The Electricity Market Law1 was recently amended by
Law No. 5784 (the "Amending
Law")2. The Amending Law ushers in major
changes with significant implications for different electricity
market activities, including electricity distribution.
The first key amendment introduced by the Amending Law in this
respect is the change in the definition of "distribution
facility". The new, broader classification has the
objective of bringing greater precision to the term's
Another important amendment concerns electricity used for
outdoor lighting, and provides that, apart from the lighting of the
highways, a distribution company3 will also be in charge
of the outdoor lighting of avenues and streets, the specifics of
which will be further defined through ancillary legislation. For
the period between 1 January 2009 and 31 December 2015, a special
fund controlled by the Undersecretariat of the Treasury is
allocated to the consumption expenses related to such lighting.
The Amending Law further enables the distribution companies to
provide side services4 and requires
distribution companies, as of 1 January 2013, to carry out
generation and retail sales activities under separate legal
Parallel to the enactment of the Amending Law, the Energy Market
Regulatory Authority ("EMRA"), for the
sake of coherence, implemented new amendments to certain ancillary
A significant example is the revision set forth in the
Communiqué regarding the Connection to Electricity Market
Transmission and Distribution Systems and System Use.5
In this respect, as of 12 November 2008, distribution companies
will have ownership of the energy distribution lines6
between the termination point of a production facility and the
switch yard of such facility, except for eligible consumers
connected to the distribution system, who will remain the owners of
the facilities, equipment and connection lines up to the connection
Another change, to the Electricity Market Distribution
Regulation,7 sets forth that, as of 12 December 2008, a
distribution company may execute bilateral control
agreements, whose terms will be governed by private law and
the principle of freedom of contract. This kind of agreement may be
concluded with a legal-entity owner and/or operator of a private
direct electricity line which holds an electricity generation
license or whose electricity generation application is pending.
Prior to the enactment of such amendment, only the Turkish
Electricity Transmission Company (TEİAŞ)
had this right. The amendment aims to contribute to the consistency
and integrity of the management of the electricity distribution
With the new amendments introduced to the ancillary legislation,
EMRA has clarified the pricing and income evaluation methods
applicable to the electricity distribution market, creating a more
attractive climate for investors by introducing transparency. In
this respect, the execution of a temporary price equalization
mechanism (fiyat eşitleme mekanizması)
during the first implementation period, aiming to protect consumers
from price differences, has been prolonged from 31 December 2010 to
31 December 2011.
Finally, in light of the recent press releases, we understand
that the Turkish Privatization Administration intends to announce
tenders with respect to the Eastern and Western Anatolian
electricity distribution regions. The details of such tenders are
expected to be announced in mid-March.
1. Electricity Market Law No. 4628 published in the
Official Gazette dated 3 March 2001 under No. 24335, 1st
2. Published in the Official Gazette dated 26 July 2008
under No. 26948.
3. Pursuant to the Electricity Market Law, an electricity
company is defined as "a legal entity engaged in the
distribution of electricity in a certain geographical
4. Pursuant to the Regulation on Side Services, published
in the Official Gazette dated 27 December 2008 under No. 27093,
side services include services, (i) used by the system operator in
order to implement system integrity and security with respect to
the offer quality and operating conditions set forth under the
Regulation on Offer Authenticity and Quality of Electricity
Transmission System, and (ii) referred to under the Electricity
Market Network Regulation.
5. Published in the Official Gazette dated 27 March 2003
under No. 25061, as amended on 12 November 2008.
6. The ownership does not include low voltage
7. Published in the Official Gazette dated 19 February
2003 under No. 25025.
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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