REPUBLIKA SRPSKA MINISTRY OF ENERGY AND MINING

Transcription

1 Promulgated in the Official Gazette of Republika Srpska, No. 66/02 of October 23, 2002 This translation is unofficial; it is for information purposes only. REPUBLIKA SRPSKA MINISTRY OF ENERGY AND MINING ELECTRIC POWER LAW

2 I - BASIC PROVISIONS Article 1 The Electric Power Law (the Law) establishes the rules for generation and distribution of electric power in the territory of Republika Srpska and domestic trade on behalf of Republika Srpska. The Law regulates the establishment and operation of the electric power system exclusively in the fields indicated above. The objective of this Law is to define conditions necessary for rational and cost-effective development of the activity of generation and distribution of electric power in the territory of Republika Srpska, to create living and working conditions, and to promote companies providing public services for the purpose of unhindered electric power supply to the consumers. The Law is based in generally accepted international standards in the electric power field and seeks to promote gradual liberalization of the national electric power market. In that respect, the Law observes the principles of non-discrimination and equal treatment of persons and property. Article 2 This Law is in conformity with the Law on Transmission, State Electricity Regulatory Commission and Independent System Operator in Bosnia and Herzegovina (B-H Law), which regulates the establishment and defines the functions and authorities of the State Electricity Regulatory Commission (SERC), the Independent System Operator (ISO), and the company for transmission of electric power. The B-H Law has the legal jurisdiction at the level of Bosnia and Herzegovina over transmission, the SERC and the ISO and the transmission-related functions, and also the SERC and the ISO in the Republika Srpska, with the objective of providing a continuous supply of electric power at defined quality standards. In case of conflict between the provisions of this Law and the Law on Transmission, State Electricity Regulatory Commission and Independent System Operator in Bosnia and Herzegovina in connection with transmission, operation of the transmission system, and international trade, the provisions of the Law on Transmission, State Electricity Regulatory Commission and Independent System Operator in Bosnia and Herzegovina shall prevail. 2

3 Article 3 In this law: - generation shall mean the production of electric power in hydroelectric power plants, thermoelectric power plants, and other plants that are connected to transmission or distribution networks, as well as the auto-production; - producer shall mean a natural or legal person generating electric power; - auto-producer shall mean a natural or legal person generating electric power essentially for its own use; - independent producer shall mean a producer who is not involved in electric power transmission or distribution in the territory of Republika Srpska; - renewable electric power sources shall mean electric power sources preserved in nature and renewable in whole or in part, especially the power of water streams, wind, bio-mass, and geo-thermal and nonaccumulative solar energy; - transmission shall mean the transport of electric power on the high-voltage interconnected system with a view to its delivery to end-use buyers or to distributors; - distribution shall mean the transport of electric power on medium-voltage and low-voltage distribution systems with a view to its delivery to buyers; - buyers shall mean wholesale or end-use eligible and non-eligible buyers and distribution companies; - wholesale buyers shall mean legal persons that purchase and sell electric power to buyers, except to end-use buyers who are not allowed to freely choose their electric power supplier, and that are not involved in generation, transmission, or distribution in the territory of Republika Srpska; - end-use buyers shall mean buyers purchasing electric power for own needs and use; - eligible buyer shall mean a buyer connected to the transmission or distribution network whose annual consumption exceeds 10GWh and who is allowed to purchase electric power in its discretion; - non-eligible buyer shall mean a buyer who is supplied electric power in a regulated manner and at regulated prices (tariffs); - interconnectors shall mean equipment used for linking electric power systems; - interconnected system shall mean a number of transmission and distribution systems linked together by means of one or more interconnectors; - system user shall mean any natural or legal person supplying electric power or being supplied with electric power through a transmission or distribution system; - supply shall mean the delivery and/or sale of electric power to buyers; - electric power facilities of end-use buyers shall mean electric power facilities located beyond the point of connection to the electric power network; - supplier of electric power shall mean a licensee supplying end-use buyers with electric power; - tendering procedure shall mean the procedure through which planned additional requirements and replacement of capacities are covered by deliveries from new or existing generating capacities; - trader shall mean a legal person dealing with electric power trade; 3

