Annals of the Argentine Legislation No XX-A 1960, September 221960, pp. 67-74.Legal mentions: Decree 11.219/59
Enactment: September 15, 1960
Promulgation: September 20, 1960
Creation of the Federal Electricity Power Council
Section1°.- Activities related to generation, transformation, transmisssion and distribution of electricity within national jurisdiction are hereby subject to the provisions of this law and its regulations; with exception of transmission and distribution of electricity when their main purpose is to transmmit signals, words or images, which shall be governed by their respective special laws.
Section 2. For the purposes of this law, electricity -whichever its source and whoever its owners may be, whether public or private persons- shall be considered a juridical good which may be traded according to the ways and means authorized by civil codes and laws in so far as they do not contradict this law.
Section 3°.- For the purposes of this law, electricity public utility shall refer to the regular and continuous distribution of electricity to meet basic and general electricity needs of users belonging to a certain community or social group, pursuant to the pertinent regulations.
Likewise, the activities of the electricity industry totally or partially aimed to supply power to public utility shall be considered as an activity of general interest, linked to such public utility and governed by legal and regulatory rules that ensure the normal functioning of said public utility.
Section 4°.- Electricity purchase and sale transactions between a plant and the administrative body or the concessionaire supplying the public utility, shall be considered private commercial transactions provided they do not contravene the provisions of this law.
Section 5°.- The power of waterfalls and other hydraulic sources, including seas and lakes, constitutes a thing juridically regarded as different from water and lands that make up said sources. The right to use hydraulic power does not imply the modification of the intended use and purposes of these waters and lands, unless it is strictly indispensable for the installation and functioning of the corresponding systems of intake, conduction and generation works, pursuant to specific provisions that may be applicable for each case.
Section 6º.- Electricity generation, whatever its source, and electricity transformation and transmission are hereby declared subject to national jurisdiction, whenever:
a) They are related to national defence;
b) They are aimed to serve electricity trade between Capital Federal and one or more provinces or a province with another province or with the territory of Tierra del Fuego, Antarctica and South Atlantic Islands;
c) They belong to a place subject to exclusive legislation of National Congress;
d) They are hydroelectric or tidal exploitations that are necessary to interconect with each other or with others from same or different source, for the rational and economical use of all of them;
e) They integrate the National Interconnected Grid anywhere throughout the country;
f) They are linked to electricity trade with a foreign nation;
g) They are plants where electricity is generated through the use or conversion of nuclear or atomic energy.
Public utilities defined in the first paragraph of section 3 shall be also subject to national jurisdiction when a law of Congress reflects the general interest and the convenience of unification .
Section 7°.- The Executive Power shall provide the necessary means, within the powers hereby conferred, to promote large intakes of hydroelectric power anywhere throughout the country.
Section 8°.- The exploitation of hydroelectric power sources promoted by the federal government or a province, in cases where the intake of power involves transferring water from a river or lake or sea basin to another, concerning more than a province, shall be authorized by national law.
Section 9°.- In the context of section 6, the federal government can use and rule power sources, anywhere throughout the country, to the extent necessary for the exercise of its functions.
Section 10.- Property of any kind, works, facilities, constructions and exploitation systems whose possession is essential for the achievment of the purposes of this law and especially for the regular development and functioning of the National Interconnected Grid and/or the remaining national electricity systems shall be declared of public utility and subject to expropation. The Executive Power shall use this generic declaration, appointing who shall have authority in each case to promote expropriation judicial proceedings.
Section 11.- Within the limits of national jurisdiction referred to in section 6, and for the purposes of this law, the National Exective Power shall grant the concessions and shall perform police functions and any other inherent jurisdictional power.
The precedent powers include the right to grant the use of national lands and any other places subject to the exclusive legislation of the National Congress.
The National Executive Power is also empowered, where justified by circumstances, to exempt contracts and transactions arised from this law from national levies and taxies related to their constitution .
Provincial government shall be in charge of everything related to the granting of authorizations and concessions, and shall perform police functions and any other inherent jurisdictional power, in matters concerning provincial electriticy systems referred to in section 35, paragraph b) of this law, as well as public utilities defined in the first paragraph of section 3 of said law subject to local jurisdiction.
