1. INTRODUCTION
In the light of the Turkish energy market, The Energy Market Regulatory Authority (“EMRA”)1 takes on the duty duty of a mechanism which regulates and controls the energy market, imposes sanction and gives license. This situation creates the need of evaluating some principles in terms of Administrative Law, complications with applications problems in the application, rules that are interpreted and expanded with different case laws and Turkish Energy Legislation and of resolving ambiguities arising from the legislation. This study covers the evaluation of the possible objection of the investor, whose license was cancelled, to the cancellation decision in terms of legislation and Administrative Law. Futhermore it is evaluated which methods can be taken in case of an objection to the cancellation of the license,cancelled by EMRA with the resolution of the Board, which were obtained to generate energy for different energy resources such as wind, sun and fuel in Turkey2.
2. CANCELLATION OF THE ELECTRICITY PRODUCTION LICENSES BY EMRA AND LEGAL RESULTS OF THE CANCELLATION
Because of reasons lying in the Electricity Market Law (“Law”)3 and in the Electricity Market Licence Regulation (“Regulation”)4, the cancellation of the licences with the resolution of the Board by EMRA may be in question; In this kind of situation the guarantee letter that was submitted by the legal entity having the production license to the EMRA is recorded as revenue in accordance with the 7th paragraph of the 5th article of Law5. Primarily it should be stated that, in deference to the relevant legislation of the EMRA, the cancellation of any electricity production license with the resolution of the Board does not only cause effect on the cancelled license. In other words, afterall, the EMRA does not cancel general licenses with the resolution of the Board; reasons arising from the legislation may cause the cancellation of the license in different projects. During the process of the cancellation of a specific license, the production license holder can use an administrative objection mechanism against the decision of the cancellation by referring to either electricity market legislation or main principles of the Administrative Law and can seek remedies in case no result is obtained.
Cancellation reasons of the license are regulated in the Law (article 5/7) and Regulation (article 27/3). Besides, it should be known that they are regulated under some special conditions in each specific license given by the EMRA and contradiction to these conditions causes cancellation result of the license. The fact that there are no main conditions relating to fulfilling license requirements and giving license and contradiction to the obligations stipulated by the EMRA specifically for each license can be shown as a cancellation reason.
“Non-completion within investment period” is on of the cancellation reasons of the license in practice that has an important place among cancellation reasons. (13th Department of Council of State, decision dated 11.06.2007 and having basis number of 2007/2193, the decision was not published, decision transferred by, GÖNEN, Yakup, managing of Electricity Public Service in Turkey and License Method, Ankara, 2011 page. 267). In case it is determined that the electricity generating plant is not established within the construction period stated in the license or it will not be able to be established within the remaining time, the license is cancelled by the EMRA with the resolution of the Board.
Cancellation transactions are reason to some prospective results that will cause the refusal of license applications that were made afterwards. Namely, chairman and members of the Board including partners of the legal entity legal entity who have a share of 10% or more and whose license was cancelled and those who resigned within the previous year as from the cancellation date of the license will not be able to gain license for three years following the cancellation of the license, to make application for the license, to have share in the legal entities making application for the license and to take charge in the management boards6. In brief, license cancellation is an important decision which has the potential to prevent some actors to penetrate into the electricity market.
3. APPLICATION METHODS AGAINST THE CANCELLATION OF THE LICENSE
In the Turkish law, the possibility to apply for a complaint to Ombudsman is provided on the condition that the administrative application methods are exhausted pre-emptively. However, the Ombudsman Establishment may accept the applications even if the administrative application methods are not exhausted in case of occurance of damages that are hard or impossible to recover7. The Establishment concludes its examination and research at the latest within the six months starting from the application date8. It notifies the competent authority and applicant about results of its examination and research and its proposals, if any. Application methods against transaction, application period and authority to which application will be made are shown to the applicant by the Establishment. Usage of the Ombudsman method can be a good alternative to the application method to the jurisdication that necessitates long, expensive and speciality against savings of the administrative. Thus, the investor with the production license will be able to benefit from this Establishment that entered into Turkish Law recently even before applying to judical remedy if he wishes.
