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Electricity Regulation 2014
Electricity Market Law (EML) and Electricity Market Licence Regulation (EMLR)
In 2001, the main legislative document that created the current market structure, the Electricity Market Law No. 4628 (Law No. 4628) was issued as part of the efforts to harmonise with the EU and to liberalise the market.
Under Law No. 4628, the Energy Market Regulatory Authority (EMRA) was established to regulate and supervise the market as an independent regulatory body. It has financial and administrative independence from the government. Law No. 4628 has recently been amended with Electricity Market Law No. 6446 (EML), which entered into force on 30 March 2013. Law No. 4628 is still in force but its name has changed to the Law on the Organisation and Duties of
the Energy Market Regulatory Authority. Therefore, Law No. 4628 only regulates the duties and rights of EMRA while the EML regulates the market activities.
Pursuant to the EML, electricity market activities consist of generation, transmission, distribution, wholesale and retail, market operation as well as import and export activities. To carry out any of the market activities, market participants are required to obtain licences from EMRA.
Under the EML, licences may be granted for a maximum term of 49 years and the term for the licences regarding generation, distribution and transmission may not be less than 10 years.
Each activity is subject to a separate licence. However, the export activity can be conducted by generation licensees and supply licensees, while the import activity can be conducted by supply licensees. Import and export activities of such legal entities are regulated under their respective supply or generation licences and do not require separate licences, provided that an approval of EMRA is obtained upon positive opinion of the Ministry of Energy and Natural Resources (Ministry). The EML merged the wholesale and retail sale activities into one licence type, the ‘supply licence’. The existing wholesale and retail sale licence holders will be ex officio granted with a supply licence without prejudice to their rights under the existing licences.
A licence cannot be assigned. However, a step-in right is provided for banks and financial institutions. If the banks or financial institutions provide limited or non-recourse project financing to the licensee as per the provisions of their loan agreements by explaining the reasoning, they may request from EMRA that another legal entity be granted with a licence provided that they assume all obligations of the related licensee. The terms and conditions of the previous licence shall continue under the new licence. As another exception of the non-assignable character of the licences, a generation licence owner can assign the licence to a company incorporated as a result of the demerger of the licence owner or to another company having
the same shareholding structure as the licence owner. The terms and conditions of the previous licence shall continue under the new licence. The rights and obligations of a publicly held legal entity that holds a generation or auto-producer licence may be transferred to another legal entity that is wholly owned by such a legal entity provided that the approval of EMRA’s board is obtained and a new licence will be granted to such a legal entity as a continuation of the former licence.
In both pre-licence and licence applications regarding generation activity, applicants have to submit…
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