Section 12.- Works and facilities of electricity generation, transformation and transmission under national jurisdiction and the electricity generated or transmitted therein shall not be subject to taxes and contributions, or to local laws restricting or hindering its free production and circulation. Local retributive rates for services and improvements are not included in the aforementioned exemption.
Section 13.- The provisions of Law No. 4.408 (on telephones and radiotelegraphy) shall be applicable in a subsidiary manner in matters consistent with this law and not otherwise provided for, without prejudice to the powers of local provincial and municipal authorities- in matters under their respective competence.
Concessions and authorizations
Section 14.- A concession from the Executive Power shall be required when individuals carry out activities related to electricity generation, transmission and distribution within national jurisdiction, whichever the power source they use, in the following cases:
a) Concession is required for:
1) The explotaition of hidroelectric power sources of public water courses when normal power granted in concession exceeds 500 kilowatts;
2) The performance of activities aimed at the electricity transmission and/or distribution public utilities.
b) Authorization is required for:
1) The establishment of thermal plants or transmission and distribution lines, whatever the source of the power to be transmitted is, whenever power is equal to or greater than 5000 kilowatts.
2) For the establishment of thermal plants or transmission and distribution lines, whatever the source of the power to be transmitted, whenever power is less than 5000 kilowatts but their facilities require the use of public way or, in general, of public property or of property linked to public use or utility.
Section 15.- Concessions for the exploitation of the hydroelectric power sources subject to national jurisdiction (section 14, paragraph a) -1), which may be granted for a fixed or indeterminate period, shall establish the following terms and conditions:
1. Main object of its use.
2. Regulatory rules of water use , and in particular, established in accordance with local authority: those concerning navigation, protection against inundation, public health, drinking and domestic uses by riverside populations, irrigation, conservation, and fish free movement, landscape protection and tourism development.
Said rules shall take into account the following priority order for water use:drinking and domestic uses by riverside populations, irrigation and then the production of power.
3. Exploitation’s characteristic powers and installation’s maximum power.
4. The term of execution of works determined in the concession.
5. The term of the exploitation of a fixed-term concession, which shall not exceed sixty years.
6. Necessary conditions to transfer property and facilities to the State at the end of the concession.
7. Conditions and reasons for termination due to non-compliance of obligations established in fixed-term concessions.
8. Time in advance to notify persons concerned of the revocation or termination of the concession, and manner, time and conditions to transfer property, if it is an undetermined –term concession.
9. Price to be paid by the concessionaire as royalty for the use of the source. This charge shall be deposited in the National Electricity Fund.
Section 16.- In concessions for the exploitation of hydroelectric power sources subject to national jurisdiction, for works determined in the concession or for its exploitation, the concessionaire, without prejudice to indemnities to be paid to individuals concerned, will hold the following rights:
1. To occupy -within the interior of the perimeter defined in the signing of the concession agreement- the private properties that are necessary for water retention or dam works, and for necessary conveyance or outflow channels, underground or open air ones, in accordance with general laws and local regulations.
2. To flood beaches to attain the necessary rise of water level.
3. To request the Executive Power to exercise the power conferred on it by section 10, when definitive possession of third parties properties were necessary and whenever this had not been contemplated in the concession and the parties had not come to an agreement.
Section 17.- The Executive Power, once the Federal Council has issued an opinion, shall be entitled to encourage, by means of capital injection, financing, contribution, and/or temporary taxes exemptions, the concession holders mentioned in section 15 whose works arise multiple benefits or whose main target concerns national defence or seeks an appreciable improvement of the conditions of agricultural use of water courses or the regularization of their regimen or promotes their navigation.
Electricity imports and exports
Section 22.- The Executive Power is empowered to authorize electricity imports and exports, upon determination of maximum amount of power to be exploited or imported.
The authorization shall be subject to conditions and guarantees related to the use of power and to its sale or resale price.
Section 23.- The term of the authorization shall not exceed ten years, and it may be extended; and it may be revoked at any time, when the circumstances that justified the previous approval have changed, or when serious grounds of public interest are involved.
