Recently, some of our clients engaged in unlicensed electricity generation activities have faced issues of non-payment by suppliers within the scope of the feed-in tariff (the “FiT”). Accordingly, we submitted a complaint petition to EMRA with a request for administrative sanctions to be imposed on suppliers which fail to make payments. The Principles and Procedures is the outcome of such request.

EMRA published the so-called Draft Procedures and Principles in respect of Unpaid Amounts for Unlicensed Generation on 13 May 2022 to regulate the measures to be taken in case of late payment or non-payment. The relevant draft is now approved by EMRA and published in the Official Gazette.

In this context, suppliers were obliged to complete the necessary measures determined in the Principles and Procedures by 30 June 2022 (since the Principles and Procedures entered into force as of 1 July 2022).

Administrative Sanctions against Suppliers for Non-Payment

The Regulation on Unlicensed Electricity Generation in the Electricity Market[1] (the “Regulation”) and the Regulation on Certification and Support of Renewable Energy Resources[2] provide that certain unlicensed generators that are connected to the power grid may sell the excess generation to the relevant suppliers within the scope of the FiT. In this regard, the relevant supplier estimates the total amount of payments due to such generators and informs Elektrik Piyasaları İşletme A.Ş. (“EPİAŞ”), the electricity market operator. Once EPİAŞ pays these amounts to the supplier, the supplier must then direct these payments to the relevant generators.

If EMRA finds that a supplier does not fulfil such payment obligations within the scope of the Regulation, EMRA may take administrative action against such supplier and inform the central settlement institution, market operator and the relevant supplier.

According to the Principles and Procedures, the following measures will henceforth be taken by EMRA against a supplier for a period to be determined by EMRA, provided that such period does not exceed 1 (one) year:

1. the relevant supplier’s net advance receivables arising from the transactions carried out in the day-ahead and intraday markets will be blocked by the central settlement institution;


2. the relevant supplier will not be allowed to submit notifications for bilateral contracts as a seller, the submitted forward-looking bilateral contract notifications regarding sales will be cancelled and the relevant parties will be informed through the market operating system;


3. If the relevant supplier is a party responsible for balancing the system within a certain group, such group will be dissolved as of the start of the first billing period following EMRA’s decision and the supplier will be prohibited to be a party in such group; and


4. If the relevant supplier is a party to a group responsible for balancing the system, it will no longer belong to such group as of the start of the first billing period following EMRA’s decision and will not be allowed to be in such group.

EPİAŞ and the relevant suppliers must notify the central settlement institution of the amounts that must be paid to unlicensed generators until the latest relevant invoice payment date.

If the blocked advance receivables amount of the supplier is less than the total amount that the supplier must pay pursuant to the Regulation, the payments will be made in the following order according to the Principles and Procedures:

1. The relevant supplier’s invoice receivables for a settlement period, if any, will also be blocked by the central settlement institution;


2. In case the blocked invoice receivables are not sufficient for the payment, the remaining unpaid amount will be paid to the unlicensed generator blocked cash collateral account at the central settlement institution by the supplier; and


3. The blocked amounts will be paid to the accounts of the relevant unlicensed generators and relevant suppliers by the central settlement institution on the eighth business day following the final settlement notification.

This Procedures and Principles will also be applied to outstanding debts of suppliers to be paid before their effective date – i.e. 1 July.

Duties and Obligations of Suppliers

Suppliers within the scope of the Principles and Procedure are responsible for:

1. notifying the central settlement institution of updated amounts to be paid and the list of payees;


2. depositing any unpaid amount into the unlicensed generator’s blocked cash collateral account if the blocked receivables and invoice receivables are not sufficient for payment;


3. opening of a collateral and cash account at the central settlement institution in a timely and accurate manner; and


4. signing an agreement with the central settlement institution to determine the parties’ rights and obligations and paying a service fee for the services to be provided by the central settlement institution.

Inspection

If EMRA determines that suppliers do not comply with the Principles and Procedures as a result of inspections carried out, an administrative fine of 1,618,333.00 TL (approximately $92,500.00 as of 19 July 2022)[3] may be imposed for the year 2022 pursuant to Article 16 of the Electricity Market Law numbered 6446.[4]

Conclusion

Our firm has been paramount in enabling this development but EMRA’s approach should be applauded as it eliminates any uncertainty in the legislation and deals with issues efficiently and competently regarding non-payment experienced by many unlicensed electricity generators operating in the electricity market. Hence, we expect suppliers to exhibit a more cautious approach towards payment.