Turkey: Market Tariffs

Last Updated: 12 June 2015
Practice Guide by Herdem Attorneys at Law

The principles and procedures governing the preparation, examination, evaluation, modification and approval of the regulated tariffs in the electricity market are regulated under Regulation on Electricity Market Tariffs. Accordingly, the transmission and distribution activities in the market and the sale of electricity and/or capacity  and/or provision of retail service to non-eligible consumers shall be regulated through tariffs. The regulated tariffs shall include the following:

  • Transmission connection tariff,
  • Distribution connection tariff,
  • Transmission tariff,
  • Distribution tariff,
  • Retail tariff,
  • Wholesale tariff of TETAS.

The transmission connection tariff prepared and proposed by TEIAS shall include the transmission connection charge, as well as the principles and procedures applicable to the implementation of the tariff. The transmission tariff prepared by TEIAS includes the use of transmission price, transmission system operation price, and market management price, as well as the principles and procedures applicable to the implementation of the tariff.

The distribution connection tariff prepared and proposed by distribution licensees shall include the distribution connection charge as well as the principles and procedures applicable to the implementation of the tariff. The distribution tariff prepared by the distribution licensees shall include the use of distribution system prices as well as the principles and procedures applicable to the implementation of the tariff. The transmission and the distribution connection charge shall not include investment amount of network.

The retail tariff prepared by retail licensees for sale of electricity and/or capacity to non-eligible users shall include retail prices and retail service prices as well as the principles and procedures applicable to the implementation of the tariff. Consumers whose consumption levels exceed the limits required for being an eligible consumer, and who do not exercise their right to choose their own suppliers, shall continue to be supplied electricity and/or capacity under the retail tariff that its retail licensee applies to non-eligible consumers.

The parameters to be used in the calculations regarding the determination of revenue and/or price caps of the licensees subject to tariff regulation for one implementation period shall be determined through revenue control performed by the EMRA.

The following criteria shall be taken into consideration during revenue control:

  • Ensuring reliable, adequate, quality, uninterrupted, low-cost and environment-friendly electricity supply to consumers,
  • Establishing a non-discriminatory revenue control structure,
  • Ensuring that the parameters within the scope of revenue control reflect costs,
  • Increasing the service quality and efficiency with due regard to the security of transmission and distribution services,
  • Ensuring the financial viability of legal entities with due regard to their efficiency levels,
  • Facilitating efficient long-term investments,
  • Facilitating effective competition,
  • Ensuring the pass-through of gains from increased efficiency and competition,
  • Ensuring that cross subsidies between activities are prevented.

The work towards determining the parameter values for revenue control to be in effect for an implementation period shall be commenced within a minimum of twelve and maximum of eighteen months prior to October 31 of the last year of the current implementation period.

The legal entities subject to tariff regulation shall submit the following information and documents prepared within the framework of the schedule determined for revenue control and the provisions of the “Communiqué regarding Electricity Market Chart of Accounts, Regulated Items and Reporting” as well as other provisions in the applicable legislation:

  • The financial statements prepared for the current implementation period,
  • Annual demand, cost and revenue estimates prepared for the next implementation period,
  • The consumption levels and the related accrual and collection levels for the current implementation period for each customer category,
  • The consumption, accrual and collection estimates for the next implementation period for each customer category,
  • The investment plan progress and evaluation report for the current implementation period,
  • The investment plans for the next implementation period.

Any information and document required during the revenue control may be requested from the licensees and the legal entities may be invited for interviews. The parameters regarding the transmission system revenue cap, transmission system operation revenue cap, market management revenue cap and the use of distribution system revenue cap are set to allow to recover regulatory operating expenses, regulatory depreciation costs and a return on the regulated asset base calculated as per the provisions of the applicable legislation, to the extent that the efficiency, quality and loss-theft target levels applicable for the type of the activity are achieved. The parameters regarding retail prices are set with due regard to the price cap regarding energy purchase, loss-theft target levels and gross profit margin, and to allow to recover retail service costs calculated as per the provisions of the communiqués regarding electricity market chart of accounts, regulated items and reporting as well as the provisions of the applicable legislation, to the extent that efficiency targets are achieved.

The revenue control shall not take any non-tariff and/or below-tariff practices and any form of cross-subsidy into account. The expenditures will not be included as cost items in any form during the revenue control and/or will be allowed to a certain extent determined by the EMRA.

The licensees subject to tariff regulation shall prepare and submit to the EMRA for approval: their tariff proposals that include the prices to be effective in the following year; and the applicable procedures and principles as per the provisions of the applicable legislation, by the end of October every year.

The legal entities subject to tariff regulation shall submit to the EMRA the information and documents pertaining to the following issues at least sixty days prior to submitting their tariff proposals to the EMRA:

  1. Pricing methodology,
  2. Service cost analysis,
  3. Sample price calculations.

The evaluation regarding whether or not the documents requested from the legal entities for tariff application have been delivered in accordance with tariff application principles, shall be completed within five working days following the registration of the application documents in the Register of the EMRA. The examination and evaluation of the tariff proposals shall be completed by the EMRA before December 31 of the current year. If a tariff proposal is deemed appropriate, the tariff proposal shall be approved. The tariffs approved shall be effective for the tariff period between January 1 and December 31 of the following year. The licensees subject to tariff regulation shall be obligated to announce their approved tariffs through publishing them in the press.

The price structure in the tariff proposal may be formed of fixed and/or variable components. Price structure shall include energy (active-reactive), power expressed in kW, connection capacity and similar items as variable components. The prices in the scope of tariff proposal may be prepared taking the following into consideration:

  1. Location characteristics,
  2. Voltage and power levels,
  3. Time of day (night, day, peak and similar) and time of year.

The customer categories included in the tariff proposals shall cover residential, industrial, commercial, agricultural irrigation and public illumination categories. The legal entities subject to tariff regulation may propose sub-categories under the main categories or new categories with regard to the locational characteristics and load curves. However, consumers included in the same customer category shall have similar cost structures and similar consumption or demand patterns.

This document is not intended to create an attorney-client relationship. You should not act or rely on any information in this document without first seeking legal advice. This material is intended for general information purposes only and does not constitute legal advice. If you have any specific questions on any legal matter, you should consult a professional legal services provider.

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