The Law Amending the Electricity Market Law (the "EML") and Other Laws numbered 7257 ("Omnibus Law") was published and entered into force on 2 December 2020. The Omnibus Bill amended certain provisions of the EML. The main important amendments are as follows:
Amendment in the Approval of Share Transfers and Changes of Control:
As per Article 32 of the Omnibus Law, the requirement of obtaining approval from the Energy Market Regulatory Authority ("EMRA") for changes in the shareholder structure or any other activity resulting in a control change over business is now limited to legal entities whose tariff is subject to regulation i.e. the distribution companies or authorized supply companies. As the Electricity Market License Regulation ("License Regulation") regulates the details of the approval to be taken from the EMRA in case of share transfers, relevant provisions regarding obtaining approval from the EMRA in the License Regulation will need to be amended and aligned as well. In line with the amendment, it would be advisable to remove the provisions stipulating the approval of the EMRA in articles of association of energy companies that are no longer subject to the EMRA's approval for shareholder structure changes.
A New License Exemption:
The EML provides certain exceptions to the requirement of obtaining a license. One of them is "renewable generation facilities up to 1 MW" (which was increased to 5 MW with a President Decision). Article 35 of the Omnibus Law makes an addition to the license exemptions. Accordingly, renewable energy generators, so far as they do not exceed the capacity stipulated in their connection agreement, would be exempted from license obtaining process. Thus, we understand that it will be possible to establish unlicensed renewable generation facilities exceeding the 5 MW limit if their capacity in their connection agreement is more than 5MW. We understand that the introduced provision seems to render the "renewable generation facilities up to 5 MW" provision redundant. The recital regarding Article 35 explains that the change aims for consumers to produce their own needs without license requirement.
Transmission Investment Reimbursement in 5 Years:
Previously, Article 8/5 of the EML regulated that when a company has made an investment for a new transmission facility or line, it would be reimbursed based on the connection and system usage agreement in 10 years. As per Article 33 of the Omnibus Law, this period is now five years.
Extension of Electricity Price Equalization Mechanism:
As per Article 41 of the Omnibus Law, the application of electricity price equalization mechanism is extended from 31 December 2020 to 31 December 2025.
Change regarding the Incentive on State Properties' Usage:
The Provisional Article 4 of the EML, before the amendment made by the Omnibus Law, provided that renewable energy facilities, the electricity generation facilities where the mines of peat, lignite, hard coal, asphaltite, bituminous schist, bituminous shale, coccolith, sapropel are used as input, transportation roads, and energy transmission lines including those to be transferred to TEIAS and distribution companies until the connection point to the system stated in the licenses that would start their operations before the end of 2020 (which was later prolonged to the end of 2025 with the Council of Ministers' Decision) could utilize a discount of 85 percent on the fees for permission, lease, right of easement and right of usage on the state properties for the first 10 years of their investment and operation periods starting from the permit date. The Omnibus Law has removed "the renewable energy facilities" from the list of facilities that may benefit from such incentive on the grounds that such incentive is already regulated under the Law numbered 5346 on the Utilization of Renewable Energy Sources for the Purpose of Generating Electrical Energy ("Renewable Energy Law") and reflected the time extension decision of the Council of Ministers until 31 December 2025 in this provision of the EML. In line with this, a minor amendment in Article 8 of the Renewable Energy Law is also made by the Omnibus Law with respect to the starting date of the same incentive to the renewable energy facilities. While the relevant provision granting the incentive to the renewable energy facilities in the Renewable Energy Law determined the incentive period "as the first 10 years of the investment and operation period" without mentioning the start date as the license date, with the amendment made by the Omnibus Law, such period of 10 years is clearly set forth to start from the license date in the Renewable Energy Law. While the practice was also to start the incentive from the license date in the renewable energy facilities, we understand that the lawmakers wanted to eliminate any doubt and dispute of interpretation between the two laws, and made these amendments explained above for the renewable energy facilities in both Renewable Energy Law and the EML.
Previously, the EMRA had the full authority to decide on real estate procurement claims of both generation and distribution companies. General Directorate of National Estate would assist the EMRA with the execution of the decision. After the Omnibus Law, only the EMRA will manage the process and Turkish Electricity Distribution Company ("TEDAS") will have the full authority to decide and execute on real estate procurement claims of distribution companies. The application of this provision will be determined by a regulation to be enacted by the EMRA.
Temporary License Termination Right:
Legal entities that aim to terminate or amend their pre-license or license applications shall submit a claim to the EMRA within two months upon the enactment of the Omnibus Law i.e. 2 December 2020 to receive back the security they have provided in part or full.
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