1. EFET GENERAL AGREEMENT(ELECTRICITY) TURKISH EXPERIENCE
Değer Boden
BODEN LAW OFFICE
EFET Members’ Meeting
Rome, 30 March 2012

2. EFET GENERAL AGREEMENT (ELECTRICITY) TURKISH EXPERIENCE
CURRENT STATUS ON MARKET OPENING
Current Market Structure
Draft Electricity Market Law
LICENSE REQUIREMENTS
Licensing
Minimum company share capital
ANALYSIS UNDER TURKISH LAW
Language
Applicable Law
Jurisdiction and Arbitration
Formation of Individual Contracts (Written Confirmation Forms)
Individual Contracts
AMENDMENTS ON THE EFET AGREEMENT

3. CURRENT STATUS ON MARKET OPENING/ Current Market Structure Electricity Market Activities
Generation
Transmission
Distribution
Retail and Retail Services
Wholesale
Import and Export

4. Generation Turkish Electricity Generation Company (EUAS)
Private companies operating under BOO, BOT, TOOR models
Other private generators
Auto-producers, auto-producer groups

5. State owned monopoly, TEIAS
Transmission
State owned monopoly, TEIAS

6. Distribution and Retail
Division of the distribution network into 21 distribution region
A separate distribution company for each distribution region
Privatization process
Distribution companies’ exclusive authority to sell electricity to non-eligible consumers (consumers below the eligible consumer threshold- 25,000 KWh in 2012) until 1 January 2013
Separate legal entities for distribution and retail as of 1 January 2013

7. Wholesale
Turkish Electricity Wholesale Company (TETAS), state owned wholesale company:
Activities regulated
Taken over existing BOO, BOT, TOOR contracts
Purchase of generation of EUAS and/or its affiliates
Sale to the distribution companies
Private wholesale companies

8. Turkish Power Trade Market
Balancing Mechanism
Bilateral Agreements’ Market
Cross-Border Electricity Trade
Limited financial futures market

9. Balancing Mechanism Balancing power mechanism Day ahead market
Hourly settlement
Market operator, financial settlement of balancing power market, day ahead market---Market Financial Settlement Center (MFSC / PMUM) within TEİAS
System operator- real time balancing ---National Load Dispatch Center (NLDC) within TEIAS

10. Bilateral Agreements’ Market
Non regulated
Electricity sale/purchase agreements between:
Generation companies
Distribution companies holding retail license
Wholesale companies
Eligible consumers (eligible consumer threshold 25,000 KwH for 2012)
Notification of agreement quantities to the (MFSC / PMUM)

11. Cross-Border Electricity Trade
Parallel and synchronized operation of countries
Limited import and export activity at the moment
Synchronization with ENTSO-E as of 18 September 2010
Connection to Bulgarian system by Bulgarian system by two 400 kV lines
Connection with Greek system by one 400 kV line
Limited capacity allocation (third phase) started on June 2011
Third phase is determined to last for 11 months.
Amendments on the regulations such as import and export regulation were made accordingly

12. DRAFT ELECTRICITY MARKET LAW
Abolishment of PMUM and establishment of a new entity, separate from TEIAS, the Energy Markets Operation Joint Stock Company (EPIAS)
EPIAS to operate the organized wholesale markets, except for the balancing power market and ancillary services market which will still be operated by TEIAS.

13. DRAFT ELECTRICITY MARKET LAW
Definition of “organized wholesale markets”:
“day-ahead market, real-time market, balancing power market, ancillary services market, over-the-counter (OTC) markets and derivative markets where wholesale and retail sale and purchase of power and capacity, and derivate products of these will be made and which are organized and operated by an intermediary legal entity which holds a market operation license, and power markets such as balancing power market and ancillary services market which are organized and operated by TEIAS”.
Critiques on inclusion of the OTC markets into the definition of the organized wholesale markets
Stamp duty exemption for the transactions made in the organized wholesale markets (written and executed documents such as contracts, letters of commitment including a monetary amount are subject to stamp duty of %)
In other words, trade in non-organized markets are not exempt from stamp duty

14. DRAFT ELECTRICITY MARKET LAW
Merger of wholesale and retail sales activities into one license type, the “supply license”
Market Restriction for suppliers:
Under the current EML, a real person or entity through the wholesales companies that it controls cannot sell more than 10 percent of the total electricity consumed in the market during the preceding year.
The Draft Law provides that the total electrical power amount supplied by a real person or a private sector legal entity through supply companies controlled by them (wholesale or retail sale companies) cannot exceed 20% of the total electricity energy consumed in the market in the previous year.

15. LICENCE REQUIREMENTS Licensing
Separate license for each activity
No separate license requirement for import and export, but regulation of import and export activities under wholesale or retail licenses
Licensing fees and annual license fees (wholesale licensing fee circa Euro 115,000 for 2012/ annual license fee Euro cent 0,00125 per KWh sold in the preceding year)

16. Company Establishment Requirements
Joint stock or limited liability company establishment requirement
The minimum share capital requirements:
Generation companies: 20% of the envisaged investment amount
Distribution companies: 15% of the transfer or purchase price of the right to operate the distribution region
Wholesale companies: circa Euro 835,000
Retail companies: circa Euro 415,000
Retail services companies: circa Euro 83,500 for each distribution region

17. ANALYSIS UNDER TURKISH LAW Language of the Contract
Turkish Language Requirement under the Law No. 805
An agreement between two Turkish companies (national trade/bilateral agreements): Turkish language
An agreement between a Turkish company and a foreign company (cross – border trade): Foreign language
RECOMMENDATION: Turkish version to be binding between two Turkish entities

18. ANALYSIS UNDER TURKISH LAW Applicable Law
Freedom to chose a foreign law as applicable law
Court of Cassation Decision No. 1008/325: The mere fact that the parties choose a foreign applicable law constitutes a foreign element
RECOMMENDATION:
An agreement between two Turkish companies (national trade/bilateral agreements): Turkish law
An agreement between a Turkish company and a foreign company (cross – border trade): Foreign or Turkish law

19. ANALYSIS UNDER TURKISH LAW Jurisdiction and Arbitration
No restriction regarding selection of foreign courts or arbitration
Enforcement of foreign arbitral awards subject to the New York Convention
RECOMMENDATION:
An agreement between two Turkish companies (national trade/bilateral agreements): Turkish courts
An agreement between a Turkish company and a foreign company (cross – border trade): Foreign courts, arbitration or Turkish courts

20. ANALYSIS UNDER TURKISH LAW Formation of Individual Contracts
No written contract requirement for validity
Evidence with written document for transactions above circa Euro 1050
Electronic signature
Evidence agreement
RECOMMENDATION: Written individual contracts / written confirmations or evidence agreement

21. ANALYSIS UNDER TURKISH LAW Individual Contracts
Turkey specific provisions:
Notifications to MFSC (effect of notification)
Compensation provisions (difference between Contract Quantity and quantity notified to MFSC)

22. AMENDMENTS ON THE EFET AGREEMENT
Article 3.1 Inserting the phrase “unless otherwise specified in the Election Sheet” into the General Agreement and inserting the optional right to the Election Sheet regarding Article 3.1 that Individual Contracts shall be concluded in written form (additionally, specifying that the exchange of written Confirmations will be also considered as written agreement)
Broadening the definition of Network Operator in General Agreement to cover Market Operator in Annex 1

23. AMENDMENTS ON THE EFET AGREEMENT
Article 4 Specifying in the Individual Contract that the Seller is responsible for notifying the electricity quantity to PMUM and in case of a conflict between the amount in the notification made to PMUM and the Contract Quantity, the latter will prevail
Article 8 Determination of a reference price as the market price: (i) system marginal price; (ii) system day-ahead price; (iii) the average of system marginal price and system day-ahead price or (iv) the higher price among system marginal price and system day-ahead price

24. AMENDMENTS ON THE EFET AGREEMENT
Article 13.1: Inserting a standard invoicing date to Part Two of the Election Sheet (last day of the month)
Article 13.2 and 13.3: Changing the currency as TL in the General Agreement; providing the option to choose Euro in the Election Sheet
Article 17: references to the German Law to be removed
Article 22: Selection of the Turkish law and arbitration mechanism in Turkey in the Election Sheet

25. AMENDMENTS ON THE EFET AGREEMENT
Article 23: Inserting a provision in Part Two of the Election Sheet stating that notices and notifications will be made in accordance with the Article 20(3) of the Turkish Commercial Code or Article 18/3 of the new Turkish Commercial Code
Article 23: Inserting a provision in the Part Two of the Election Sheet stating that the «Turkish version shall prevail» in contracts between Turkish companies

26. Meşrutiyet Cad. No. 98/10
Beyoğlu/İstanbul
T (90) (212)
F (90) (212)