tender”
A tender published by the Minister for the selection of a
producer who shall receive a production license to enable the
sale of energy or available capacity to the holders of a
transmission license or another.
“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.
“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, minimal
operating availability, 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 facilities to the
electrical 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 facility until it is synchronized
with the electrical grid.
“Synchronization
of the 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 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 private producer for purchase of electrical energy or
provision of available energy capacity.
“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
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the energy production and its availability or the technology.
2.
“Normative
guarantee
component”
An amount in New Shekels equal to 600 US dollars per
kilowatt of installed capacity of a production unit.
“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.
“Recognized
hours for
availability”
Times that the Authority shall determine and publish, that
shall be recognized for the purpose of payment for the
provision of available capacity.
“Production
plan”
A plan in which a private producer or electricity producer
specifies the planned consumption of the facility’s consumers
and the planned available 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 the erection and operation of private
electricity production facilities, according to the principles of minimizing the costs of
production for the economy and encouraging the sale of electricity by private
producers to consumers.
3.
Methods for the purchasing deal
The purchasing deal under these regulations may be carried out by the following
methods:
(1) Sale of energy – a purchasing deal whereby a private 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 (non dispatchable).
(2) Sale of available energy and capacity – a purchasing deal whereby the producer
places his available capacity at the disposal of the holder of a transmission license
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according to a suitable production plan in a format determined by the Authority,
and sells him electrical energy or part of it, according to the requirement from the
system manager (dispatchable).
(b) The Authority shall stipulate a mechanism for cases in which the producer deviates
from the production plan submitted according to a suitable reporting format for a deal
regarding the sale of energy or sale of available capacity and energy.
4.
Obligation to purchase electrical energy
(a) A private producer may sell electrical energy or available capacity and energy
generated in his facility to any consumer, subject to the contents of regulation 17 and
the provisions of any law, for the price paid by a voluntary purchaser to a voluntary
seller. 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) A private producer who so wishes may enter into a purchasing deal with the holder of a
transmission license, subject to the terms of the private 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) Sale of electricity to parties outside the borders of the State of Israel requires the
approval of the Minister.
5.
Duration of the arrangement
(a) For the purchasing deal, the period of the arrangement with the holder of the
transmission license is limited to up to 20 years from the date of the facility’s
commercial operation, at the discretion of the private producer.
(b) For the purposes of this regulation, the period of the arrangement shall be deemed to
start on the date when the facility’s commercial operation begins, and it includes any
period of early release and renewal of the deal as specified in regulations 6 and 7.
6.
Early release from the deal
(a) Notwithstanding the contents of regulation 5, the private producer may be released
from all or part of the purchasing deal before the end of the period on the following
conditions, providing that he gives prior notice as specified below:
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(1) For a deal according to a tender published before the commencement of these
regulations, the prior notice period for the holder of a transmission license shall
be no less than:
(a) For a deal according to the energy method – 12 months;
(b) For a deal according to the available capacity and energy method – 12
months if the scope of the available capacity placed at the disposal of the
holder of the transmission license is reduced but is no greater than the
minimum capacity, and if it is greater than the minimum capacity – 24
months;
(2) For a deal that is not as stated in paragraph (1), the period of notice shall be as
specified below:
(a) For a private producer, who operates a facility with a capacity no greater
than 50 megawatts, and who wishes for early release from all or part of a
purchasing deal before the end of the period of the period prescribed in the
deal, in order to make deals to sell electricity to consumers – the early notice
shall be given to the holder of the transmission license, and all by
arrangement with the Authority, and if the scope of the deals is greater than
50 megawatts – also by arrangement with the Administration.
(b) Notwithstanding the foregoing in paragraph (a), the early release of a private
producer from all or part of a purchasing deal before the end of the
prescribed period, which is not for the purpose of selling electricity to
consumers, requires the approval of the Administration and prior written
notice of no less than the following:
For a private producer operating a facility with a capacity no greater than 50 megawatts – 1
month.
For a private producer operating a facility with a capacity greater than 50 megawatts but no
greater than 250 megawatts – three months.
For a private producer operating a facility with a capacity greater than 250 megawatts – six
months.
(3) A private producer who has taken early release from a purchasing deal shall not
be entitled to proceeds according to regulation 10; however, the following two
cases shall not be deemed early release from a purchasing deal.
(a) A change in the available capacity under the method of selling available
capacity and energy in accordance with a suitable production plan, due to the
sale of electrical energy to consumers;
(b) A change in the capacity to sell electrical energy under the sale of energy
method, due to the sale of electrical energy to consumers.
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(4) The holder of the transmission license shall not be entitled to compensation or any
payment whatsoever only for the reason that the private producer has taken early
release from the purchasing deal.
(5) 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.
7.
Renewal of the deal
(a) If a private 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 following terms:
(1) If the deal was according to a tender published before the commencement of these
Regulations but 10 years have not elapsed from the start of commercial operation
of the facility to the actual renewal of the deal, the deal shall be renewed
according to one of the following:
(a) A deal according to the sale of energy method – the deal will be renewed on
the same terms as the original deal.