In case the EMRA does not abide by the decision of Ombudsman following the Ombudsman, the entering of a lawsuit regarding the cancellation of the license will be able. In the law, it is stipulated that suits which were brought by the EMRA for cancellation against all resolutions of the Board will be tried in the Council of State as court of first instance. Hence, those whose license was cancelled will be able to object to the cancellation arising from the electricity market legislation and will be able to use some concepts formed with the local case laws of the Council of State against the cancellation. The most important one is the concept of the force majeure, which was stipulated as a valid reason against the cancellation either in the practical life or in the electrical market legislation and formed to remove any administrative procedure in the meaning of the Administrative Law; it is used in case it cannot be established within the construction period by the investor and which is the main cancellation reason.
4. SITUATIONS WHICH ARE CONSIDERED AS FORCE MAJEURE
In case the investments are not completed within time or the investor asserts a claim for force majeure by understanding that they will not be able to be completed because of other cancellation reasons, the EMRA should consider this in terms of Law and Regulation. In such evaluations, 3rd paragraph of the 24th article of the Regulation should be considered so that the EMRA determines whether there is any force majeure or not. The said article, within the period of establishment of the production facility, includes regulations about the fact that the license can be amended, provided that the period for completing the plant is extended in case (i) valid reasons not arising from the force majeure and license owner occur, (ii) the said situations directly affects or are such as to affect the building of the production facility, (iii) application is made to the Establishment with reasons and documents within the period of completing the plant stated in the license provided that the period for completing the plant is extended.
It is regulated in the 35th article of the Regulation that obligations of the pre-license and license owner arising from the relevant legislation may be postponed or suspended with the resolution of the Board in case of force majeure, at the rate that they were affected and until effects of the force majeure are removed, the Board may decide to remove the obligation of the pre-license and license owner in case it is understood that the said obligations will not be able to be fulfilled. Relating to the fact that which situations are considered as force majeure, criteria of the fact that the situation shall not be prevented, avoided and stipulated although the affected party showed necessary attention and took all precautions and this situation should prevent that the affected party fulfills obligations within the scope of the relevant legislation was regulated in the 2nd paragraph of the 35th article of the Regulation.
It is stated in the 3rd paragraph of the 35th article of the Regulation including but not limited to that (i) Natural disasters and epidemics, (ii) Wars, nuclear and chemical fall outs, civil commotions, attacks, terror movements and sabotages (iii) Strike, lockout or other officer and labor movements will be considered as force majeure. According to the 4th paragraph of the 35th article, the license owner is obliged to notify the EMRA in written about the beginning date and nature of the force majeure, effects to obligations within the scope of relevant legislation and about the application that includes the estimated period for removing the effects so that the decision for postponing, suspending or removing obligations within the scope of relevant legislation can be made. Demands that are within this scope will be concluded with the resolution of the Board within sixty days starting from the date when necessary information on the application and documents are completed.
In the regulation of the 35th article of the Regulation, it is stated that licenses of the legal entities not fulfilling obligations within additional period of 6 months apart from the force majeure will be cancelled. It is understood wording of the article that force majeure situations are not limited and that new force majeure situations can be added to the said situations that are mentioned in the article according to the qualification of concrete case. Relating to this situation, opinions of the Council of State in which it will evaluate delays to be attributed to administrations in completing necessary permissions before the construction within the scope of force majeure can be given as sample. In the event that is subject to the decision of the 13rd Department of the Council of State dated 15.10.2008 and having basis number of 2008/8245 for ceasing enforcement, “the period for completing the plant” of eighteen months that was given to plaintiff company by the EMRA was increased to thirty months by being extended twice. The third demand which was made for extending the period with claim of the force majeure was rejected. The Council of State stated that it gave discretionary power to the defendant administration on extending the period for completing the plant and determining expiration date in a suit that was brought via demand the cancellation of this decision and cessation of its execution, however, stipulated that this authority is not used in accordance with the law. Although correspondence and studies between executive organs that were realized so as to bring the investment in compliance with necessary procedures caused a recent time loss, it was decided to cease the execution by finding the fact that the administration decided to cancel the license which was contrary to the law by the Council of State.
