Non-official translation

Law 24.065

Reference Statutes: Law 15.336; Law 23.696; Law 15.574; Law 17.803; Law 19.955; Law 20.050; Law 23.411; Law 17.866; Law 19.287; Law 20.954; Law 21.937; Law 22.938. Law 19.199; Law 19.552

Enacted on: 19 December 1991
Partially Promulgated on: 3 January 1992
Electricity Generation, Transmission and Distribution

CHAPTER I

Object


SECTION 1°.- Electricity transmission and distribution shall be characterized as public utilities.
Generation, in all its modalities, totally or partially aimed to supply energy to a public utility shall be considered as an activity of general interest, linked to such public utility and governed by rules and regulations that ensure the normal functioning of said public utility.

CHAPTER II

General Policy and Agents

SECTION 2°.- The objectives of the national policy on electricity supply, transmission and distribution shall be the following:

a) To provide adequate protection of the users’ rights;

b) To promote competitiveness in the demand and production electricity markets and to encourage investments in order to secure long term supply;

c) To promote operation, reliability, equality, open access, non-discrimination and widespread use of the electricity transmission and distribution services and facilities;

d) To regulate the electricity transmission and distribution activities, ensuring the tariffs applied to services are fair and reasonable;

e) To encourage efficient supply, transmission, distribution and use of electricity, setting adequate tariff structures;

f) To stimulate private investments in production, transmission and distribution, ensuring markets competitiveness where possible.

The National Electricity Regulatory Agency, created under the section 54 of this law, shall be governed by the principles and provisions of this law. The Agency shall be responsible for the electricity sector’s compliance with the above mentioned principles and provisions.
CHAPTER III

Transmission and distribution

SECTION 3°.- Electricity transmission and distribution shall be mainly carried out by private legal entities holding the concessions granted to them by the Executive Power pursuant to laws 15.336, 23.696 and this Law.
For the purposes of guaranteeing the continuity of service, the State by itself or through any of its agencies or stated-owned companies shall provide transmission or distribution services if , once the selection process set forth under this law is completed, there are no bidders to be awarded the supply of said services.

CHAPTER IV

Generators, transmitters, distributors and large users


SECTION 4°.- The following shall be the electricity market agents:

a) Generators or producers;

b) Transmitters;

c) Distributors

d) Large Users

SECTION 5°.- Generator means the owner of an electricity plant acquired or installed under the terms and conditions of this law, or the concessionaire of exploitation services in accordance with Section 14 of law 15.336 whose partial or total production is used in the transmission and/or distribution services under national jurisdiction.

SECTION 6°.- Generators may enter into supply contracts directly with distributors and large users. Said contracts shall be freely agreed upon between the parties.
SECTION 7°.- Transmitter means the holder of a concession for electricity transmission granted under the terms and conditions set forth herein who is responsible for electricity transmission and transformation from the point of delivery by the generator to the point of reception by the distributor or large user, as the case may be.

SECTION 8°.- Those receiving bulk energy in consideration of royalties or services may commercialize it in the same manner that generators do.

SECTION 9°.- Distributor means who, within his concession area, is responsible for supplying those end users that are not able to contract their supply independently.

SECTION 10.- Large user means who makes an independent contract with a generator and/or distributor, for electricity supply for its own consumption. The regulation shall specify the modules of power and energy and related technical parameters for large user’s characterization.


CHAPTER V

Common Provisions to transmitters and distributors

SECTION 11.- No transmitter or distributor shall begin construction and/or operation of facilities that due to their magnitude requires the Agency’s qualification, nor the extension or the enlargement of existing facilities, without first obtaining from the Agency the certificate of public need and convenience for such construction, extension or enlargement. The Agency shall be in charge of publicizing these kinds of applications and carrying out a public hearing before deciding on the grant of said certificate.

SECTION 12.- The beginning or the imminent beginning of a construction and/or operation without proper certificate of public need and convenience shall empower any person to denounce or object to it before the Agency. The latter shall order the interruption of said construction and/or operation until a decision on the grant of said certificate is made, without prejudice to the penalties that may be imposed for such non-compliance.

SECTION 13.-The construction or enlargement of facilities of a transmitter or distributor that unreasonably interferes or is about to interfere with the service or system of any other transmitter or distributor shall entitle the latter to refer the matter to the Agency, which shall decide whether to authorize the new construction or not after having heard the parties concerned. To that end, the Agency may convene a public hearing.

SECTION 14.- No Transmitters or distributors shall wholly or partly abandon any electricity transmission and distribution facilities or discontinue any supply of services without the approval of the Agency, which shall only give such approval after having verified that such facilities or services are not necessary for the public utility at that time or in the near future.

SECTION 15.- The Agency shall resolve the issues under Sections 11,12,13 and 14, within the term of three (3) months of being initiated.