(b) A deal according to the sale of available capacity and energy method, where
the scope of the renewal is no greater than the minimum capacity – the deal
will be renewed on the same terms as the original deal; however if the scope
of the renewal is grater than the minimum capacity, the Authority may
determine in the criteria, if it sees fit to do so in view of the purposes of the
Law, a rate of reduction in the proceeds no greater than 4% for fixed
operating and maintenance costs, for provision of a quantity of additional
available capacity greater than the minimum capacity;
(2) In a deal according to paragraph (1), if 10 years have passed since the start of
commercial operation of the facility up to the actual renewal of the deal, the
proceeds as stated in that paragraph shall be reduced by 5%.
(3) If the deal was not as stated in paragraph (1) and 5 years have not elapsed since
the early release date to the actual renewal of the deal, the deal shall be renewed
on the same terms as the original deal; however, if the producer was not released
from the purchasing deal for the purpose of selling to end consumers and wishes
to renew 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 4% of the price in the original purchasing deal.
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(4) If 5 years have passed from the date of the early release to 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.
(5) Renewal of the deal under this regulation is conditional on the private producer
giving notice one month in advance, in the case of production units with an
installed capacity no greater than 50 megawatts, and three months in advance, in
the case of production units with an installed capacity greater than 50 megawatts,
to the Authority and to the holder of the transmission license; and in the case of
production units with an installed capacity greater than 50 megawatts, also to the
Administration, of his intention to renew the deal; and for a facility with an
installed capacity greater than 50 megawatts, that 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
8.
A deal according to the sale of energy method
(a) A deal by the sale of energy method shall be done in one of these two ways:
(1) If a tender is published – according to the terms of the tender;
(2) If no tender is published – in a deal for the sale of energy, a private producer,
excluding a private producer with a facility that operates using stored energy, the
owner of a facility linked to the grid with low voltage or high voltage, shall be
permitted to sell electrical energy to the holder of a transmission license, and the
holder of a transmission license shall be obliged to purchase electrical energy
from a private producer, each year, as follows:
(a) In a facility whose installed capacity is no greater than 5 megawatts – at peak
times up to 100% of the facility’s net capacity; at shoulder times up to 40%
of the facility’s net capacity; at low demand times, sales according to the sale
of energy method shall not be permitted.
(b) In a facility whose installed capacity is greater than 5 megawatts – at peak
times up to 80% of the facility’s net capacity; at shoulder times up to 30% of
the facility’s net capacity; at low demand times, sales according to the sale of
energy method shall not be permitted.
(c) The proceeds from deals according to this regulation shall be according to
regulation 10(a)(2)(a) and the terms of the private producer’s license.
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Nothing in the contents of this paragraph prevent a private producer from making
deals with the holder of a transmission license to sell available capacity and
energy, based on consent between a voluntary seller and a voluntary buyer,
subject to the approval of the Authority that shall not be withheld unless the
matter is contrary to the purposes of the Law and these regulations; the extent of
such sales shall be no greater than the difference between the total electrical
energy produced in the facility and the electrical energy supplied according to this
paragraph.
(b) Notwithstanding the foregoing in sub regulation (a), the system manager may give a
private producer instructions regarding input of energy into the system to prevent
damage to the system and for reasons of safety, including the survivability of the
electricity production system and the national electricity grid, and prevention of
hazards to people and property.
9.
A deal according to the available capacity and energy method
A deal by the sale of available capacity and energy method shall be done in one of these two
ways:
(1) If a tender is published – according to the terms of the tender;
(2) If there is no tender – a private producer connected to a very high or ultra high
voltage grid and a private producer with a facility that uses stored energy and is
connected to low or high voltage, shall be obliged to place his available supply at
the disposal of the holder of a transmission license, and the said license holder
shall be obliged to pay the private producer for the provision of such available
supply, according to regulation 10(a)(2)(b) and the terms of his license.
10. The price paid by the transmission license holder
(a) The holder of the transmission license shall pay for the purchasing deal as follows:
(1) If a tender was published – the price that the transmission license holder shall pay
the private producer for the electrical energy or the available capacity, under the
sale of available capacity and energy method, shall be according to the terms of
the contract signed with the winner of the tender.
(2) If no tender was published –
(a) For the sale of energy - the price that the transmission license holder shall
pay the private producer, from the date when acceptance tests begin, for the
electrical energy or part of it supplied to him shall be according to the value
of the production component in the electricity tariff and the cluster of
demand hours.
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(b) For the sale of available capacity and energy the private producer shall
receive payment, from the date when commercial operation of the facility
begins, for supplying available capacity to the transmission holder, and from
the date when acceptance tests begin, for the input of electrical energy or part
of it to the electricity grid, on the basis of these principles:
The Authority shall publish a normative cost per megawatt of net output from the
production unit, taking account of the following:
Minimal operating availability;
The technology on which the production unit is based;
The size of the production unit.
The Authority shall also publish the fixed operating and maintenance
costs.