Revocation may also occur for non-use of the authorization or for non-fulfillment of the conditions established for its granting.
Federal Electricity Power Council
Section 24.- The Federal Electricity Power Council is hereby created, reporting to the Secretariat of Energy and Fuels, which shall regulate its functioning. The Federal Electricity Power Council shall serve the following purposes:
a) To consider and coordinate development plans of electricity systems for the country and submit them for the approval of the corresponding jurisdictional powers;
b) To serve as an advisory and consultant body to the National Executive Power and provincial governments when so required, on issues concerning electricity industry and electricity public utilities; priorities in the execution of studies and works; concessions and authorizations; prices and tariffs for the electricity industry and electricity public utilities;
c) To advise on ammendments required by legislation on issues regarding the electricity industry;
d) To propose provisions it may consider necessary for the best enforcement of this law and its regulations.
Section 25.- The Federal Electricity Power Council shall consist of :
a) The Secretary of Energy and Fuels, who shall serve as chairperson, or the Undersecretary, in his/her absence;
b) A representative of the Secretariat of Energy and Fuels who shall be appointed by the Executive Power;
c) The Chairperson of the Board of Directors of Agua y Energía Eléctrica, Empresa del Estado ;
d) A representative and an alternate for each province appointed by the Executive Power, on a proposal from the corresponding local governments;
e) A representative from Capital Federal and Territorio de Tierra del Fuego, Antártida Argentina and Islas del Atlántico Sur appointed by the Executive Power. The National Legislative Power may appoint three of its senators and three of its deputies to participate in the meetings of the council.
Section 26.- The council shall appoint six of its members who shall form a committee which shall be chaired by the representative of the Secretariat of Energy and Fuels.
This committee shall be in charge of the following:
a) Preparing studies and works required by the council and submitting them for consideration;
b) Performing the functions delegated to it by the council;
c) Dealing with all urgent matters, reporting them inmediately to the council if necessary, or if that is not possible, in the first ordinary meeting.
Section 27.- The Secretariat of Energy and Fuels shall determine the agencies which shall act as technical and administrative bodies of the Federal Electricity Power Council and the Committee in accordance with the regulations to be issued by said Secretariat for that purpose.
Section 28.-The Federal Electricity Power Council shall delimit “electrification zones”; each of these areas shall be composed by the province or provinces that, rationally and technically, constitute a power core from the point of view of gradual strengthening of the Argentinean electricity system or have, in case of two or more provinces, a real or potential interdependence in this field.
Each electrification zone thus created shall have an Electricity Zonal Committee, which shall be dependent on the Federal Council and shall be composed of the full members of the corresponding provinces, referred to in section 25, parragraph d) and e), and of the chairpersons of the agencies in charge of local hydraulic and electric energy problems in said provinces.
The Federal Electricity Power Council shall be regulated on the basis of recognizing and conferring to the zonal committees an informative participation in any dispute within the competence of the Federal Council related to their respective areas; the application of the Special Fund for the Electricity Development in the Interior of Argentina and the energy solutions deemed in the interest of the respective zone.
Section 29.- The expenses required for the functioning of the Federal Electricity Power Council shall be covered by the National Electricity Fund.
Electricity Funds.- National Electricity Fund
Section 30.- The National Electricity Fund is hereby created with the purpose of contributing to the financing of electrification plans, and it shall consist of:
a) A contribution from the National Treasure to be fixed yearly;
b) At least the 50 % of the proceeds from the National Electricity Fund, and said percentage may be increased by the Exdecutive Power on a proposal from the Secretary of Energy and Fuels ;
c) Royalties for the use of the hydroelectric sources set forth under section 15, paragraph 9;
d) Import duties on electricity established in each case by the competent authorities;
e) A $0,10 surcharge per kilowatt hour over the electricity sale price. The Executive Power is hereby authorized, after the Federal Electricity Power Council ‘s opinion, to modify such surcharge, which shall not exceed the 15% of said sale price.
f) Proceeds from the trading of governments bonds financed with the Funds’s resources;
g) Collection of repayments, and interests, of loans made with resources of the Fund;
h) Grants, legacies, contributions and other resources not specified previously.
Section 31.- The National Electricity Fund shall be managed by the Secretariat of Energy and Fuels and shall be allocated as follows:
a) - The 80 % exclusivelly to studies, construction and enlargement of plants, networks and related or ancillary works executed by the State;
b) - The remaining 20% shall be transferred to the Fund for the Electricity Development in the Interior of Argentina, in accordancce with section 32, parragraph d).
Special Fund for the Electricity Development in the Interior of Argentina
Section 32.-Reserve Fund for Electricity and Fund for Rural Electrification are hereby unified in a Special Fund for the Electricity Development in the Interior of Argentina, which shall consist of:
a) Surplus from tariffs and surcharges to be established by the Executive Power in Capital Federal and Gran Buenos Aires;
b) Contributions from the National Treasury in accordance with the commiments of the Economic Restoration Fund and other contributions to be determined in the budget law;
c) Ten percent (10%) of the proceeds from the National Electricity Fund;
d) Twenty percent (20%) (section 31, parragraph b) from the National Electricity Fund.
Section 33.- The Special Fund for the Electricity Development in the Interior of Argentina shall be managed by the Secretariat of Energy and Fuels and shall be used for the following:
a) Contributions and loans to the provinces for their electrification plans, as long as they form part of the plans approved with the intervention of the Federal Electricity Power Council and as long as they do not tax the electricity consumption for other purposes other than the development of electricity. To benefit from this, provinces shall set tariffs including the amortization of such contributions .
Money collected under such concept shall be used exclusively for renewing, enlarging existing plants or for executing electrification networks or for repaying, where appropiate, the corresponding loans.
b) Loans to municipalities, cooperatives and electricity users’ associations for new builds projects, construction and enlargement of plants, distribution systems and ancillary works;
c) Loans to private electricity utility companies for enlargement and improvement of their services in plants with generating capacity of less than 2,000 kW .
The unused balance remaining ath the end of the financial period shall be carried forward to the following financial period of same fund.
Section 34.- The Secretariat of Energy and Fuels shall allocate the above mentioned fund with the intervention of the Federal Electricity Power Council and shall administer said fund with the premise of ensuring in all cases the return of loans according to the following rules:
a) In the case of any loan described in paragraphs a) and b) of section 33, with an annual interest of not less than 6% and with amortization up to fifteen years;
b) In the case of any loan described in paragraph c) of section 33, with an annual interest of not less than 8% and with amortization up to five years;
The above mentioned amortization terms may be extended up to ten (10) years more in the following cases: I) When loans are used totally or partially for rural electrification works; II) When loans are intended for plans including the purchase of domestically manufactured electromechanical equipment and electric materials in a proportion of not less than 80% of the total investment. In these cases, for investments in rural electrification or in the purchase of domestically manufactured equipment and materials, the applicable interest rate may be reduced to 3% annually.
Electricity transmission and distribution- Electricity systems
Section 35.- For the purposes of this law, the following terms shall have the meanings specified below:
a) National Electricity Systems (SEN, as per its Spanish acronym) means the transmission and distribution plants, lines and networks and ancillary works and facilities- regardless of whether their owners are public or private persons-, subject to national jurisdiction;
b) Provincial Electricity Systems (SEP, as per its Spanish acronym) means the plants, lines and networks subject to provincial jurisdiction;
c) State Electricity Systems (SEE, as per its Spanish acronym) means transmission plants, lines and networks, and ancillary works and facilities that are owned, administered or exploited by the National State;
d) National Interconnection Network (RNI, as per its Spanish acronym), means the whole of national interconnected electricity systems.
Section 36.- The Secretariat of Energy and Fuels, with the intervention of the Federal Electricity Power Council, shall be responsible for the planification and coordination of works and services forming part of the National Interconnection Network and the determination of the plants, lines, networks of transmission and distribution and ancillary works and facilities that necessarily and rationally integrate it, whose approval shall be made by the Executive Power.
In the cases of intakes of hydroelectric power that are utilizable through multiple fluvial exploitations, their planification, study and coordination shall be subject to the conditions that contemplate the rational and economical use of all natural resources related to the river basin.
