Turkey: Unbundling Within The Electricity Market And The EMRA Resolution On Legal Unbundling

Last Updated: 26 February 2013
Article by Revan Sunol


"Procedures and Principles concerning the Legal Unbundling of Distribution Systems and Retail Sales" was published within the Official Gazette dated September 27, 2012 and numbered 28424 within the scope of The Energy Market Regulatory Authority ("EMRA") Resolution dated September 12, 2012 and numbered 4019 ("Resolution"). Within the Resolution, the principles and procedures concerning the operation by undertakings holding a distribution license of distribution systems and retail sales under separate legal entities have been set forth.

The Notion of Unbundling

Unbundling within energy markets refers to the unbundling of vertically integrated structures. The unbundling of generation, transmission, distribution and retail sales has an important role within the electricity market with regard to the implementation of competition. The inclination towards the unbundling of the transmission and distribution operations, which are referred to as network operations and which carry natural monopoly characteristics, from generation and retail sales activities, is based on the concern that the dominant undertaking may limit in various ways the access of other undertakings that it is competing with in generation and retail sales areas. The mechanism referred to as vertical unbundling aims to provide the access of all players to distribution and transmission systems without discrimination and the prevention of cross subsidization between undertakings conducting generation, transmission, distribution and retail sales activities.

Unbundling within the electricity market may be realized as unbundling of accounts, legal unbundling and ownership unbundling. Unbundling of accounts provides for the independent accounting for separate operations. Legal unbundling on the other hand, provides for the organization of different activities under different legal entities. However, this does not prevent such different activities from being owned by the investment group. Ownership unbundling, to the contrary of legal unbundling, requires the unbundled assets and activities to not be owned by the same investment group.

Unbundling in the European Union

Competition within the electricity market in the European Union is regulated with the Directive 2009/72/EC of the European Parliament published within the Official Journal dated August 14, 2009 concerning rules for the internal market in electricity ("Directive 2009/72/EC"). Directive 2009/72/EC repealed Directive 2003/54/EC ("Directive 2003/54/EC") that was published in the Official Journal dated July 15, 2003. According to Directive 2003/54/EC, in the case of vertically integrated undertakings, transmission and distribution systems operators within such undertakings were required to be organized under different legal entities with independent decision making mechanisms. The said Directive emphasized the importance of the independent functioning of distribution and transmission systems especially with regard to other players within the market engaged in generation and retail sales and stated that for this reason, transmission and distribution system operators must have independent management structures. In this context, parent companies were prohibited from giving instructions with respect to the day to day operations of the subsidiary. In addition to these, the unbundling and transparency of accounts were also accepted. However, it did not require ownership unbundling. Directive 2009/72/EC which is in force today on the other hand, accepts the method of ownership unbundling; setting forth that legal unbundling provided within the Directive 2003/54/EC did not implement effective unbundling with regard to transmission systems. According to the said Directive, the only way in which effective transparency and prevention of discrimination within the market can be implemented is the removal of the incentive for vertically integrated undertakings to discriminate, by the ownership unbundling of network operations and generation. Accordingly, the unbundling of distribution and transmission system operators has been required for vertically integrated undertakings.

Unbundling in Turkish Law

Unbundling in Turkish Law has been provided with various provisions of the Electricity Market Law numbered 4628 ("Law") and the Regulation on Electricity Market License ("Regulation") published in the Official Gazette dated August 4, 2002 and numbered 24836. Pursuant to the Regulation, license holding legal entities which conduct multiple operations within the market and/or which conduct the same operation in multiple facilities or areas are under the obligation of keeping separate accounts and books for each operation that is subject to license and for each facility or area as well as for operations that complete or that are required by a market operation and operations that relate to side products.

The Law on the other hand sets forth multiple provisions relating to unbundling. First of all, in line with the Regulation, legal entities holding multiple licenses and/or which conduct the same operation within multiple facilities must keep separate accounts and books for each operation subject to license and for each facility. It is possible for generation companies to participate in distribution companies; however, they are prohibited from establishing control over the distribution company.

Private distribution companies may establish generation facilities besides conducting distribution and retail sales activities under the condition that they obtain a license. However, in this case the accounts must be unbundled. In addition to this, the distribution company may purchase electricity from the generation company or companies that it is affiliated with for a purchase price that does not surpass the average wholesale price for the country.

Another fundamental unbundling rule brought by the Law provides that distribution companies shall realize generation and wholesale operations under separate legal entities as of January 1, 2013.

Within this context, according to the Resolution of EMRA, the legal unbundling for the conduct of distribution and retail sales operations realized by legal entities holding a distribution license under separate legal entities shall be realized in accordance with the provisions of the Turkish Commercial Code numbered 6102 ("TCC") relating to partial spin-off procedure. In accordance with the provisions of TCC relating to incorporation, a joint stock company shall be incorporated before commencing the partial spin-off procedure. The articles of association of the joint stock company that is to be incorporated in this context must include the clauses of purpose and subject, type of share certificates, transfer of share certificates, merger and amendment of the articles of association as set out within the provisions of the Regulation.

Under the TCC, in the case that a part of the assets is to be transferred by way of partial spin-off, a spin-off plan shall be prepared in writing by the relative company's board of directors.

Pursuant to article 165 of the TCC, in cases where there is a period exceeding six months between the date of the spin-off and the date of execution of the spin-off agreement or where there is a material change in the assets of the companies participating in the spin-off after the last financial statement, an interim financial statement shall be issued.

A copy of the spin-off agreement approved by the distribution company shall be submitted before EMRA within five business days following the conclusion of the agreement.

The shares of the acquiring, that is to say the newly incorporated company, shall be acquired by the shareholders to the company subjected to the spin-off procedure. The acquiring company and the company subject to the spin-off must have the same control structure until the finalization of the legal unbundling. However, pursuant to article 6, paragraph 3 of the Resolution, within generation and retail sales companies which have the same control structure as the distribution company; even if persons conducting duties as member of board of directors, general manager and assistant general manager are acting under different titles, managers and auditors that are authorized signatories and that hold duties equivalent to or higher than assistant general manager in respect of their powers and duties must consist of different persons as of January 1, 2013.

According to the Resolution, retail sales companies must apply to EMRA for sales license before December 15, 2012. Along with the application petition, the company's articles of association and shareholding structure shall also be presented to EMRA. Simultaneously with the retail sales company, the distribution company shall apply to EMRA for the revocation of the sales license. Applications made within this context shall be evaluated by EMRA and the sales license held by the distribution company shall be terminated to be valid as of December 31, 2012 and the retail sales company shall be granted a new license which qualifies as the continuation of the previous one to be valid as of January 1, 2013.

Finally, pursuant to the Resolution, unavoidable costs relating to the procedures and transactions required by the legal unbundling realized within the scope of the unbundling of distribution and retail sales shall be compensated by the tariffs applied to the distribution or the retail sales company, as appropriate. However, it is essential for these transactions to have been made with minimum cost. A report must be submitted to EMRA with regard to the costs demanded to be reflected on the tariff and such costs must be documented.


Within the electricity sector, it is essential that unbundling be realized within vertically integrated undertakings in order to support the entry of new players to the market and to prevent discrimination between undertakings within the market. The transition from unbundling of accounts to legal unbundling must be considered as an important step under Turkish Law, even if it is only with respect to distribution and retail sales.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions