Law and Climate Change Toolkit
Turkey • Law • 2013

(TR) Electricity Market Law 2013

Part One

 

 PART ONE
 - Object, Scope and Definitions

Legal Area
Energy regulator
Cross-cutting Categories
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Part Two

 

 PART TWO
 - Electricity Market Activities and Licenses

Legal Area
Energy supply diversification/mix Energy system advisory body Energy distribution/grid management body Goal/obligation to review and report on renewable energy Overall energy infrastructure budget/finance Energy infrastructure finance – renewable energy Energy use charges Energy Market Regulation Overall market principles Market access provisions Market regulatory coordination provisions Market design rules for promoting efficiency
Cross-cutting Categories
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Part Three

 

 PART THREE
 - Supervision and Sanctions

Legal Area
Energy system advisory body Energy distribution/grid management body Market integrity and abuse Non-tariff measures
Cross-cutting Categories
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Part Four

 

 PART FOUR
 - Tariffs, Protection of Consumers, Privatization, Expropriation and Security of Supply

Legal Area
Overall energy infrastructure budget/finance Investor regulation – guarantees and risk sharing Energy consumption taxation Energy use charges Energy Market Regulation Markets – design and regulation Market design rules for promoting efficiency
Cross-cutting Categories
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Part Five

 

 PART FIVE
 - Miscellaneous Provisions

Legal Area
Energy distribution/grid management body Energy regulator Investor regulation – return/remuneration Fiscal incentives – energy efficiency – tax relief/rebates
Cross-cutting Categories
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Part Six

 