Section 37.- All the functions and powers of government, inspection and police, concerning electricity generation, transfomation, transmission and distribution of national jurisdiction, shall be performed by the Secretariat of Energy and Fuels, which shall be responsible for the following:
a) Promoting the integral development and rational functioning of the National Electricity Systems (SEN, as per its Spanish acronym), through the interconnection of plants and networks of national jurisdiction;
b) Ensuring free electricity circulation and distribution throughout the territory of the Nation;
c) Updating the inventory of energy sources, the cadaster of used lands and the statistic of electricity industry in all its aspects;
d) Advising the Executive Power about the granting of concessions and authorizations for the use of electricity sources and for the installation of plants and networks of national jurisdiction;
e) Performing technical security police functions for the systems referred to in parragraphs a), c) and d) of section 35, and accounting and technical inspection functions over inspections, functioning and tariffs regime of said systems;
f) Providing technical rules and necessary provisions for the functioning and operation of the services of national jurisdiction, according to the principles of this law and the regulations to be enacted for its enfrcement;
g) Submitting for the approval of the Executive Power, the tariffs and prices of energy purchase and sale to producers and to distributors of the National Interconnection Network (RNI), and public utilities of national jurisdiction;
h) Regulating the functioning of the National Electricity Systems (SEN), the National Interconnection Network (RNI) included, with approval of the Executive Power.
Section 38.- Load dispatching in the National Interconnection Network and managing and functioning of the National Electricity Systems shall be conducted by Agua y Energía Eléctrica, Empresa del Estado, which- for that purpose and without prejudice to the powers conferred on it by its own organic statute- shall have the following powers:
a) To buy electricity from the National Interconnection Network‘s plants and to deal with its commercialization by selling it to the electricity public utility companies or bodies, and to large industries;
b) To establish the operation scheme of each National Interconnection Network‘s plant annualy;
c) To impose the necessary orders for load dispatching, in accordance with the rules prepared by the Secretariat of Energy and Fuels;
Provincial Electricity Systems mentioned in parragraph b), section 35 may be connected to the National Interconnection Network if they want to obtain or deliver electricity through said Network.To this end, the respective provincial authority and Agua y Energía Eléctrica, Empresa del Estado, shall agree on the operation conditions and regime of mutual service for load dispatching purposes.
Prices and tariffs
Section 39 - The National Executive Power shall fix the prices and tariffs for electricity commercialized in plants and lines of the National Interconnected Grid and for public utilities of national jurisdiction, which in line with the fair and reasonable principle shall be basically consistent with the following concepts:
a) Costs of capital:
1. Capital costs shall include allocations to the renewal fund which shall be determined on the basis of a fixed percentage to be established, on the replacement value of the installed power with their equipments and related elements.
2. Allocations to the reserve funds.
5. Capital amortizations, provided that the corresponding concession or authorization contains clauses for complete or partial transfer of the property of the concessionaire or of the official agency without charge to the State, upon the expiration of concession or authorization.
6. Interest on capital, which shall be ruled according to the corresponding concession or authorization.
b) Costs of personnel salaries :
1. Salaries, wages and in general any remuneration paid according to legal rules.
2. Social benefits established and to be established by legal rules and amounts that must be annually allocated to build or increase special reserve funds that ensure the compliance with these obligations.
c) General expenses, office managment, technical managment and advisory services which shall be in comformity with the regulations of this law;
d) Fuels, lubricants, and in general any material required for consumption in the corresponding period and destined for generation, transformation, transmission and distribution of electricity, if any;
e) Value of electricity acquired from third parties;
f) Interest and additional financial expenses on bonds and other credit capital which have been destined for explotation and previosusly approved by the Executive Power. The total amount of said interest shall not exceed 10% of the corresponding capital on a yearly basis;
g) The rest of the expenses that are not specified in the items above, provided that they have a causality relationship with exploitation activities;
h) Electricity losses in every respect, in accordance with the rules to be established by the Secretariat of Energy and Fuels;
a) Adjustment clauses:
1. Capital, maintennance and other costs shall be adjusted annually.
2. Changes in labor or fuel prices shall be adjusted within thirty days (30) after their occurrence in accordance with the fomulae to be established by the Secretariat of Energy and Fuels.
