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Corrected: Turkish electricity law shapes exchange trading

14 Mar 2013 17:53:00 | edem

ICIS_00092432.jpgCorrection: The ICIS story headlined "Turkish electricity law shapes exchange trading" published on 14 March 2013, in the fifth paragraph, please read, "...created after the restructuring of...", instead of "... created after the merger of.’

Also, the 10th paragraph should read: "Existing wholesale and retail licences are to be merged into a single supplier licence. Under the latest changes, a definition of ‘authorised suppliers’ is added. Authorised suppliers are existing retail companies previously conducting distribution and retail activities. This follows on from the separation of the retail side...." This replaces the text: "Existing wholesale and retail licences are to be merged into a single supplier licence. This follows from the unbundling of the retail side..." A corrected story follows:

Turkish policy-makers are still to clarify the status of the country's burgeoning over-the-counter market after the country's General Assembly passed amendments that regulate the establishment of exchange trading.

The parliament has already passed 30 articles covering issues ranging from the new market structure to provisions related to the purchase and sale of energy by generators, the new supplier licence, provisions related to securities for pre-licences and stipulations related to electricity sales by micro-cogeneration units.

Deger Boden, partner in the Istanbul-based Boden Law office, told ICIS that under the latest arrangements, the amendments that were brought to the old Electricity Market Law 4628 would be removed from there and incorporated in a new electricity market law. The exact name and number of this new law is yet to be defined.

Meanwhile, stipulations referring to the organisation of the regulator EMRA included in the old Electricity Market Law 4628 would remain under that umbrella, but the law would be renamed as The Law on the Establishment of the Authority of the Energy Market Regulatory Authority. The provisions related to the organisation of EMRA remain unchanged, the lawyer said.

Market structure

Boden said the law included three market operators in the organised wholesale market definition. These are the proposed exchange EPIAS, grid operator TEIAS and Borsa Istanbul,  which would be created after the restructuring of the Istanbul Stock Exchange, the Istanbul Gold Exchange and the Izmir-based derivatives platform TurkDEX

The over-the-counter market (OTC) which had been previously included under the organised wholesale market definition has now been removed. However, Boden said there were no specific provisions related to OTC in the amendments.

"Just because there is no definition for OTC, it does not mean that there will be no OTC," she said.

Under the amendments, the state ownership of EPIAS, which could operate under the umbrella of Borsa Istanbul, would be limited to 15%, although Boden explained that the Council of Ministers may increase this limit to 30%.

However, the share of the state-owned Borsa Istanbul in EPIAS is not limited. Sources previously told ICIS that Borsa Istanbul itself may be privatised.

Borsa Istanbul will also include a platform for electricity derivatives. Sources from the Turkish Energy Traders' Association have told ICIS that the association would lobby for the creation of a link between derivatives and spot trading to ensure the physical delivery of future contracts (see EDEM 7 March 2013).

Suppliers and authorised suppliers

Existing wholesale and retail licences are to be merged into a single supplier licence (see EDEM 14 December 2011).. Under the latest changes, a definition of ‘authorised suppliers’ is added. Authorised suppliers are existing retail companies previously conducting distribution and retail activities. This follows on from the separation of the retail side from the distribution arm of energy supply companies. However, the latest changes allow authorised suppliers previously acting as distribution companies to sell to eligible customers across Turkey, and noneligible consumers in the area of distribution and customers of last resort.

Suppliers previously acting as wholesale companies can only sell to eligible consumers - meaning those with a consumption no lower than 5MWh per year, Boden explained.

Generators' wholesale purchases

Boden explained that generating companies would be able to buy electricity/capacity from organised wholesale markets.

"There is no restriction with regards to in which market they can sell," she said. "The [regulator] EMRA will determine the upper limit that they can purchase from the organised wholesale market. They will purchase in order to fulfil their supply requirements. The upper limit that they can purchase will be determined by EMRA and will be a percentage of the total generation amount written in their generation licence."

Pre-licence and micro-cogeneration

The new law stipulates that to obtain a licence, companies would have to provide a security amounting to no more than 10% of the value of the investment.

Finally, the law raises the size of producer that can sell a minimum of 50kW to 100kW, and from 500kW to 1MW for the maximum.

Stamp duty

The law envisages an exemption from stamp duty for all transactions concluded under the organised wholesale market framework. This means that exchange trading would be exempt from the levy, which amounts to 0.94% of the value of the transaction. Aura Sabadus

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