 PART SIX
 - Transitional and Final Provisions
 PROVISIONAL ARTICLE 1 - National tariff application
 (1) A price equalization mechanism, which is established in such a way as to protect, in whole or in part, the consumers who buy electrical energy out of tariffs subject to regulation from interregional cost differences or from existing price differences, and the implementation matters of which are regulated under a communiqué prepared by the Authority, shall be implemented until 31/12/2015. All public and private distribution companies and assigned supplier companies shall be included in the price equalization mechanism.
 (2) Until 31/12/2015, the requirements of the national tariff application shall be taken as the basis and cross subsidization shall be applicable in the national tariff. National tariff shall be prepared by the Authority and take effect upon approval thereof by the Board.
 (3) Until 31/12/2015, all accounts shall be kept and maintained by separation in accordance with the relevant legislation.
 (4) The authority to extend the periods under the scope of this article up to five years shall rest with the Council of Ministers. PROVISIONAL ARTICLE 2 - Build-Operate-Transfer Agreement
 (1) For purposes of ensuring that the companies which entered into a build-operate-transfer agreement with the Ministry under the provisions of the Law no. 3096, but which terminated or will terminate their agreements before commissioning could maintain their activities by obtaining a license under this Law, the immoveable properties held by the Treasury, on which An easement is constituted in favor thereof for the establishment of build-operate-transfer facilities under the agreement, may be directly sold by the Ministry of Finance to such companies over their current values, regardless of the value of the facilities located on such immoveable properties. PROVISIONAL ARTICLE 3 - Tax regulations
 (1) Under the scope of privatization of electricity distribution companies and generating facilities and/or companies, profits arising from transfer, merger, demerger, partial demerger procedures to be made until 31/12/2023 shall be exempt from corporate tax. In case of losses due to the procedures and transactions made under this article, such loss shall be disregarded in the determination of the profit of the institution. Such demerger procedures shall be deemed a demerger procedure ensured under the scope of Corporate Tax Law no. 5520, dated 13/6/2006.
 (2) Deliveries and services to be provided under this Article shall be exempt from value added tax. The taxes undertaken with respect to the performance of such deliveries and services shall be deducted from value added tax calculated in respect of procedures subject to taxation. Value added tax which may not be covered by way of deduction may not be returned. In respect of procedures falling under the scope of this article, the relevant provisions of the Law no. 6102 shall not apply.
 (3) The separation of distribution and retail sale activities shall be deemed a demerger ensured under the scope of the Law no. 5520 under the principles and procedures specified with regard to this Law, on condition that it is made over the registered values. PROVISIONAL ARTICLE 4 - Regulations intended to ensure supply security
 (1) For purposes of creating the required supply capacity in the short term along with a sufficient reserve, the legal entities holding a generation license, which will start operating until 31/12/2015 for the first time shall be provided with the following incentives. The authority to extend the said duration up to five years shall rest with the Council of Ministers. a) Fifty percent discount shall be made for the system use prices of transmission systems for a period of five years as of the date of commissioning of generation facilities. b) At the investment period of generating facilities, the procedures and works performed in respect of generating facilities shall be exempt from charge, and the documents and papers executed shall be exempt from stamp duty.
 (2) Among the immoveable properties, which are of forest nature or which are under the private ownership of the Treasury or under the control and disposal of the Government; at electricity generating facilities based on renewable energy sources under the Law no. 5346 and the electricity generating facilities, where the metals referred to in Group W (b) of Article 2 of the Mining Law no. 3213, dated 4/6/1985 are utilized as input, under the scope of mine operation license and permit regulated by the Ministry; the Ministry of Forestry and Water Affairs or the Ministry of Finance shall, in return for its value, grant permit, or rent, constitute easement or provide utilization right to and for those which shall be used for energy conveyance line up to the facility, transportation and grid / network connection point.
 (3) Where the immoveable properties intended to be used for purposes referred to in the second paragraph are public-owned meadow, summer pasture, winter quarters and grassland and pasturage within the scope of Law no. 4342, dated 25/2/1998, such immoveable properties shall be registered under the name of the Treasury by changing its purpose of allocation, in pursuance of the provisions of the Law no. 4342. The Ministry of Finance shall rent or constitute easement for such immoveable properties in consideration of its value.
 (4) For the electricity generation facilities which are based on renewal energy sources under the Law no. 5346 and are to be put into operation until 31/12/2020, including those in operation as of the day of publication of this Law, and the electricity generation facilities where the metals referred to in Group IV (b) paragraph of Article 2 of the Law no. 3213 are used as input under a mining operation license and permit as regulated by the Ministry, and which are to be put into operation until 31/12/2020 as of the publication of this Law, transport roads and from energy conveyance lines, including those which will be transferred to TEIAS or distribution companies, until the point of connection to the system specified in the licenses thereof, eighty-five percent deduction shall be applicable to the values of investment and permits in the first ten years of their operating period, rent, easement and utilization right, as of the date of permit granted by the authority. The Development of Forest Villagers Income and Forestation and Erosion Control Income shall not be demanded therefrom. The facilities which are established or to be established on mining sites, for which tender is made or which are regulated under an agreement for purposes of building electricity generating facilities by public institutions and organizations prior to the date of publication of this Law may not take advantage of the discount and exceptions referred to under this paragraph. The authority to extend the duration under this paragraph up to five years shall rest with the Council of Ministers. PROVISIONAL ARTICLE 5 - Electrical Energy Fund