3. Cost decreases arising from a major technical efficiency shall be credited in equal parts to users and the producing, transporting or distributing company or entity that has originated said decreases.
The legal proceeding provided for in Title 25 of Law 50 shall be applied in order to collect the amounts of sale prices of electricity and of tariffs for bulk electricity sale by the State, and the perfect title shall be the evidence of indebtedness issued by the competent office of the provider entity.
Section 40. Tariffs and prices shall be established on the basis of expected demand deemed as convenient and taken by each plant during the year.
Section 41. – State-owned or private companies composing the national electricity systems shall adjust their bookkeeping and accountancy to a general chart of accounts in order to enable their permanent audit by the Secretariat of Energy and Fuels.
Section 42. - Industries within national jurisdiction, in duly justified circumstances and if the Secretariat of Energy and Fuels deems it right and proper, shall be allowed to obtain direct supply from national electicity services and interconnect their own plants to them.
Section 43. – Every month the provinces where there are hydroelectric power sources shall receive the five (5) percent resulting from applying the tariff for bulk sale to the energy sold.
When hydroelectric power sources are located in border rivers between provinces, or when rivers pass through more than one province, said five percent (5%) shall be allocated equally and rationally between these provinces.
Section 44. - The National Executive Power is hereby authorized to use resources from the Special Fund for the Electricity Development in the Interior of Argentina referred to in section 32 of this law, when they are necessary for the continuity of the financial aid established by decree 11.219/59.
Section 45. - Agua y Energía Eléctrica, Empresa del Estado and companies in which it has a stake shall be authorized to finance their future or ongoing expansion works through issuance of debt securities, bonds or obligations.
These funds shall be exclusively used for strictly lucrative works and facilities so that their revenues can cover amortizations and interests of debts incurred under this regime.
The Executive Power shall be authorized to grant to securities, bonds or obligations to be issued, tax exemptions agreed or to be agreed to securities, bills, bonds, obligations and other papers issued by national, provincial or municipal goverments and by decentralized agencies or companies.
The National Executive Power shall set the oportunity, kind of interest and financial characteristics as it may deem proper in order to proceed with the issuance of securities involved. The guarantee by the National Government shall be granted by the Executive Power when necessary.
Section 46. - Agua y Energía Eléctrica, Empresa del Estado’s assets shall consist of all movable and immovable property occupied or involved in any way, form and place with its activities, including lands, buildings, works and facilities, staff and equipment, tools and vehicles, funds and other goods aimed to its specific activities as
a legal person of private law.
Consequently, it is hereby stated the transfer to the company of the rights of ownership over all State-owned lands that are occupied by said company or involved with said activities, with the exception of those corresponding to works or services executed or provided by the National Government, only in the case of activities fully committed to development and in the corresponding proportion when partially committed or when they are multipurpose.
The Executive Power shall legalize the corresponding titles, their registration and any other appropiate measure and shall be also authorized to transfer immovable property that may be required in the future with same purposes, in accordance with action plans and annual budgets that it approves, according to regulations in force.
Section 47. – It is hereby declared the cancellation of Agua y Energía Eléctrica, Empresa del Estado’s debt with the National Government, resulting from funds that the National General Treasury, the National Electricity Fund or the Reserve Fund for Electricity granted to said company and preceding agencies in order to execute works, notwithstanding their nature, to carry out studies or to defray operating deficit, as well as loan amortization services and past due interest, if any.
Section 48 (Provisional) .- The Federal Electricity Power Council shall be constituted once half of the provinces have informed to the Nacional Executive Power about their proposals for the appointment of representatives and they have been designated. If after the term of thirty days the provinces have not made such a proposal, the Federal Electricity Power Council shall be composed of the number of designated representatives.
Once the council is constituted, within next thirty days, it shall submit for the approval of the National Executive Power the draft of regulations of this law and its staff organization plan .
Section 49. Any law or provision in force that contradicts with this law is hereby repealed.
Section 50.- Be it communicated to the Executive Power.
José Maria Guido.- Federico F. Monjardin.