4 - SERC shall mean the State Electricity Regulatory Commission, as defined in the Law on Transmission, State Electric Power Regulator and Independent System Operator; - ISO shall mean the Independent System Operator, as defined in the Law on Transmission, State Electric Power Regulator and Independent System Operator. Article 4 Electric power facilities, equipment, power lines, and plants of electric power companies and end-use buyers, in the activities regulated by this Law, shall be constructed, used, and maintained in accordance with the regulations of Republika Srpska, with standards and technical norms that apply to these types of facilities, and with the environmental protection regulations of Republika Srpska. Such facilities and equipment may not threaten the security of people and property. II- ELECTRIC POWER POLICY Article 5 The Republika Srpska Government shall develop the electric power policy in accordance with this Law. The electric power policy shall: - define the structure and quality of electric power supply; - provide a long-term balance between development of the electric power industry and the energy industry in general, and energy consumption trends; - enable the use of various primary sources of energy; - enable the use of renewable sources for the production of electric power; - ensure efficient use of energy; - maintain the ecological balance in generation, transmission and use of electric power; - ensure competitiveness in the electric power market and in other energy markets; - ensure the supply of quality electric power in the RS electric power market; - ensure rational consumption of electric power. 4

5 Article 6 Electric power policy shall provide access to the distribution network in accordance with the principle of non-discriminatory third party access. Article 7 The Republika Srpska Government issues long-term and annual electric power schedules. In cooperation with the ISO, electric power schedules shall establish the framework plans for total consumption of electric power and ways of supplying electric power in mediumterm and long-term periods. The electric power schedule shall specify: - the electric power consumption structure; - ways of supplying electric power; - the requirements for environmental protection and measures to ensure environmental protection; - the structure and features of consumption by new consumers and the expansion of existing consumers; - electric power surpluses; - plans and forecasts based on the recommendations of the producers and distributors, in cooperation with the ISO. A long-term electric power schedule shall apply to a period of five years in advance. III-PERFORMING ELECTRIC POWER ACTIVITY Article 8 Electric power activities that are the subject matter of this Law shall be: generation of electric power; distribution of electric power; trade and supply of electric power. Article 9 Electric power activities referred to in Article 8 of this Law shall be performed by: companies for generation of electric power; companies for distribution of electric power; companies for trading in electric power. 5

6 Companies referred to in paragraph 1 of this Article and companies that perform several electric power activities referred to in Article 8 of this Law, shall be founded in accordance with the Republika Srpska Law on Enterprises. Generation of electric power in the manner and under the conditions set forth in this Law may be carried out by companies referred to in paragraph 1 of this Article, as well as by citizens and legal persons for their own needs, with the possibility of sale of electric power surplus in the market. Article 10 Companies for generation of electric power and companies for distribution of electric power may not be involved in the transmission of electric power following the establishment of the transmission company of Bosnia and Herzegovina. Article 11 Establishment, management, organization and association of companies referred to in Article 9 of this Law shall be done in accordance with the Republika Srpska Law on Enterprises. IV-REGULATION OF THE PERFORMING OF THE ELECTRIC POWER ACTIVITY Article 12 The Regulatory Commission for the Energy of Republika Srpska (hereinafter: the Regulator) shall be established for the purpose of regulating monopolistic behavior and providing transparent and non-discriminatory treatment of all participants in the electric power market in the Republika Srpska. Article 13 The Regulator is an autonomous, specialized, independent and non-profit organization in Republika Srpska. The Regulator shall have the status of a legal person. The Regulator shall be entered in the court register. Article 14 The full name of the Regulator is: the Regulatory Commission for the Energy of Republika Srpska. 6