The Council of State found decision of the EMRA on refusal of its demand for extending the period and cancellation of the license against the law in its similar decision by evaluating the situations that it is not possible to start construction because of the expropriation and construction plan change as per changing conditions. In discrepancy mentioned in the case law, RES turbine coordinates to be installed were changed and the need for the expropriation and construction plan to change occurred as a result of this and it was not possible to start the construction upon demand of the Air Forces Command for changing the turbines by stating that the turbines having a height of 76 meters to be installed in Bandırma a district of Balıkesir are contrary to the flight safety within the frame of “International Airport Mania Criteria”. The Council of State found the followings contrary to the law; all these delays whose most part arises from the administration were not evaluated within the scope of force majeure, period for the completing the plant was not extended and the license was cancelled by the EMRA (13th Department of Council of State, decision dated 22.06.2009 and having basis number of 2008/2501 and decision dated 2009/6904)
In the light of decisions that were taken, the fact that the decision was made for cancelling of the license without waiting for obtaining results of the administrative applications of license owners within additional period of 6 months allowed by the law and within the frame of changing parameters shows that force majeure situations stipulated in the law were ignored and constitutes contradictions to the law. In parallel with the said decisions of the Council of State, it was stated that “delays arising from the administrations will not be prevented even if relevant legal entity showed necessary attention and took all the precautions, in case they indispensably arise from the relevant administration, they should be considered as force majeure” in harmony with the Council of State, upon demand of the Department of Electricity Market in the Civil Department for negotiation whether the fact that delays in the period of completing necessary permission and approvals within the scope of 15th provisional article of the Regulation arise from the administration can be considered as force majeure or not9. And relating to criteria whether the license holder showed “necessary attention”, it was stated that “…although there are confidential military radars during the license application, it is thought that the Company fulfilled its obligation of “acting as prudent merchant” that can be concreted as a necessity for researching characteristics of the field on which it will make investments before its license application via correspondences that it made with the above mentioned establishments, (this situation) can be considered as force majeure."
The Importance of that opinion in the application of the Civil Department is significant. Thus, it can be concluded by relying on this opinion that force majeure situations do not only arise from the Law and Regulation and that it is necessary to separately and comprehensively evaluate each event according to their qualifications. The conclusion from the said decisions and opinions is that it is necessary for the investor as a prudent merchant to immediately show necessary attention and effort relating to determination of any subject that may affect project the and pose an obstacle to the investment during the investment. When considering decisions of the EMRA and Council of State, it is evaluated that the defense of the investor that can document the effort given by the investor for the force majeure will be approved by the EMRA and Council of State.
5. CONCLUSION
It is seen that the EMRA recently often uses its authority for cancellation which arise from the Electricity Market Law and Electricity Market License Regulation in case no satisfactory progress report is submitted after the investor obtains electricity production license. Since delays in taking decision of the administrative authorities cause that no progress, which is anticipated by the investor, is made in practice, such situations will be able to be shown as force majeure for the investor who is the owner of a license. Considering the decisions of the EMRA, in case the investor shows necessary attention for the cancelling occurrence of the force majeure so that the investor can demand for cancellation by basing on a concept of force majeure, it will be possible that the decision for the cancellation is legally invalid.
FOOTNOTE
1 It was established under the name of “Electricity Market Regulatory Authority” via Electricity Market Law numbered 4628 which was published in the Official Gazette dated 03.03.2001 and having repeated number of 24335 and took the name of “Energy Market Regulatory Authority” via the Law on making amendment on the Electricity Market Law and Natura Gas Market numbered 4646 which was published in the Official Gazette dated 02.05.2001 and having repeated number of 24390.
2 The Establishment uses its authorities via Energy Market Regulatory Authority while doing its duties arising from the Law. Representative and decision making body of the Establishment is the Board.
3 Electricity Market Law numbered 6446 that was published in the Official Gazette dated 30.03.2013 and having repeated number of 28603.
4 Electricity Market License Regulation that was published in the Official Gazette dated 02.11.2013 and having repeated number of 28809
5 Article 5/7 of the Electricity Market Law: “Guarantee letter is obtained by the legal entity that made application for the production license in a way not to exceed ten percent of the investment amount according to quality and magnitude of the production facility demanded to be established provided that it is recorded as revenue in case the said facility is not established within construction period stated in the license of the production plant following fulfilling prelicense requirements. In case the production facility is not established within the construction period stated in the license of the production facility apart from valid reasons which do not arise from force majeure and license holder or it is determined that it will not be able to be established within remaining time, license is cancelled and guarantee letter is recorded as revenue.”
6 This matter is regulated in article 27/4 of the Electricity Market License Regulation.
7 Ombudsman Establishment was constituted with decision of Public Inspection Establishment Law numbered 6328 which was published in the Official Gazette dated 29.06.2012 and having repeated number of 28338 and this subject related to the application was regulated in 4th paragraph of the 17th article of the Law.
8 The Public Inspection Establishment Law numbered 6328, article 20: “The Establishment concludes its examination and research within six months at the most as from the application date.” ,
9 Civil Department of the EMRA, its opinion dated 06.05.2014 and numbered 15901.