A private producer shall receive 80% of the normative cost of the production unit as
specified in sub paragraph (1) for every megawatt of available capacity that he places at the
disposal of a transmission license holder, and 100% of the fixed operating and maintenance
costs for every megawatt of available capacity, and a private producer with a facility that
operates using stored energy – 100% of the normative cost of the production unit as
specified in sub paragraph (1) if the net supply is up to 100 megawatts, and 95% if the net
supply is greater than 100 megawatts, and 100% of the fixed operating and maintenance
costs.
The price for the sale of electrical energy, out of the available capacity placed at the
disposal of the transmission license holder as specified in paragraph (2)(b) and fed into the
electricity grid according to the available capacity and energy deal – shall be in accordance
with the tariff determined by the Authority.
The producer shall not be entitled to the full payment under paragraph (2)(b) if he supplies
all or some of the electrical energy at times that are not recognized for availability.
If a private producer is required to input electrical energy under a sale of
available capacity and energy deal and for that reason is obliged to use
backup fuel at the times prescribed by the Administration, the private
producer shall be entitled to payment for the backup fuel to reflect the cost of
using this fuel.
(b) From the date when the production component or the normative cost was determined,
as applicable, on the basis of which the private producer entered into the purchasing
deal, and to ensure the private producer’s certainty, no changes shall be made in the
production component or the normative cost, as applicable, for that private producer,
excluding the regular update of the elements of the production component or the
normative cost, as determined by the Authority.
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(c) Without derogating from the powers of the Minister under any law, the Authority may,
by arrangement with the Minister, change the aforesaid rates in sub regulation
(a)(2)(b)(2), if it realizes that failure to change the aforesaid rates is preventing the
regulations from achieving their purposes.
11. 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 16.
(2) The applicant for a provisional license must give details, inter alia, of the
applicant’s identity, the requested activity, 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, 5725-19656,
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 16.
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Book of Laws, 5725, p. 307.
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12. Contracts
(a) The holder of a transmission license shall be obliged to enter into 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 period of the deal, the starting
date, the type of deals, the price, associated services as determined by the Authority
from time to time, arrangements for emergencies, and matters of liability and
indemnity.
(c) If a tender was published, the purchasing deal shall be according to the contract signed
between the transmission license holder and the private producer based on the terms of
the tender.
13. Technical and commercial requirements
(a) The holder of a transmission or distribution license, as applicable, and the private
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 of Electricity
Matters within the meaning of section 3 of the Electricity Law, 5714-19547
(hereinafter: the Manager of Electricity Matters), no later than 3 months from the
date of obtaining the building permit for the facility, unless the Manager of
Electricity Matters, 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 Electricity 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
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Book of Laws 5714, p. 190.
13
applicable, shall decide the matter within 45 days of the dates specified in the aforesaid
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
private 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) On 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
private 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 private producer with a 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.
14. 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.
15. Services to the consumer
(a) The existence of an agreement to sell electricity between one private 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
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 private producer is
prevented from supplying electricity to his consumers for reasons depending on him or
his agents.
16. 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 0.2% 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.
(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 1.8%
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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 private producer with a facility with a capacity of up to 50 megawatts –
subject to increasing the guarantee to 0.4% 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 2.4% 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 8,000 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.
(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 8,000 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 expires, 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 applies for a new provisional license must deposit a
guarantee as stated in regulation (c) plus a further amount equal to 5% of the deposited
guarantee, but no less than an amount in New Shekels equal to 8,000 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 8,000 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.
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(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.
(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.
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17. 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.
18. Metering and supervision
For the purpose of checking and measuring the issue of electrical energy from the private
producer’s facility to the electricity grid or the consumer, metering systems shall be
installed, according to the requirements of the Ministry or the Authority, pursuant to their
powers under the Law.
19. Maintenance plan
A private producer shall submit to the system manager a maintenance plan in the report
format as prescribed by the Authority; any dispute between a private producer and the
system manager regarding the maintenance plan shall be decided by the Authority.
20. Availability
The license shall stipulate the minimal operational availability of the production unit for
available capacity and energy deals.
21. Reporting obligations
Private 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.
22. 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), 5758-19978.
23. Commencement and application
(a) These regulations shall commence 30 days following their publication (hereinafter: the
commencement date).
8
Collected Regulations 5758, p. 40
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(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 8, 9
and 10 shall only apply to a party that shall receive a provisional license by the 23 rd of
Tevet 5768 (1st November 2008) or shall receive a license to produce electricity by
15th Tevet 5770 (1st January 2010) on the basis of a provisional license as aforesaid.
(c) These regulations shall not apply to:
(1) Anyone who received just before the commencement date approval from the
Minister or a production license for a cogeneration facility or anyone who
received a production license on the basis of such approval;
(2) Anyone to whom the Electricity Market Regulations (Cogeneration), 5765-20049
apply.
(3) Anyone who received approval or a provisional license or a production license
based on these for a facility operating with a renewable energy source.
On this matter, “approval” – approval given by the Minister to a person by which,
when the conditions stipulated in it are met, that person shall receive a production
license.
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Collected Regulations 5765, p. ____
19
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.
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
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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.
Regards,
_______________________
Ariel Sharon, Prime Minister and
Minister of National Infrastructures
______________________
Bank Branch
_________________ 5765
(________________, 2004)
(HM 3-3444)
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