Non-official translation


Decree 1398/92.

Buenos Aires 6 August ,1992

IN VIEW OF the enactment of Law No 24.065 and File No 751.034/92 of the Register of the Secretariat of Energy, and

WHEREAS:

That it is absolutely necessary to regulate some of the provisions set forth in such law for the purpose of immediate enforcement.

That, in its turn, given the regulation criteria stated in Law No 24.065 and its complementary character to Law 15.336, it is necessary to specify the scope of its contents, particularly, in relation to the characteristics of the distribution public utility concession as well as the basis for calculation of the Hydroelectric Royalty ruled by Section 43 of Law No 15.336, amended by Law No 23.164, since Section 39 of Law No 15.336 is repealed by Section 90 of Law No 24.065.

That the NATIONAL EXECUTIVE POWER is authorized to order this action by virtue of the powers conferred under Section 67 of Law No 23.696, under Section 91 of Law No 24.065 and under Section 86 paragraph 2) of the NATIONAL CONSTITUTION.

Therefore
THE PRESIDENT OF THE ARGENTINE NATION
DECREES:

Section 1° –The “Regulation of Law No 24.065”, which as Annex I forms part of the present Decree, is hereby approved.

Section 2° – The “Regulation of Section 18 and Section 43 of Law No 15.336 , amended by Law No 23.164”, which as Annex II forms part of the present Decree, is hereby approved.

Section 3 – This decree shall come into effect as of the date of its publication.

Section 4°-To be communicated, published, and submitted to the National Official Registry and filed.
MENEM - Domingo F. CAVALLO

ANNEX I
REGULATION OF LAW No 24.065

CHAPTER I
Object

SECTION 1° –The electricity distribution activity shall be considered to be of a public utility character due to its condition of natural monopoly. Its regulation shall consist of fixing the tariffs to be applied and controlling the quality of the service provision.

Transmission activity shall be characterized as a public utility due to its condition of natural monopoly, but sharing nevertheless the rules inherent to the market because of its special characteristics regarding its expansion. Such conditions shall be taken into account by the SECRETARIAT OF ENERGY on laying down specific regulation of said activity and by THE NATIONAL ELECTRICITY REGULATORY AGENCY on exercising the powers conferred by Law No 24.065 upon the Agency.

Electricity generation activity, since it responds to free interaction of supply and demand, shall be only regulated on those aspects and circumstances which affect the general interest.
CHAPTER II

General Policy and Agents

SECTION 2° - Not regulated.
CHAPTER III

Transmission and distribution

SECTION 3° –THE NATIONAL EXECUTIVE POWER shall take the necessary measures in order to achieve, in the shortest time possible, the transfer to the Private Sector of the electricity transmission and distribution activities currently in charge of AGUA Y ENERGIA ELECTRICA SOCIEDAD DEL ESTADO, HIDROELECTRICA NORPATAGONICA SOCIEDAD ANONIMA and SERVICIOS ELECTRICOS DEL GRAN BUENOS AIRES SOCIEDAD ANONIMA, pursuant to the terms and conditions of Law No 23.696 and Law No 24.065.
.
The SECRETARIAT OF ENERGY and the NATIONAL ELECTRICITY REGULATORY AGENCY shall implement any necessary mechanisms in order to ensure that the activities mentioned in the above paragraph remain under the responsibility of the Private Sector.
CHAPTER IV

Generators, transmitters, distributors and large users

SECTION 4° – Not regulated.

SECTION 5° – The performance of thermal electricity generation activity shall not require prior Authorization from the NATIONAL EXECUTIVE POWER. On the other hand, hydroelectric generation activity shall be subject to an exploitation concession, pursuant to the terms and conditions stated in Section 14 of Law No 15.336.

SECTION 6° - Not regulated.

SECTION 7°- Not regulated.

SECTION 8° – The reference value for the electricity received as a payment for hydroelectric royalty or any other service, for the purpose of its commercialization in the wholesale Spot Market, shall be that corresponding, in such market, to the concessionaire of the hydroelectric power station where such payment originated.

SECTION 9° – No holder of a distribution concession shall be allowed to own generation units. If the holder is a corporation, its shareholders may own generation units, either as individuals or as a juridical person constituted for such purpose.

SECTION 10° – “Large user” shall mean any user who, due to its consumption modality, may enter into contracts for the sale and purchase of bulk electricity with generators defined in Paragraph a) of Section 35, Law No 24.065, being subject to national jurisdiction when said contracts are executed through the ARGENTINE INTERCONNECTED SYSTEM.

The power to specify the power and energy modules and other technical parameters which characterize the “large user” shall be delegated to THE SECRETARIAT OF ENERGY.

Cooperative Entities in charge of providing electricity public utility shall be equated with “large users” for the purpose of determining their participation in the WHOLESALE ELECTRICITY MARKET.
CHAPTER V

Common Provisions to transmitters and distributors

SECTION 11° – The NATIONAL ELECTRICITY REGULATORY AGENCY shall establish the magnitude of a facility requiring its qualification of necessity in order to be operated and/or constructed, and shall duly publicize this specification.

SECTION 12° – Any individual who intends to object to the construction and/or operation of electricity distribution or transmission facilities lacking the certificate regulated by Section 11 of Law No 24.065 shall previously demonstrate having a subjective right or legitimate interest affected before the NATIONAL ELECTRICTY REGULATORY AGENCY.

SECTION 13 – Not regulated.

SECTION 14 – Not regulated.

SECTION 15 – THE NATIONAL ELECTRICTY REGULATORY AGENCY shall submit, through the SECRETARIAT OF ENERGY, within a period of ONE HUNDRED AND TWENTY (120) DAYS from the start of its activities, a project of rules and regulations establishing the procedure to be applied in order to intervene and resolve the issues regulated in this Chapter.

SECTION 16 – Not regulated.

SECTION 17 – The SECRETARIAT OF ENERGY shall determine the norms for the protection of watersheds and associated ecosystems to be observed by the electricity generators, transmitters and distributors, concerning physical infrastructure, facilities and operation of their equipments.

SECTION 18 – Not regulated.

SECTION 19 – THE NATIONAL ELECTRICITY REGULATORY AGENCY shall be empowered to characterize, in each particular case, whether or not a situation constitutes an act of unfair competition or abuse of dominant position within the market.

SECTION 20 – Not regulated.
CHAPTER VI

Provision of Services

SECTION 21 – THE NATIONAL EXECUTIVE POWER shall authorize only those electricity distribution concessions that establish regulation on the basis of the criteria stated under Section 1 of this decree and that stipulate penalties for noncompliance with the service quality rules that affect the continuity of provision of service.

Distributors shall meet any demand for electricity service during the term of their concession contracts. Distributors shall be responsible for satisfying any demand increase in their concession area, thus, they shall assure themselves of supply by entering into contracts for the sale and purchase of bulk electricity as deemed convenient. Insufficient electricity supply shall not be invoked by them to be exempted from responsibility for noncompliance with service quality rules stated in their concession contracts.

Under no circumstances shall the National State be responsible for the provision of lacking electricity to supply the present or future demand of the distribution concessionaire.

The aforementioned concession contracts shall particularly comply with the regulations regarding tariffs under Paragraphs a), b) and c) of Section 40, under Section 41 and under Paragraphs c) and d) of Section 42 of Law No 24.065, with the basic guidelines defined in regulations under Paragraphs b), d) and f) of Section 56 of said law, as well with the procedures provided for in Sections 51 and 52 of the above mentioned law.

SECTION 22 – THE NATIONAL ELECTRICITY REGULATORY AGENCY shall specify the criteria for exercising the right of open access to transmission capacity of the transmitter and/or distributor systems.

SECTION 23 – Not regulated.

SECTION 24 – Not regulated.

SECTION 25 – Not regulated.

SECTION 26 – The criteria for determining minimum quality specifications for the electricity to be used in the transmission and /or distribution systems shall be subject to the technical rules established for such purpose by the NATIONAL ELECTRICITY REGULATORY AGENCY.

SECTION 27 – Adequate service to users shall mean any service provided in complete accordance with the service quality rules defined in the specific concession contract and with those established for such purpose by the NATIONAL ELECTRICITY REGULATORY AGENCY.

SECTION 28 – Not regulated.

SECTION 29 – Not regulated.
CHAPTER VII

Limitations

SECTION 30 – Not regulated.

Section 31.- THE SECRETARIAT OF ENERGY shall control that, as a result from the privatization method set forth in Sections 93, 94 and 95 of Law No. 24.065, the division of the electricity activity currently in charge of the companies AGUA Y ENERGIA ELECTRICA SOCIEDAD DEL ESTADO, HIDROELECTRICA NORPATAGONICA SOCIEDAD ANONIMA and SERVICIOS ELECTRICOS DEL GRAN BUENOS AIRES SOCIEDAD ANONIMA, into generation, distribution and transmission is carried out in such a manner so as to prevent the WHOLESALE ELECTRICITY MARKET from becoming a monopoly or an oligopoly. Likewise, the above mentioned Secretariat shall guarantee free competition in said ambit, and shall issue, for such purpose, all the necessary rules to avoid that the control of companies in charge of these activities is concentrated in only one economic group.

The SECRETARIAT OF ENERGY shall be empowered to authorize distributors, generators and/or large users to build a transmission line for private use, at their request and at their own expenses. Likewise, said Secretariat shall establish, in said action, the rules governing the type and manner of the transmission line operation. Said transmission concession for private use shall not constitute a public utility.

SECTION 32 - Not regulated.

SECTION 33 - It shall be stipulated that the condition of non-endorsable, under the terms of Section 33 of Law No. 24.065, shall be only required for the percentage of the capital stock which determines the controlling interest of a distribution or transmission company.

CHAPTER VIII

Exports and imports

SECTION 34 – Not regulated.
CHAPTER IX

Load Dispatch

SECTION 35 – The SECRETARIAT OF ENERGY shall define the concepts of “ARGENTINE INTERCONNECTED SYSTEM” and “WHOLESALE ELECTRICITY MARKET” when issuing the rules governing the NATIONAL LOAD DISPATCH CENTER.

SECTION 36 – Not regulated.

SECTION 37 – The SECRETARIAT OF ENERGY shall fix the Unified Fund budget arising out of Section 37 of Law No. 24.065 for the fiscal year 1992 and shall determine monthly the distribution criteria. As from fiscal year 1993, said Secretariat shall be empowered to establish monthly the distribution criteria of said fund in accordance with the uses determined in the above mentioned section.

SECTION 38– Not regulated.

SECTION 39 – Not regulated.
CHAPTER X

Tariffs

SECTION 40 -

Paragraph a) The cost inherent to distribution for each voltage level that will integrate the concession tariff shall consist of:

1. - the marginal or economic cost of grids made available to the user, affected by coefficients representing the technical losses associated with the different voltage levels;

2 - the operation and maintenance costs, considering as such the expenses inherent to operation and maintenance of the grids made available to the user, and

3 - the marketing expenses, which includes measurement expenses and administrative expenses related to customer care.


Paragraph b) Distribution costs shall be assigned to the different tariff categories taking into account:

1. - the voltage level at which the supply is provided, and
2. - the consumption modality of each type of user, taking into account its participation in load peaks of the distribution grids.

Paragraph c) the purchase price of bulk energy in the WHOLESALE ELECTRICITY MARKET shall be added to the cost inherent to distribution, taking as reference the price corresponding to the Spot Market. The above mentioned purchase price shall be multiplied by a factor representing the technical losses associated with its distribution system according to the voltage level of supply.

In the event that the distributor buys the whole or part of bulk electricity, by means of freely agreed upon contracts, the price to be passed to end users tariffs shall be the price corresponding to the Spot Market.

The prices of the contracts for the sale and purchase of bulk electricity transferred to the successful bidders of the bidding process held in order to privatize the distribution activity in charge of the SERVICIOS ELECTRICOS DEL GRAN BUENOS AIRES SOCIEDAD ANÓNIMA shall be wholly passed to end users’ tariff. In the event that amendments to said contracts are agreed on, after the mentioned transfer, these contracts shall be equated with the freely agreed upon contracts, for the purposes regulated in this paragraph.

Each distributor shall pass to the end users’ tariff the price corresponding to the Spot Market (whether purchase is carried out in said market or through freely agreed upon contracts) and/or the price of the contracts transferred in the privatization processes referred to in the preceding paragraphs, considering the proportion of the total purchase represented by each.

Paragraph d) Not regulated.

SECTION 41.- Rate of return shall be considered as the discount rate determined by the NATIONAL ELECTRICITY REGULATORY AGENCY for the calculation of the costs inherent to distribution.

To that end, said Agency shall be consistent with the principles defined in Section 41 of Law No 24.065.

SECTION 42.- The Tariff Regime and the Tariff Table to be established in the concession contracts of electricity distribution and commercialization, to be granted as a result of the privatization of said activity under the terms and conditions of Section 95 of Law No 24.065, may be applicable during an initial period of TEN (10) years, in order to provide an adequate frame of reference to the provision of the public utility .

Paragraph a) Tariff reductions in favour of retired persons whose income is inferior to the amount to be determined for that purpose by the NATIONAL ELECTRICITY REGULATORY AGENCY, of non-profit organizations that serve the public good and duly registered as such and/or of electro-intensive industrial sectors may remain in effect, only if a specific budget item is allotted to compensate the concessionaire for the difference in revenues that such subsidy represents. In such cases, said Agency shall proceed to obtain validation of the respective budget items from the government area in charge of safeguarding the subsidized social sector and shall control that the distributor applies the differential tariff regime properly.

Paragraph b) Not regulated.

Paragraph c) The NATIONAL ELECTRICITY REGULATORY AGENCY shall consider, in principle, the following factors aimed to stimulate efficiency and investment in construction and maintenance of facilities:

1. - Setting of the tariff tables taking into account normal levels of technical losses, and

2. - Application of discounts on the bills to end users in the event that the distributor fails to comply with the service quality rules set forth in its concession contract.

Paragraph d) The tariff adjustments referred to in Paragraph d) of Section 42, Law No 24.065, shall allow to reflect the variations in the purchase price of bulk electricity, according to the concept defined under Paragraph c) of Section 40 of said Law and to maintain constant the costs inherent to distribution determined in accordance with Paragraphs a) and b) of the regulation of the aforesaid section.

Paragraph e) Not regulated.

SECTION 43. – Upon expiration of the initial term referred to in the regulation of Section 42 of Law No. 24.065, THE NATIONAL ELECTRICITY REGULATORY AGENCY shall again fix tariffs for successive FIVE (5) year periods.

SECTION 44 – Not regulated.

SECTION 45. Together with the tariff submission, the distributor shall enclose all the information on which its proposal is based and, in turn, shall supply any other information that may be requested by the NATIONAL ELECTRICITY REGULATORY AGENCY.

In order to study the tariff proposal submitted by the distributor, said Agency shall hire the services of an independent consulting group with recognized experience in the Sector which shall make an alternative proposal. The NATIONAL ELECTRICITY REGULATORY AGENCY, based on both proposals, shall establish the tariff table for the next FIVE (5) years.

SECTION 46 – Not regulated.

SECTION 47 – Not regulated.

SECTION 48. If the tariff applied ex officio by the distributor, as a consequence of the provisions of Section 47 of Law No.24.065, is qualified as unfair and unreasonable by the NATIONAL ELECTRICITY REGULATORY AGENCY, the distributor shall apply the previous tariff values, as from the moment of the notification of such qualification until the expiration date of the term specified in the aforementioned Section.

SECTION 49 – Not regulated.
CHAPTER XI

Awards

SECTION 50 – Not regulated.

SECTION 51 – The NATIONAL ELECTRICITY REGULATORY AGENCY shall submit to the NATIONAL EXECUTIVE POWER, through the SECRETARIAT OF ENERGY, its proposal of extension of the concession term or negotiation of a new concession. Said Secretariat shall resolve this issue within a term of THIRTY (30) working days, having the authority to reasonably refuse such request, in which case shall instruct the mentioned Agency to begin a process for the selection of a new concessionaire, according to the terms and conditions specified for said Secretariat.

If the SECRETARIAT OF ENERGY approves the proposal made by the Agency, the SECRETARIAT shall submit the proceedings to the NATIONAL EXECUTIVE POWER for approval.

SECTION 52. – THE NATIONAL ELECTRICITY REGULATORY AGENCY shall submit its refusal of extension of the concession term or new concession to the SECRETARIAT OF ENERGY. The Agency shall be authorized to start the process for the selection of a new concessionaire, in accordance with the terms and proceedings to be established for that purpose by the SECRETARIAT OF ENERGY, only after being notified of said Secretariat‘s action ratifying its proposal.

Said Agency shall submit the award proposal resulting from the new selection process referred to in the above-mentioned paragraph, to the SECRETARIAT OF ENERGY which, if it approves such proposal, shall submit it to the NATIONAL EXECUTIVE POWER for formal approval.

SECTION 53.- Not regulated.

CHAPTER XII

National Regulatory Agency

SECTION 54.- Not regulated.

SECTION 55 .- The MINISTRY OF ECONOMY AND PUBLIC WORKS AND SERVICES shall be empowered to determine and transfer to the NATIONAL ELECTRICTY REGULATORY AGENCY movable and immovable property belonging either to the National State or to wholly state-owned companies of the National Electricity Sector.

SECTION 56.-

Paragraph a) Not regulated.

Paragraph b) THE NATIONAL ELECTRICITY REGULATORY AGENCY shall:

b.1. – As a comptroller of the electricity distribution concessionaire, concentrate on the quality of the service provided, considering, for this purpose, the following guidelines:

b.1.1. - Quality of service shall be defined as the set of rules specifying the quality of electricity to be supplied (product) and of the service to be provided, from the technical and the commercial point of view.

The quality of the product supplied shall be related to the voltage level at the feeding point and to its disturbances (rapid voltage variations and slow voltage drops of voltage and harmonics).

The quality of technical service offered shall take into account the frequency and duration of supply interruptions.

The quality of service from a commercial point of view shall be measured taking into account the length of time taken by the concessionaire to respond to requests for service connection, billing mistakes and estimated billing frequency.

b.1.2- The distribution concession contract shall clearly establish the service quality rules which will govern the conditions of its provision. Likewise, said contract shall fix the limits within which a service shall be considered satisfactorily rendered and this level shall be taken into account to regulate the penalties for non-fulfilment of such rules.

b.1.3 - The concessionaire shall determine, according to its own criteria, the necessary works and inversions in order to fulfil the pre-established quality level.

b.1.4. – The Regime of Penalties shall be established according to the economic losses suffered by the user due to unsatisfactory service provision.

Consequently, the fine for non-fulfilment of quality rules of satisfactory technical service shall consists in the application of discounts in the bills of the users that have been affected, which shall be calculated based on the cost that not supplied energy represents for each group of users.

b.1.5. -THE NATIONAL ELECTRICITY REGULATORY AGENCY shall implement the mechanisms for the control of the faithful observance of pre-established guidelines. To that end, the Agency shall instruct the concessionaire to:

b.1.5.1 - Carry out measurement campaigns and gather information on load curves and voltage levels.

b.1.5.2. - Organize a database with information on contingencies, which shall be linkable to databases of topology of the grids, billing and results from the measurement campaigns, whose design shall be instructed by the Agency.

b.2. - The Supply Regulations shall mainly contain the conditions of supply; the rights and obligations of the user, the rights and obligations of the concessionaire; provisions concerning cases where the concessionaire shall be authorized to cut off or discontinue the supply, establishing, for such purposes, the proceeding to be followed; manner and terms for the reconnection of service and penalties for non-fulfilment of the obligations defined in these Regulations.

Paragraph c) Not regulated.

Paragraph d) THE NATIONAL ELECTRICITY REGULATORY AGENCY, far enough in advance of the expiration date of the fourth year of each effective term of the distributor’s tariff table, referred to in Section 43 of Law No 24.065, shall define the basis for the calculation of the distribution tariffs, in accordance with the following general principles:

d-1 - The costs inherent to distribution, pursuant to the provisions of Paragraph a) of Section 40 of Law No 24.065, shall reflect the marginal or economic costs of the grid’s development.

d.2. The purchase price of bulk electricity in the WHOLESALE ELECTRICITY MARKET, whose concept is defined in Paragraph c) of Section 40, Law No 24.065, shall be added to the value resulting from the concept defined in the preceding paragraph.

d.3. -Tariffs shall be differentiated according to the consumption modality and to the voltage level at which the supply is provided.

Paragraph e) Not regulated.

Paragraph f) The terms and conditions of selection for granting the electricity distribution concessions shall be based upon the general principles set forth in the Bid Specifications to be used in order to privatize the distribution activity in charge of SERVICIOS ELECTRICOS DEL GRAN BUENOS AIRES SOCIEDAD ANONIMA, and, particularly, the Annex corresponding to the Concession Contract shall meet the principle of dividing the concession term into management periods, as well as observe mechanisms ensuring that the National State shall not reacquire, for valuable consideration, the assets assigned to the service and that said assets shall be transferred successively to new suppliers of the service.

Paragraph g) Not regulated.

Paragraph h) Not regulated.

Paragraph i) Not regulated.

Paragraph j) In order to hold a public hearing THE NATIONAL ELECTRICITY REGULATORY AGENCY shall implement mechanics of users’ organic representation, which shall be applicable to all those cases where the decisions of Agency affect their general interest, particularly, where dealing with tariff tables or issues on quality of service.

Paragraph k) “Specific rules” in the sense in which they are referred to in Paragraph k) of Section 56 of Law No 24.065, shall be considered as those laws specifying safety technical rules linked to the object regulated by said paragraph. These laws shall be applied by the NATIONAL ELECTRICITY REGULATORY AGENCY.

Paragraph l) Not regulated.

Paragraph m) Not regulated.

Paragraph n) Not regulated.

Paragraph ñ) Not regulated.

Paragraph o) Not regulated.

Paragraph p) Not regulated.

Paragraph q) Not regulated.

Paragraph r) Not regulated.

Paragraph s) Not regulated.

SECTION 57.- The remuneration of the NATIONAL ELECTRICITY REGULATORY AGENCY’s Board of Directors shall be fixed by a decree issued by the NATIONAL EXECUTIVE POWER.

SECTION 58. - For the purposes of the appointment of the members of the NATIONAL ELECTRICTY REGULATORY AGENCY’s Board of Directors, the SECRETARIAT OF ENERGY shall define the profile of each member of the Board of Directors, shall carry out a selection process and shall determine, in each case, which of the positions to be filled shall be proposed by the FEDERAL ELECTRICITY POWER COUNCIL, among those applicants for such positions who had previously been selected as “Eligible Candidate”.

The above-mentioned selection process shall start by means of an open public competition duly published in newspapers of general circulation and the rules stipulated for the Regime of Positions with Executive Functions approved by Decree No 994 of 27 May, 1991 shall be applicable to it.

The applicants’ backgrounds shall be evaluated based upon their submitted curricula vitae and upon personal interviews conducted by specialists in order to determine those who meet the minimum requirements defined in the call for nominations for the position. The result of the evaluation shall be submitted to a Selection Committee composed by representative persons, who due to their conditions guarantee impartiality and independence of judgment in their pronouncement. The preceding mechanism shall be used to select the minimum number of applicants to be defined by the SECRETARIAT OF ENERGY for each position, and those selected applicants shall be considered as “Eligible Candidates”.

In the event that there is no eligible candidate to fill a certain position, the above mentioned procedure shall be repeated, only for such position. The procedure shall also be repeated if the Secretariat of Energy deems it necessary, for those positions with only one eligible candidate. Such circumstance shall not hinder the continuation of the appointment procedure for the rest of the members of the Agency’s Board of Directors.

The Secretariat of Energy and the Federal Electricity Power Council shall propose to the National Executive Power the list of members of the Agency‘s Board of Directors that may correspond to them, among the eligible candidates.

SECTION 59.- Prior to the appointment, the NATIONAL EXECUTIVE POWER shall communicate the list of those who shall be appointed as members of the Agency’s Board of Directors as well as the grounds for such decision to the Committee of the NATIONAL LEGISLATIVE POWER referred to in Section 59 of Law No 24.065.

Upon the completion of the thirty (30) calendar day period given to the aforesaid Committee to issue an opinion, as established in the section mentioned in the above paragraph, the NATIONAL EXECUTIVE POWER shall immediately order the administrative action for the respective appointment.

SECTION 60. Not regulated.

SECTION 61. Not regulated.

SECTION 62. Not regulated.

SECTION 63. Not regulated.

SECTION 64.- THE NATIONAL ELECTRICITY REGULATORY AGENCY, within a thirty (30) working day period as from the administrative action of appointment of the members of the Board of Directors, shall submit to the SECRETARIAT OF ENERGY for approval, a rule of general character regulating its financial and accounting management.

SECTION 65. Not regulated.

SECTION 66. Not regulated.

SECTION 67. Not regulated.

SECTION 68. Not regulated.

SECTION 69. Not regulated.
CHAPTER XIII

National Electricity Fund

SECTION 70.- WHOLESALE ELECTRICITY MARKET shall be characterized, for the purposes of determining the taxable event levied by the NATIONAL ELECTRICITY FUND only, as any purchase of bulk electricity made either within the territory of the ARGENTINE REPUBLIC or as a result of an importation by those Large Users and Distributors who contract directly with a Generator and/or through a REGIONAL INTERCONNECTED SYSTEM or through the ARGENTINE INTERCONNECTED SYSTEM.

The withholding agents for the tax created under Section 70 of Law No.24.065 shall be the generator who sells its energy through freely agreed upon contracts or through REGIONAL INTERCONNECTED SYSTEMS, the NATIONAL LOAD DISPATCH CENTER when transactions are made through the ARGENTINE INTERCONNECTED SYSTEM or the Distributor or Large User when they import electricity.

The SECRETARIAT OF ENERGY shall control that the Subsidy Fund for Regional Compensation of Tariffs to End Users’ allocation created under Section 70 Paragraph b) of Law No 24.065 is distributed among the Provinces that have adhered to the tariff principles set forth in the above mentioned law. Furthermore, said Secretariat shall verify that Provinces that have adhered to such tariff principles do actually apply them when determining end users tariffs within their jurisdiction.
CHAPTER XIV

Jurisdictional Control and Procedures

SECTION 71.- Not regulated.

SECTION 72- The actions ordered by the NATIONAL ELECTRICTY REGULATORY AGENCY, as a consequence of the powers granted by Section 72 of Law No. 24.065, shall be of jurisdictional nature.

SECTION 73.- Not regulated.

SECTION 74.-

Paragraph a) The approval by the NATIONAL ELECTRICTY REGULATORY AGENCY of the tariff table referred to in Section 45 of Law No 24.065 and its regulations are deemed to be linked to the convenience, necessity and general utility of the electricity distribution service.

Paragraph b) Not regulated.

SECTION 75.- Not regulated.

SECTION 76.- The Appeals lodged for review of the resolutions of the NATIONAL ELECTRICITY REGULATORY AGENCY shall be definitively resolved by the SECRETARIAT OF ENERGY, and its pronouncement shall constitute the exhaustion of administrative remedies.

For the purposes of determining the scope of the comptroller function of the SECRETARIAT OF ENERGY, regarding each of said Agency’s actions that were appealed, said SECTRATARIAT shall previously characterize the action as being of jurisdictional nature or not.

CHAPTER XV
Contraventions and Penalties

SECTION 77.- Not regulated.

SECTION 78.- Not regulated.

SECTION 79.- Not regulated.

SECTION 80.- Not regulated.

SECTION 81.- The NATIONAL ELECTRICITY REGULATORY AGENCY shall submit to the SECRETARIAT OF ENERGY, for its information and within a period of ONE HUNDRED AND TWENTY (120) days from the start of its activities, a draft regulation establishing the procedure to be applied to intervene and resolve through the Public Hearing System.

CHAPTER XVI

Miscellaneous Provisions

SECTION 82.- Not regulated.

SECTION 83.-Not regulated.

SECTION 84.- The perfect title shall be, for the purposes of executory process stipulated in the Second Paragraph of Section 84 of Law No. 24.065, the evidence of indebtedness issued by Generators, Transmitters and/or Distributors which meets the requirements to be established for such purpose by the SECRETARIAT OF ENERGY.
CHAPTER XVII

Scope

SECTION 85.- Not regulated.
CHAPTER XVIII

Temporary Provisions

SECTION 86.- Not regulated.

SECTION 87.- Not regulated.

SECTION 88.- Not regulated.
CHAPTER XIX

Amendments to Law 15.336

SECTION 89.- Not regulated.

SECTION 90.- Not regulated.

SECTION 91.- Not regulated.

SECTION 92 .- The SECRETARIAT OF ENERGY shall be empowered to prepare the amended text of the Electricity Regulatory Framework composed of Law No 15.336 and Law No. 24.065

CHAPTER XX

Privatization
SECTION 93.- Not regulated.

SECTION 94.- Not regulated.

SECTION 95.- Not regulated.

SECTION 96.- Not regulated.

SECTION 97.- Not regulated.
CHAPTER XXI

Adherence

SECTION 98.- The adherence regulated by Section 98 of Law No 24.065, unlike the one of a restricted kind stated in Section 70, Paragraph b) of aforementioned law, is unrestricted and implies that Generation, Transmission and Distribution under provincial jurisdiction, as well as the organization and exercise of the comptroller activity shall be subject to the provisions of the above mentioned rule, without this implying that the NATIONAL ELECTRICITY REGULATORY AGENCY is granted jurisdiction over activities that are not under federal jurisdiction.

SECTION 99.- Not regulated.

SECTION 100.- Not regulated.
ANNEX II
REGULATION OF SECTIONS 18 AND 43 OF LAW 15.336
AMENDED BY LAW 23.164

Regulation of Section 18 and Section 43 of Law No 15.336 amended by Law No 23.164.

SECTION18.-

Paragraph 1) Not regulated.

Paragraph 2) Not regulated.

Paragraph 3) Not regulated.

Paragraph 4) The distributor’s duty to meet the demand increase within its area of concession and its exclusive responsibility for determining the necessary investments for such purposes.

Paragraph 5) The distributor‘s power to determine the period of beginning and completion of works and facilities that, within the terms referred to in the preceding paragraph, are considered necessary to meet supply and demand increase within its concession area.

Paragraph 6) Not regulated.

Paragraph 7) Not regulated.

Paragraph 8) Amended by Section 89 of Law No 24.065. The conditions under which the State shall guarantee the successive transfer of the assets assigned to the provision of public utility of distribution and commercialization to new private concessionaires in case of expiration, revocation or bankruptcy.

Paragraph 9) Not regulated.

Paragraph 10) Not regulated.

Paragraph 11) The distributor’s duty to bear all the cost of the expansion of its distribution grids.

Paragraph 12) The criterion for valuation of distribution company’s capital.

Paragraph 13) Not regulated.

Paragraph 14) Not regulated.

Paragraph 15) Not regulated.

Paragraph 16) Not regulated.

Paragraph 17) Not regulated.

Paragraph 18) Not regulated.

Paragraph 19) Not regulated.

SECTION 43.- The calculation for the Hydroelectric Royalty ruled by Section 43 of Law No 15.336, amended by Law No 23.164, shall be made on the amount which results from valuing the energy generated by the hydroelectric source at the price corresponding to the concessionaire of such generation source in the Spot Market.