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Legal Alerts
11/09/2021 https://www.esin.av.tr/wp-content/themes/esin/images/esin.jpg

Public Offerings Incentivized in the Electricity Distribution Sector

Legal Alerts
Capital Markets
Energy, Mining & Infrastructure

 

The Energy Market Regulatory Authority (“EMRA”) published its decision dated 3 December 2020 (“Decision“) in the Official Gazette on 8 December 2020. The Decision determines the general quality indication rates applicable for electricity distribution and authorized supply companies quoted on the stock exchange. The general quality indication is a variable used as a performance incentive in the formula of revenue cap, which is utilized as a basis in the calculation of tariffs.

Pursuant to the Decision, the general quality indicator rates will be

(i)      1% for distribution and authorized supply companies quoted on the Borsa Istanbul; and
(ii)     0.3% for distribution and authorized supply companies whose direct shareholders are quoted on the Borsa Istanbul

as of the end of any year during the fourth implementation period covering the years 2021-2025.

The Decision also provides an additional formula in order to encourage distribution companies to use internal resources for the performance of their activities. The formula increases the above stated general quality rates when the external services costs are equal to or less than the expenses for internal resources.

The EMRA’s move to incentivize the public offerings of electricity distribution companies comes after the tax changes incentivizing public offerings, which we discussed in our legal alert dated 23 November 2020.

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