SECTION 16.- Electricity generators, transmitters, distributors and users are obliged to operate and maintain their facilities and equipments in such a way so as not to be hazardous to public safety and to be consistent with the regulations and resolutions issued by the Agency to that end. Said facilities and equipments shall be subject to inspection, examination and tests that will be periodically carried out by the Agency. Moreover the Agency shall be empowered to order interruption of the service, repair or replacement of facilities and equipments or any other measure aimed to protect public safety.

SECTION 17.- The physical infrastructure, facilities and operation of equipments concerning electricity generation, transmission and distribution shall take into account those measures aimed to protect the watersheds and associated ecosystems. Moreover, they shall be subject to current standards for pollutants emission as well as those set forth in the future by the Secretariat of Energy at national level.

SECTION 18.- Transmitters and distributors shall enjoy easement rights under Law 19.552.

SECTION 19.- Generators, transmitters and distributors shall not carry out any act which entails unfair competition or abuse of a dominant position within the market.The determination of the existence of the above mentioned situations shall suffice to refer the matter to the judicial authorities and institute the legal proceedings set forth in law 22.262, except for section 32 thereof, which shall not be applicable.

SECTION 20.- Generators, transmitters and distributors shall pay an inspection and control duty to be fixed by the Agency in accordance with the provisions of Sections 67 and 68 of this law.

CHAPTER VI

Provision of services

SECTION 21.- Distributors shall meet all demand for electricity services required within the terms and conditions of their concession contracts.

SECTION 22.- Transmitters and distributors shall allow third parties to have an indiscriminate access to the transmission capacity of their systems not committed to supply the contracted demand, according to the conditions agreed upon between the parties, and pursuant to the terms of this law.
For the purposes of this law, transmission capacity includes transformation capacity and access to any other facility or service that the Agency may determine.

SECTION 23.- No transmitter or distributor shall give or offer advantages or preferences in the access to their facilities, except for those that may be based on the categories of users or specific differences determined by the Agency.

SECTION 24.- Transmitters and distributors shall respond to all service requests within thirty (30) calendar days of receipt of the request .

SECTION 25.- In case of disagreement with a distributor about the conditions of a request for electricity service or disagreement with a transmitter or a distributor about the conditions of a request for access to their transmission capacity, the Agency may be required to intervene. After hearing the parties involved, the Agency shall settle such dispute with the main purpose of guaranteeing supply.

SECTION 26.- Transmitters and distributors shall set minimum quality specifications for the electricity used in their systems. Said specifications shall be publicized in the respective tariff schedules.

SECTION 27.- Transmitters and distributors shall maintain their facilities so as to ensure an adequate service to users.

SECTION 28.- Concession contracts may oblige transmitters and distributors to extend or enlarge their facilities when convenient for public utility needs. In such event, concessionaires may recover their investments in accordance with the provisions of Section 41 of this law.

SECTION 29.- Transmission concession subject to national jurisdiction shall be granted for a fixed period in accordance with the provisions of Section 18 of law 15.336, except for paragraphs 3, 11, 12, 16, 17 and 18 thereof which shall not be applicable. Besides, the concession shall specify capacity, characteristics and plan for works and facilities to be carried out as well as the system of toll prices.
CHAPTER VII

Limitations

SECTION 30.- Transmitters (whether as individual or as majority owners, and/or as holders of the controlling blocks of shares of the transmission concession company), shall not buy nor sell electric energy.

SECTION 31.- No generator, distributor, large user or any of their controlled or controlling companies shall be owner or majority shareholder of a transmission company or its controlling company. Nevertheless, the Executive Power may authorize a generator, distributor and/or large user to build, at their own expense and for their own needs, a transmission network, establishing mode and type of operation for such purpose.

SECTION 32.- Two or more transmitters or two or more distributors may consolidate in a single business group or merge only with the prior express approval of the Agency.
Likewise, with the prior express approval of the Agency, any transmitter or distributor may acquire shares of capital stock of any other transmitter or distributor, respectively.

The request for approval shall be submitted to the Agency, specifying the parties involved, the reason for and description of the arrangement to be approved, and any further information that may be required by the Agency for decision purposes.
The Agency shall convene public hearings to hear all the interested parties and any other investigations deemed necessary and shall grant said approval provided that the provisions of this law are not violated and that neither service nor public interest are jeopardized.

SECTION 33.- For the purpose of this title, the companies of electricity transmission and distribution that are stock companies shall have a capital represented by registered non-edorsable shares.

CHAPTER VIII

Exports and imports

SECTION 34.- Electricity exports and imports shall require prior authorization from the Secretariat of Energy dependent on the Ministry of Economy and Public Works and Services

CHAPTER IX

Load Dispatch

SECTION 35.- The technical dispatch of the Argentine Interconnected System (SADI, as per its Spanish acronym) shall be in charge of the National Load Dispatch Center (DNDC, as per its Spanish acronym), a body which shall be constituted under the form of a stock company whose capital shall be represented by registered non-endorsable shares and whose majority shareholder shall be, initially, the Secretariat of Energy, and in which all the agents of the Wholesale Electricity Market (MEM, as per its Spanish acronym) may participate as shareholders. The state shareholding, initially the majority shareholding, may be reduced up to ten percent (10%) of the share capital by the Executive Power; nevertheless, such percentage shall ensure state participation and veto power in the board of directors.

The Secretariat of Energy shall determine the rules, which must ensure transparency and equity of decisions, to be fulfilled by the DNDC in the performance of its duties, in accordance with the following principles:

a) To permit the execution of contracts freely agreed upon between the parties, understanding by such generators (except for those comprised under Section 1 of law 23.696 and the Argentine party to binational entities), large users and distributors (forward market);

b) To dispatch the required demand on the basis of recognition of energy and power prices stated in the Section 36 below which shall be explicitly accepted by the agents of the market in order to be entitled to supply or receive electricity not freely agreed upon between the parties.

SECTION 36.- The Secretariat of Energy shall dictate a resolution containing the economic dispatch rules for the energy and power transactions stated in paragraph b) of the Section 35 above to be applied by the DNDC. The above mentioned resolution shall stipulate that all generators receive a uniform tariff for the energy sold at each point of delivery to be fixed by the DNDC calculated on the basis of the system’s economic cost. This calculation shall take account of the cost that non-supplied energy represents for the community.
Moreover, the resolution shall stipulate that the demand parties (distributors) pay a uniform tariff stabilized every ninety (90) days, measured at the point of reception, which shall include what generators receive for the concepts set forth in the above paragraph and the costs of transmission between the supply and reception points.

SECTION 37.- Wholly or majority state-owned generation and transmission companies shall be entitled to recover total operation and maintenance costs only to the extent needed to ensure quality, continuity and safety of service, whose concept and methodology of determination shall be stipulated by the Secretariat of Energy. Any surplus resulting from the difference between the said value and the sale price of the energy generated pursuant to the section above, as well as any surplus resulting from the difference between the latter and the sale price of energy generated by binational agencies in accordance with their respective agreements or any surplus resulting from international interconnections shall integrate a unified fund, whose budget shall be annually approved by the National Congress and shall be administered by the Secretariat of Energy , which shall use said fund in order to fulfill the commitments arising from debts contracted hitherto and to invest in works in progress at the effective date of this law to be determined by the Secretariat of Energy. The unified fund shall be also allocated for stabilizing, during a period to be stipulated, the prices to be paid by distributors pursuant to section 36 of this law.
The above mentioned secretariat may divide into independents accounts the Fund resources according to their source and allocation and may establish a system of refundable loans among those accounts.

SECTION 38.- The Secretariat of Energy shall prepare and publicize guidelines on SADI ‘s supply and demand conditions, which provide MEM’s agents and potential investors with reliable information on the dispatch prospects.

SECTION 39.- The DNDC shall not impose restrictions on self-generators supplying energy through contracts freely agreed upon with the demand parties, unless there are well-founded technical reasons to decide otherwise, and shall channel sales of surpluses of this kind of generation, to the extent that proves economic for the system.

CHAPTER X

Tariffs

SECTION 40.-The services provided by transmitters and distributors shall be supplied at fair and reasonable tariffs, which shall be consistent with the following principles:

a) To provide transmitters and distributors who operate in an economic and judicious manner with the opportunity to obtain sufficient revenues to cover reasonable operating costs applicable to the service, taxes, amortization costs and a rate of return , as determined in the Section 41 of this law;

b) To take into account any reasonable cost differential among the different types of services according to the service provided, geographical location and any other characteristic that may be deemed relevant by the Agency;

c) In the case of distribution tariffs, the sale price of electricity to users shall include a term representing the purchase costs of electricity in the MEM;

d) To ensure the minimum reasonable cost for users consistent with continuity of supply, subject to compliance with the requirements set forth in the above paragraphs.

SECTION 41.- Tariffs applied by transmitters and distributors shall permit a reasonable rate of return for efficiently operated companies. Moreover, said rate shall:

a) Bear relation to the company’s degree of operating efficacy and efficiency;

b) Be similar, in average for the industry, to that of other activities having similar or comparable risk activities at the local or international level.

SECTION 42.- Transmittion and distribution concession contracts shall include an initial tariff table for the first five (5) years and shall be consistent with the following principles:

a) To establish initial tariffs according to each type of service provided and pursuant to the terms and conditions stated in Sections 40 and 41 of this law;

b) Subsequent tariffs shall provide a price cap for each type of service;

c) The price cap shall be determined by the Agency according to the markets indicators reflecting the changes in goods and/or services values. Said indicators shall, in turn, be adjusted upward or downward by a factor aimed to encourage efficiency as well as investments in construction, operation and maintenance of facilities;

d) Tariffs shall be subject to adjustments enabling them to reflect any cost changes outside the control of the concessionaire.

e) In no case the costs attributed to services rendered to a user or users' category can be recovered through tariffs charged to other users.

SECTION 43.- At the end of the initial five (5) year period, the Agency shall fix new tariffs for successive five (5) year periods. The calculation of new tariffs shall be made in accordance with the terms and conditions set forth in Sections 40 and 41 of this law and price caps shall be fixed according to the provisions referred to in the section above.

SECTION 43.- No transmitter or distributor shall apply differences in tariffs, charges, services, or any other concept, except when those differences result from different location, type of services, or any other similar distinction that could be reasonably approved by the Agency.

SECTION 45.- Transmitters and distributors shall request, within the last year of the period stipulated in Section 43 of this law and subject to the Agency’s regulations, the Agency’s approval of their proposed tariffs tables meeting the requirements set forth in Section 42 of this law, indicating modes, rates and any other charges for each type of service, as well as the classifications of their users and general conditions of the service. Said tariffs tables, once approved, shall be widely publicized for the information of users.

SECTION 46.- Transmitters and distributors shall strictly apply tariffs approved by the Agency. Nevertheless, modifications deemed necessary may be referred to the Agency on the basis of objective and justified circumstances. Upon receipt of the request for modification, the Agency shall immediately publicize said request for a period of thirty (30) days and shall convene a public hearing for the next succeeding working day in order to determine whether the requested modification is consistent with the provisions of this law and with the public interest.

SECTION 47.- The Agency shall resolve the issue within one hundred and twenty (120) calendar days from the date of request for modification, otherwise the concessionaire may adjust its tariffs to the requested modifications as if they had been effectively approved; Nevertheless said concessionaire shall refund to users any difference in their favor that may result if modifications are not finally approved or partially approved by the Agency.

SECTION 48.- If, as a result of procedures initiated ex officio or upon complaint by individuals, the Agency should consider that there are reasons to allege that a transmitter or distributor’s tariff is unfair, unreasonable, unduly discriminatory or preferential, the Agency shall notify said transmitter or distributor of said circumstance, shall publicize said issue and shall convene a public hearing at least thirty (30) days in advance of the hearing. Once the public hearing has been held, the Agency shall issue a decision within the period stipulated in the above mentioned section.

SECTION 49.- Transmission and distribution tariffs shall be subject to annually decreasing caps in real terms based on automatic adjustment formulas to be fixed and controlled by the Agency.

CHAPTER XI

Awards

SECTION 50.- Electricity transmission and distribution shall only be carried out by companies holding concessions granted by the Executive Power in compliance with the terms and provisions of law 15.336 and this law. Concessions shall be awarded pursuant to the selection process pre-established by the Secretary of Energy.

SECTION 51.- At least eighteen (18) months before the expiration date of the concession, transmitters and distributors shall be entitled to request the Agency for a ten (10) year extension of the concession term or a new concession. The Agency shall reasonably resolve whether to grant or not to grant said concession extension or new concession within sixty (60) days of receipt of said request.

SECTION 52.- If the Agency should decide not to grant the concession extension or a new concession to the existing concessionaire, a new selection process to award such transmission or distribution concession shall be initiated within the term of thirty (30) days.

SECTION 53.- In the event provided for in the above section, if the new concession could not be granted before the existing concession expiration date, the Agency may require the holder of the existing concession to continue in charge for a period not longer than twelve (12) months from the original expiration date of its existing concession.
CHAPTER XII

National Regulatory Agency

SECTION 54.- Within the scope of the Secretariat of Energy of the Ministry of Economy and Public Works and Services, the National Electricity Regulatory Agency is hereby created which shall take any and all necessary steps to comply with the objectives set forth in Section 2 of this law. The National Electricity Regulatory Agency shall be fully constituted and able to fulfill its functions within the sixty (60) days after the effective date of this law.

SECTION 55.- The Agency shall be a self-governing body and shall have full legal capacity to act in the fields of public and private law and its assets shall consist of those transferred to it and those acquired by it in the future by any title. The Agency shall have its seat in the City of Buenos Aires. The Agency shall approve its own organizational structure.

SECTION 56.- The Agency shall have the following functions and powers:

a) To enforce this law, its regulations and its complementary provisions, controlling the provision of services and the fulfillment of the obligations fixed in the concession contracts;

b) To dictate regulations to be observed by electricity producers, transmitters, distributors and users on matters of safety, technical standards and procedures, consumption measurement and billing, control and use of meters, supply interruption and reconnection, access to third party property and quality of services provided.

c) To prevent any anti-competitive, monopolistic or discriminatory behavior among the participants of each stage of the industry, including producers and users;

d) To define the basis for the calculation of tariffs set in the contracts granting transmission and distribution concessions and to control that such tariffs are applied pursuant to the respective concessions and in accordance with the terms and conditions of this law;

e) To publicize the general principles to be applied by transmitters and distributors in their respective contracts in order to ensure open access to their services;

f) To determine the terms and conditions of the selection process to grant the electricity transmission and distribution concessions through public procedures or private ones where justified by duly proven special reasons;

g) To invite participation in selection procedures and to make the relevant awards, signing the concession contract ad referendum of the Executive Power, who may delegate such duty to the body or officer that the Executive may deem advisable;

h) To promote before the Executive Power, where appropriate, the assignment, extension, expiration or replacement of concessions;

i) To authorize electric duct easements through applicable procedures pursuant to the provisions of Section 18 of this law and to grant any other authorization provided for in this law;

j) To organize and to apply the public hearing system provided for in this law;

k) To ensure protection of property, environment and public safety when constructing and operating the systems of electricity generation, transmission and distribution, including the right of access to the facilities owed by generators, transmitters, distributors and users, upon prior notice, in order to investigate any real or potential threat to public safety and convenience unless specific applicable rules determine otherwise;

l) To promote, before the competent Courts, civil or criminal actions, including precautionary measures, to guarantee the fulfillment of its functions and the objectives of this law and its regulations and the concession contracts;

m) To regulate the procedure for the application of penalties for violation of statutory, regulatory or contractual provisions, guaranteeing the principle of due process;

n) To request the necessary documents and information from transmitters and distributors in order to verify the compliance of this law, its regulations and the respective concession contracts, carrying out the inspections deemed necessary for such purpose, with adequate protection of information confidentiality as appropriate.

ñ) To publicize the information and provide useful advice for generators, transmitters and users, as long as third parties’ rights are not unjustifiably breached;

o) To apply the penalties provided for in this law, in its regulations and in the concession contracts, in all cases in accordance with the principles of due process;

p) To ensure the publication of decisions adopted, including the basis for adopting such decisions;

q) To submit to the Executive Power and the National Congress an annual report about the activities of the year and suggestions about the measures to be adopted for the benefit of the public interest, including the users protection and the electricity industry development;

r) To delegate to its officials those powers deemed adequate for the efficient and economic application of this law;

s) In general, to take all necessary actions to ensure the best fulfillment of its functions and the objectives of this law and its regulations.

SECTION 57.- The Agency shall be directed and managed by a board of directors composed of five (5) members, including a Chairperson and a Vice-Chairperson.

SECTION 58.- The members of the board of directors shall be selected from among persons technically and professionally experienced in the field and appointed by the Executive Power, two (2) of them on a proposal by the Federal Electricity Power Council .The term of office shall be five (5) years and may be renewed indefinitely. Such terms shall be staggered so that one term expires each year. When appointing the first Board of Directors, the Executive Power shall establish the expiration date of the term of the chairperson, the vice-chairperson and the other members so as to ensure said staggered renewal.

SECTION 59.- The members of the Board of Directors shall be exclusively devoted to their duties and shall be subject to the incompatibilities laid down by law for the holders of public office ; they may only be removed from office by justified decision of the Executive Power.
Before any appointment and/or removal, the Executive Power shall state the reasons for such decision to a committee of the National Congress consisting of sixteen (16) members who shall be the presidents and vice-presidents of the committees as each Chamber considers appropriate according to their functions, guaranteeing equal representation of senators and deputies. Such committee may issue an opinion within thirty (30) calendar days from receipt of notice. After the committee‘s opinion or upon completion of said term, the Executive Power shall be authorized to pronounce a decision.

SECTION 60.- The members of the Board of Directors shall not own or have any interest, whether direct or indirect, in companies considered as electricity market agents pursuant to the Section 4° of this law, or in their controlled or controlling companies.

SECTION 61.- The chairperson shall hold office for a term of five (5) years and may be re-elected. The chairperson shall be the legal representative of the Agency and in the event of his/her temporary absence or impediment shall be replaced by the vice-chairperson.

SECTION 62.- The presence of three (3) members of the Board of Directors shall constitute a quorum and one of these members shall be the chairperson or his/her replacement. The Board of Directors shall pass its resolutions by simple majority and the chairperson, or his/her replacement, shall cast the deciding vote in the case of a tie.

SECTION 63.-The Board of Directors shall have, among others, the following functions:

a) To enforce and control the fulfillment of legal and regulatory rules governing the activity of the Agency;

b) To issue its internal regulations;

c) To advise the Executive Power on matters within the competence of the Agency;

d) To hire and remove the Agency’s employees, determining their functions and employment conditions;

e) To formulate an annual expenses budget and resources estimates to be submitted through The National Executive Power for Congress’ approval through the National Budget Law for the corresponding fiscal year;

f) To prepare an annual report and balance sheet;

g) In general, to perform all other acts necessary to fulfill its functions and the objectives of this law;

SECTION 64. - The Agency’s financial, patrimonial and accounting management shall be governed by the provisions set forth in this law and the regulations to be dictated for that purpose. The Agency shall be subject to the external control established by the public comptroller’s system. Labor relations shall be governed by the Labor Contract Law, and shall not be subject to the basic legal regime of public service.

SECTION 65.- The Agency shall draw up its annual budget, reasonably estimating expenses and investments for the following fiscal year. A draft budget shall be previously published, thus providing an opportunity for transmitters, distributors and users to make well-founded objections to them.

SECTION 66.- The Agency’s resources shall consist of the following incomes:

a) Inspection and control duty created under Section 67 below;

b) The subsidies, inheritances, legacies, donations or transfers received under any title;

c) Other funds, assets or resources which may be assigned to it pursuant to the applicable laws and regulations;

d) The proceeds derived from penalties and seizures;

e) The interests and benefits resulting from the management of its own funds.

SECTION 67.- Producers, transmitters and distributors shall pay annually and in advance an inspection and control duty to be fixed by the Agency in its budget.
Said duty shall be fixed individually for each producer, transmitter or distributor and shall be equal to the total sum of expenditures and investments anticipated by the agency in said budget, multiplied by a fraction in which the numerator shall be the gross income for the operations of the previous calendar year, and the denominator, the total gross income for the operations of all the producers, transmitters and distributors of the country during the same period.

SECTION 68.- If during the execution of a budget, the estimated resources for the fiscal year are insufficient due to events that were unforeseen during its elaboration, the Agency shall be entitled to require the payment of an additional fee, subject to approval of the Executive Power, until budget needs are satisfied.

SECTION 69. Default due to lack of payment of said duty shall occur by operation of law and shall give rise to penalty interests to be fixed by regulation. The certificate of debt due to lack of payment of the duty issued by the Agency shall enable the executory proceeding before Civil and Commercial Federal Courts.
CHAPTER XIII

National Electricity Fund


SECTION 70.- Subparagraphs e) and g) of Section 30 and Section 31 of Law 15.336 shall be replaced by the following :

e) The National Electricity Fund shall be formed by a surcharge of thirty australes per kilowatt hour (A 30 KW/h) applied to the tariffs paid by the wholesale market buyers, that is to say, distributors and large users, as well as by the repayments and accrued interest of loans made with resources of the Fund. The Secretariat of Energy shall be authorized to modify the amount of the aforementioned surcharge, up to a twenty percent (20 %) upwards or downwards, according to the economic variations in the industry after the effective date of this law;

g) The Fund shall be managed by the Federal Electricity Power Council (CFEE, as per its Spanish acronym) and shall be appropriated as follows:
    - The sixty per cent (60 %) to create the Fondo Subsidiario para Compensaciones Regionales de Tarifas a Usuarios Finales (Subsidy Fund for Regional Compensation of Tariffs to End Users), which shall be annually allocated by the Federal Electricity Power Council (CFEE, as per its Spanish acronym), and shall be distributed among those provincial juridictions that have fulfilled the tariff principles set forth in this law.

    - The remaining forty percent (40 %) to supply the Fondo para el Desarrollo Eléctrico del Interior (Fund for the Electricity Development in the Interior (of Argentina)). The CFEE shall distribute the funds according to the current allocation indicators or to those the CFEE may determine in the future.
CHAPTER XIV

Jurisdictional Control and Procedures

SECTION 71.- The Agency’s relations with individuals and with public administration shall be governed by the procedures set forth in the Administrative Procedures Law and its regulatory provisions, except for those issues expressly contemplated in this law.

SECTION 72 - Any dispute that may arise between generators transmitters, distributors, large users regarding the supply or electricity transmission and distribution utilities shall be previously and compulsorily submitted to the jurisdiction of the Agency.
Users as well as any interested third parties, whether natural o legal persons, have the option of choosing to previously submit claims regarding the same abovementioned reasons to the jurisdiction of the Agency.

SECTION 73.- When, as a consequence of procedures started upon a claim or ex officio, the Agency deems that any act performed by a generator, transmitter, distributor or user is in violation of this law, its regulations, the Agency’s resolutions or the concession contracts, the Agency shall notify this situation to all the parties concerned and shall convene a public hearing. Before deciding on the existence of said violation, the Agency is empowered to take all the necessary preventive measures, depending on the act under consideration.

SECTION 74.- The Agency shall call the parties and hold a public hearing before passing a resolution on the following matters:
a) The general usefulness, convenience and necessity of the electricity transmission and distribution services;

b) Conduct contrary to the principles of free competition or the abuse of situations derived from a natural monopoly or from a dominant position within the market.

SECTION 75.- If the Agency or the members of its Board of Directors act in excess of the powers conferred on them by this law or its regulations, or do not fulfill the functions and duties attached to their positions, any person whose rights are affected by such acts or omissions may institute legal proceedings before the Agency or the Federal Courts, as appropriate, so that the Agency and/or its board of directors fulfill the duties imposed by this law.

SECTION 76.- The resolutions of the Agency may be appealed according to the terms of the National Law of Administrative Procedures and its regulatory provisions. Having exhausted the administrative procedures, the appeal may be filed directly before the National Court of Appeals for Federal Contentious- Administrative Matters.

CHAPTER XV

Contraventions and Penalties


SECTION 77.- The violation or breach of this law and its regulations committed by non-concessionaire third parties shall be penalized as follows:


a) Fine of between one million australes (A 1.000.000) and one billion australes (A 1.000.000.000);

b) Special disqualification for the term of one (1) to five (5) years;

c) Suspension from providing services and activities authorized by the Agency for a term of up to ninety (90) days;

d) Seizure of the elements used for committing contravention or of the assets, devices and facilities built or located in contravention. This penalty may be applied in addition to the above mentioned penalties or independently of them.

SECTION 78.- The violation or breach of the electricity transmission or distribution services concessions contracts shall be penalized pursuant to the penalties established in their respective concession contracts.

SECTION 79.- The Agency may order sequestration of assets as a form of precautionary measure, unless such assets belong to a non-responsible third party .
SECTION 80.- When preventing and verifying contraventions, as well as when enforcing sequestration measures and any other measures as may be appropriate, the Agency shall be empowered to request the assistance of law enforcement with jurisdiction over the place where the contravention occurred. To this end, a written requirement to the corresponding authority issued by the official competent to institute the proper administrative proceedings shall be sufficient. The Agency shall ask the Federal Courts with jurisdiction over the place to intervene when preventing or verifying a contravention that constitutes a public order crime.

SECTION 81.- Public hearings shall be carried out according to procedural rules to be dictated by the Agency and the penalties to be applied shall be those set forth in this chapter, in full compliance with principles of due process in all cases.
The penalties applied by the Agency may be challenged before the National Court of Appeals for Federal Contentious- Administrative Matters by lodging an appeal within thirty (30) court days after receiving notice of them.
CHAPTER XVI

Miscellaneous Provisions

SECTION 82.- The National Fund for Large Electricity Works created by Law 19.287 and the Chocón-Cerros Colorados-Alicopá Fund created by Law 17.574 and Law 20.954 shall be declared null and void.

SECTION 83.- Sections 1, 9, 10 and 11 of Law 19.552 shall be replaced by the following texts respectively :

SECTION 1.- Any estate is subject to the administrative electric duct easement created under this law. Said easement shall be constituted in favor of the concessionaire of electricity substations, electricity transmission lines and electricity distributors subject to national jurisdiction.

SECTION 9.- The owner of the land shall be entitled to compensation which shall be determined taking into account the following criteria:

a) The value of land in optimum conditions in the area where the encumbered property is located;

b) The application of a restriction coefficient that considers the degree of limitations imposed by the easement. Said index shall be established according to the set of values fixed by the competent authority.

Under no circumstances shall compensation for lost profits be allowed.

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SECTION 10.-In the case the owner of the land and the holder of the easement fail to agree on the amount of compensation for limitation on property right, the owner may bring any action to which he considers himself entitled, in the same original file pursuant to Section 8 , or if such file does not exist, before the competent federal judge where the property is located.

SECTION 11.- The legal actions mentioned in this law shall be subject to summary proceedings.

SECTION 84.- Failure to pay the electricity supply by end users and /or the sale price of said bulk energy shall be penalized with interruption and/or disconnection of said supply.

The executory process shall be applied in order to collect the amounts of the sale price of bulk energy and/or end users supply tariffs, and the perfect title shall be the evidence of indebtedness to be determined by regulation.
CHAPTER XVII

Scope

SECTION 85.- This law complements law 15.336 and has the same scope and enforcement authority

CHAPTER XVIII

Temporary Provisions

SECTION 86.- The provisions of this law shall be fully applicable to the resulting successful bidders of transmission or distribution concessions, as a consequence of the privatization process of Servicios Eléctricos del Gran Buenos Aires, Sociedad Anónima, Agua y Energía Eléctrica, Sociedad del Estado, and Hidroeléctrica Norpatagónica, Sociedad Anónima.

SECTION 87.- As an exceptional circumstance, the Agency’s budget for 1992 shall be approved only by the National Executive Power.

SECTION 88. - The users of the services provided by Servicios Eléctricos del Gran Buenos Aires, Sociedad Anónima and Agua y Energía Eléctrica, Sociedad del Estado related to those companies by means of supply contracts that are subject to special clauses at the effective date of any concession granted pursuant to law 15336 and this law, shall be entitled to be incorporated into those transmission and/or distribution grids that shall be used for such purposes by the above mentioned companies. In those cases, transmission and distribution companies shall be obliged to continue providing services to said users under the same conditions of the existing contracts for a term of two years as from the effective date of this law or any shorter period as agreed between the parties. The tariffs to be applied on such services shall be determined in accordance with the provisions of this law.
CHAPTER XIX

Amendments to law 15.336

SECTION 89.- Section 4, first paragraph of Section 11, Section 14, subparagraph 8 of Section 18 and last paragraph of Section 28 of Law 15.336 shall be replaced by the following texts:

SECTION 4°.- Transactions of purchase or sale of electricity between a power station and the administrative agency or the concessionaire providing the public utility shall be considered as private commercial transactions provided they do not contravene the provisions of this law.

SECTION 11.- first parragraph: Whithin the scope of nacional jurisdiction mentioned in Section 6° and for the purposes of this law, the National Executive Power shall grant the concessions and shall perform the law enforcement functions and any other functions resulting from jurisdictional power.

SECTION 14.- The activities related to electricity generation, transmisión and distribution within national jurisdiction, whatever the energy source, carried out by individuals, require a concession from the Executive Power in the following cases:

a) For the usage of the hydroelectric sources of public water courses whenever normal power provided exceeds 500 kilowatts;

b) For the performance of activities aimet at the electricity transmission and/or distribution public utilities.

SECTION 18, paragraph 8: The conditions under which the concession assets shall be transferred to the State or to the new concessionaire, as appropriate, in case of expiration, revocation or bankruptcy.

SECTION 28.- last paragraph: The Federal Electricity Power Council shall be regulated on the basis of recognizing and conferring to the regional committees their informative intervention in any dispute within the competence of the Federal Council in the respective region, the application of the Fondo Especial de Desarrollo Eléctrico del Interior (Fund for the Electricity Development in the Interior (of Argentina)) and the energy solutions deemed in the interest of the respective region.

SECTION 90.- Sections 17; 20; 22; 23; paragraphs a), b), c), d) and f) of Section 30; paragraphs from e) to h) of Section 37; 38; 39; 40; 41; 42 and 44 of law 15.336 shall be repealed.

SECTION 91.- The Executive Power shall be empowered to delegate to the body it determines, the duties and functions conferred to The Executive Power by this law and law 15.336.

SECTION 92.- The Executive Power shall be empowered to prepare the amended text of the electricity regulatory framework composed of Law No 15.336 and this Law.
CHAPTER XX

Privatization

SECTION 93.- Generation and transmission activities in charge of the companies Servicios Eléctricos del Gran Buenos Aires Sociedad Anónima, Agua y Energía Eléctrica Sociedad del Estado and Hidroeléctrica Norpatagónica Sociedad Anónima, which shall be governed by law 23.696, shall be subject to total privatization.

The activities to be privatized shall be carried out at the expense and risk of the purchaser.

The Bicameral Commission for Privatization Follow Up shall issue a previous binding decision within thirty days of notice regarding:

a) Bidding terms and conditions and amendments thereof;

b) Evaluation and award of tenders;

c) Final privatization contract and all its annexes, and additional documents;

The thirty calendar day term shall be counted as of the receipt of the file proved by reliable means. The Bicameral Commission shall preferably address the above mentioned issues within forty eight hours upon receipt and postponing any other item included in the agenda.

SECTION 94.- Regarding the hydroelectric generation of Agua y Energía Eléctrica Sociedad del Estado, the National State shall previously agree with the involved provinces upon the procedures for its final destination.

SECTION 95.- SECTION 95.- Point IV of Annex I of Law 23.696, exclusively regarding the company Servicios Eléctricos del Gran Buenos Aires Sociedad Anónima, shall be replaced by the following text :

IV.- Distribution and commercialization concession.

-Privatization.

- Servicios Eléctricos del Gran Buenos Aires Sociedad Anónima.

SECTION 96.- For the purpose of the application of Section 19 of Law 23.696, the previous appraisal shall be based on the valuation criterion resulting from the present value of the discounted net cash flow generated by the activity or assets being privatized.

SECTION 97.- Laws 17.574 as amended by laws 17.803 and 19.955, 20.050, 23.411, 17.866, 19.199, 19.287 as amended by law 20.954, 21.937 and 22.938 shall be repealed in all their aspects including those relating to the concessions approved by them, when they hinder privatization objectives or impede demonopolization or deregulation of the activity currently in charge of Hidroeléctrica Norpatagónica Sociedad Anónima. The Executive Power shall regulate the scope and the coming into effect of the provisions set forth in this section.

CHAPTER XXI

Adherence

SECTION 98.- The provinces are invited to adhere to the regime of this law, notwithstanding the application , according to their own regime , of the rules of a federal nature mentioned in this law.

SECTION 99.- This Law shall come into effect on the date of its publication in the Official Gazette.

SECTION 100.- Let it be communicated to the Executive Power.

ALBERTO R. PIERRI.- EDUARDO MENEM.- Juan Estrada.- Edgardo Piuzzi