 (1) Pursuant to the Fund Agreements signed by and between the relevant companies and the cancelled Electrical Energy Fund under the scope of projects realized under the frame of the Law no. 3096, no interest shall be applicable in the repayment of loans which are or are to be provided by the Fund and which are anticipated to be repaid to the Fund by provision of additional fund to companies, and by way of reflection on the sales tariffs of the company. PROVISIONAL ARTICLE 6 - General lighting
 (1) The lighting expenses made until 31/12/2015 at places which are lighted under the scope of general lighting shall be covered by the fund to be included in the budget of the Ministry and by general budget tax incomes of the relevant municipalities and special provincial administrations. The Council of Ministers shall be entitled to extend the said duration up to two years. The deduction to be made from the general budget tax income shares of the municipalities shall be applicable by ten percent of the lighting expenses for metropolitan municipalities and municipalities at urban areas, and for other municipalities, by five percent of the lighting expenses. Other than such limits, ten percent of the lighting costs shall be covered by way of deduction from the share of the relevant special provincial special administration. The Council of Ministers shall be entitled to double the rates referred to under this paragraph.
 (2) Required investments for regions for which general lighting decision may be taken by the lighting committee which consists of the distribution company under the chair of the representative to be designated by the Ministry, relevant municipality and/or provincial special administration shall be made by the distribution company.
 (3) Consumption and investment expenses relating to the border lighting for security purposes shall be covered by the fund to be included in the budget of the Ministry of Internal Affairs, and the lighting expenses of places of worship which are opened for worship by the public and which are free, by the fund to be included in the budget of the Department of Religious Affairs.
 (4) TEDAS shall inspect the distribution companies as to whether, as of certain periods, the amount and price of consumption on bills sent by the distribution companies are accurate or not. Where, in consequence of the inspections made, it is determined that excessive payment is made to distribution companies, the relevant distribution company shall be required to ensure the payment of the excessive portion of the payment amount within one month along with the interest as will be applicable to the period from the date of payment and the date of payment return, which interest is calculated in accordance with the rate of default interest as set forth in accordance with Article 51 of the Law no. 6183, dated 21/7/1953 on Collection Procedure of Public Receivables. Where the distribution company fails to ensure the payment within the said period, the said amount of payment shall be offset against the current period receivables of the distribution company. Where the receivables may not be collected also in the said manner, the amount shall be subject to follow-up and collected by the tax offices in accordance with the provisions of this Law no. 6183. Eighty percent of the collections made due to overpayments shall be recorded as revenue with the general budget, and the remaining twenty percent portion shall be transferred to local administrations. The authority to remove doubts with respect to the implementation of the foregoing paragraph and, where necessary, to set forth the principles and procedures shall, by consultation with the Ministry of Finance, rest with the Ministry.
 (5) The Ministry shall ensure the required arrangements with respect to the payments under the scope of the first paragraph within three months as of the date of effect of this Law. During the said period of time, works and procedures relating to the payment of general lighting consumption expenses shall be carried out by the Undersecretariat of Treasury in accordance with the provisions of the provisional Article 17 of the Law no. 4628, annulled by this Law and of other relevant legislation. Pursuant to the provisional Article 17 of the Law no. 4628 which is annulled by this Law, the inspection, follow-up and collection procedures with respect to the payments made from the budget of the Undersecretariat of Treasury shall be carried out under the scope of the fourth paragraph.
 (6) Technical principles relating to the measurement with respect to the lighting as well as the principles and procedures relating to payment, deduction, implementation and inspection shall be prescribed under a regulation to be put into effect by the Ministry. PROVISIONAL ARTICLE 7 - Conversion of autoproducer license into generation license
 (1) The legal entities holding an autoproducer license shall, by protection of their rights under their existing licenses, be granted a generation license ex officio within six months as of the date of publication of this Law and without imposing any charge of license obtainment. Following the effective date of this Law, no application may be lodged to the Authority for autoproducer license; the applications already made shall be evaluated under the scope of generation license.
 (2) In respect of the organizations privatized prior to the date of effect of this Law, autoproducer licenses granted pursuant to the provisions of the Law no. 4628 shall be converted into generation licenses and the matters set forth under the sales/operating right transfer agreements shall be included in the generation license. The license holders falling under this scope may, at maximum, sell in the market twenty percent of the electrical energy generation amount within one calendar year. The Board may, exclusive for the cases as may be needed for supply security, increase this rate. PROVISIONALARTICLE 8 - Harmonization of generation facilities with the environmental legislation
 (1) EUAS or affiliates, subsidiaries, business firm and business units and the assets thereof and public generation companies to be established under the scope of the Law no. 4046 shall be granted time until 31/12/2018 for purposes of realization of investments intended for harmonization with the environmental legislation and completion of required permits in respect of environmental legislation, which shall also be valid if they are privatized. The power to extend the said duration up to three years shall rest with the Council of Ministers. During the said period and for the said reason with respect to the previous periods, electricity generation activities may not be ceased at EUAS or affiliate, subsidiary, business firm and business units and the assets thereof, and at public generation companies to be established under the scope of the Law no. 4046, nor may administrative fine be imposed, which shall be valid if and where they are privatized. PROVISIONAL ARTICLE 9 - Procedures with respect to licenses not put into operation or failed to be put into operation
