On August 22, 2015, the Energy Market Regulatory Authority
("EMRA") issued the Electricity
Market Tariff Regulation setting the rules for the
introduction of regional tariffs and a supplier of last resort
tariff. The regulation will enter into effect on January 1, 2016,
and govern the five-year tariff period from 2016 to 2020.
What EMRA did
Since 2006, EMRA has established base values for price caps,
revenue caps and transmission pass-through costs which are then
used to set end-user tariffs in five-year periods. This cost-based
pricing structure has the effect of liberalizing the tariff system.
While EMRA has not yet announced the tariffs for the third
five-year period, it is expected to do so by the end of this year.
Although most of the pricing rules and the method of implementation
have not changed under the regulation, there are some significant
Cross-subsidies in the electricity
market will be abolished on December 31, 2015 in accordance with
Electricity Market Law No. 6446. Therefore, national tariffs that
allowed costs to be stabilized across different regions through a
price equalization mechanism will be replaced by regional tariffs
in line with the liberalization trend in the electricity
A "supplier of last resort"
tariff has been introduced for electricity provided by the
regionally-authorized supply company to eligible customers who do
not procure electricity from other suppliers. EMRA will issue a
communiqué on the supplier of last resort tariff by March
31, 2016, within three months from the cross-subsidy expiration
date. Until then, EMRA will apply a provisional tariff.
The supplier of last resort tariff
will be two-tier, differentiating between consumers with high and
low electricity consumption. Consumers with high electricity
consumption will be subject to a higher tariff to encourage
integration into the competitive electricity supply market.
The Turkish Electricity Transmission
Company (Türkiye Elektrik İletim A.Ş.
–TEİAŞ) will determine and charge its market
operation tariff until the Energy Market Operation Company
(Enerji Piyasaları İşletme Anonim
Şirketi – EPİAŞ) becomes fully
operational and EMRA approves its market operation tariff.
The EMRA continues to oversee the liberalization of the Turkish
electricity market. With the end of cross-subsidies, prices between
different regions in Turkey will differ. EMRA, however, is
implementing safeguards to protect small-scale consumers (e.g.,
individuals) from the adverse effects of deregulation of the
electricity market, while at the same time encouraging large-scale
consumers (e.g., manufacturers) to actively seek out the most
competitive prices by setting higher tariffs. Although EMRA laid
out the regulatory grounds for the further liberalization of
tariffs, the ultimate outcome will be determined once tariffs are
set at the end of the year.
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.
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