 (1) The legal entities which, during the pre-construction period included in the generation license, could not consummate their obligations they need to fulfill in order to commence the construction of generation facility shall be granted a period of six months only or, if any, in addition to the remaining construction time thereof. Except for the force majeure, the licenses of the legal entities failing to fulfill their obligations within the said duration shall be revoked.
 (2) The provision made under the first paragraph shall not be applicable for licenses which are granted for coal site obtained by royalty from public institutions for purposes of establishing electricity generation facility and for which it is documented to the Authority with valid grounds that expropriation and railway relocation procedures cannot be completed, which need to be completed within the pre-construction time specified in the license, within such period and for which such grounds are found acceptable by the Board.
 (3) The licenses or the applications of the legal entities desiring to terminate their existing generation or autoproducer licenses or their license applications shall be terminated and their guarantees shall be returned if the said legal entities lodge an application the Authority within one month following the effective date of this Law. PROVISIONAL ARTICLE 10 - Conversion of existing license applications into pre-license
 (1) The generation license applications which are not yet finalized by the Authority as of the effective date of this Law shall be deemed an application for pre-license and so finalized. PROVISIONAL ARTICLE 11 - Grant of supply license
 (1) The legal entities holding a wholesale and retail sales license shall, by protecting their rights under their existing license, be granted ex officio a supply license free of charge. PROVISIONAL ARTICLE 12 - Grant of license to generation facilities and projects under the scope of existing agreements
 (1) The generation facilities and projects under the scope of existing agreements shall be granted ex officio a license under the scope of the relevant legislation within one year as of the effective date of this law, provided, however, that it shall be limited with the rights and obligations under the existing agreements and with the term of agreement. PROVISIONAL ARTICLE 13 - Investment guarantee by the Treasury
 (1) No investment guarantee by the Treasury shall be provided to the investments made for purposes of electricity generation, transmission, distribution, and trading under the provisions of the Laws no. 3096, 3996 and 4283. PROVISIONAL ARTICLE 14 - Grant of new license to facilities whose construction has started
 (1) The license holders who, based on a valid generation license, commenced the construction of the plant prior to the effective date of this license, but the construction was cancelled or discontinued for whatsoever reason shall be granted a license by the Authority if they apply to the Authority within one year as of the effective date of this article, providing, however, that Ministry fixes that the generation facility has reached to an irreversible stage and finds it to be of public interest. The foregoing paragraph shall not apply to hydroelectric generation facilities.
 (2) The applicants shall continue their activities until the procedures such as the obtainment of licenses and permits required for the generation activities under the scope of first paragraph within a period of two years as of the date of license obtainment. The activities of those who fail to obtain required permits within the said period shall be ceased until the completion of the said permits.
 (3) If not disrupting the integrity of the lands which are opened for use for non-agricultural purposes for purposes of use of generation facilities under the first paragraph prior to the date of publication of this Law, permit may be granted to allow for the use for the intended purpose providing that an application should be made to the Ministry of Food, Agriculture and Livestock within one year following the date of publication of this Law and subject to compliance with the soil conservation project to be prepared and subject to payment of seven Turkish Liras for each square meter of the agricultural lands used for non-agricultural purposes. The qualification of the lands which are no longer qualified as agricultural land shall be changed in line with the request of the applicant.
 (4) The principles and procedures regarding the implementation of this article shall be prescribed under a regulation to be made by the Authority. PROVISIONAL ARTICLE 15 - Idle hydroelectric power plants
 (1) A right of water use agreement shall be signed with the beneficiaries of the hydroelectric power plants which, prior to the date of effect of the Law no. 4628, performed electricity generation activities, but which, following date of effect of the said Law, could not perform generation activities or connect to the distribution system for a price of 1 kuruslkilowatt hour, without announcement by DSI, under the frame of relevant regulations where and if they apply within six months following the date of effect of this Law and if they coincide with the existing projects. PROVISIONAL ARTICLE 16 - Ongoing works and procedures
 (1) The expropriation and transfer procedures of the immoveable properties, which are required for electricity generation and distribution facilities for which, prior to the effective date of this Law, an expropriation resolution is adopted or a transfer resolution is adopted in accordance with Article 30 of the Law no. 2942, shall be finalized by the Authority. ARTICLE 32- Enforcement
 (1) This Law shall take effect at the date of its publication. ARTICLE 33- Execution
 (1) The provisions of this Law shall be executed by the Council of Ministers.

Legal Area
Prescription of renewable energy sources Renewable energy obligations and regulation Renewable energy obligations for energy users Licensing provisions Renewable energy codes and standards – planning/environmental impact Investor regulation – guarantees and risk sharing Fiscal incentives – energy efficiency – loans/debt support Fiscal incentives – energy efficiency – tax relief/rebates Energy use charges Markets – design and regulation Overall market principles
Cross-cutting Categories
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