7 The Regulator shall have its seal. The headquarters of the Regulator shall be. Article 15 The Republika Srpska National Assembly, at the proposal of the Republika Srpska Government, shall appoint the chairman and four members of the Regulator. The term of office of a Regulator member shall be 5 years. For reasons of continuity of operations, the terms of the members of the first composition of the Regulator shall be: for one member, five years; for another member, four years; and for the third member, three years. The members of the first composition of the Regulator shall be appointed by the National Assembly within 3 months from the date of entry into force of this Law. Article 16 In the event that the chairman is prevented from performing his/her duties, an authorized member of the Regulator will carry out his/her responsibilities. All decisions of the Regulator shall require a majority vote of all members of the Regulator. Article 17 Following the expiration of his/her term of office, a member of the Regulator may be reelected for another term. No person may be appointed as a Regulator member for more than two terms. Article 18 The position of Regulator member shall become vacant if a member: - has been absent from more than three consecutive meetings of the Regulator without the approval of other members; - resigns in writing from the post of Regulator member; - is released from duty in accordance with Article 22 of this Law; - has violated the Regulator s Code of Ethics. - 7

8 Article 19 If a member of the Regulator has become incapacitated over health reasons or is otherwise unable to perform the duties of Regulator member, the Republika Srpska Government shall propose to the National Assembly to release such member from duty. A vacant Regulator member post shall be filled by another member for the remaining term of office, in the manner and under the conditions that applied to the appointment of the released member. The Republika Srpska National Assembly shall issue the decision referred to in the previous paragraph within 30 days from the date of release of duty of a Regulator member. Article 20 Persons appointed as members of the Regulator shall be citizens of the Republika Srpska with knowledge and proficiency in the fields of engineering, economy, law or ecology. Article 21 The Regulator shall adopt and publish a Code of Ethics regulating conflicts of interest and other ethical standards for the members, employees and staff of the Regulator and other parties. The Code of Ethics shall be harmonized with customary international practice. Article 22 Members of the Regulator may not: - be related by blood or married; - be persons charged with acts incompatible with the work of the Regulator; - perform duties that are in contravention of the Regulator's independence, in accordance with the Code of Ethics; - be members of legal, executive, or court authorities, as well as members of supervisory or management boards of companies, banks or insurance companies; - perform duties or undertake activities that are in contravention of the principles of transparency and non-discrimination in the electric power market of the Republika Srpska. The Regulator shall have the jurisdiction: Article 23 - to supervise and regulate the relations between generation, distribution and buyers of electric power, including electric power traders, 8

9 - to define the methodology and criteria for setting the prices of electric power supply to non-eligible buyers; - to establish electric power tariffs for distribution system users and tariffs for noneligible buyers; - to issue or revoke licenses for electric power generation, distribution, and trade; - to define the general conditions for electric power supply. Article 24 In the exercising of its authority and performing of its functions, in accordance with its authority set forth in this Law, the Regulator shall have the jurisdiction: - to improve efficiency, reliability and cost-effectiveness of the system for the generation, distribution, and exchange of electric power; - to promote competitiveness; - to stimulate efficiency, cost-effectiveness, and safety in using electric power; - to regulate the quality of services, tariffs and competitive prices, taking into account the interests of the buyers and the needs of the electric power supply companies; - to ensure fairness in the supplying of electric power; - to facilitate transparent and non-discriminatory behavior in the electric power market; - to ensure that electric power activities in the territory of Republika Srpska do not have a negative impact on the well-being, safety, and protection of the environment; - to supervise the effectiveness of the mechanisms and processes that facilitate a systemic medium-term and long-term balance between consumption and supply of electric power; - to create conditions for the development of the power system (generation and distribution); - to introduce measures for preventing abuse of monopolist behavior by users of licenses issued by the Regulator. Article 25 The Regulator shall be funded by revenues and taxes collected from the companies performing the activities of electric power generation, distribution, and trade and by revenues from license fees. These fees shall only be used by the Regulator and shall be part of the Regulator s budget. Companies licensed by the Regulator may include the regulatory fee in their tariffs. The Regulator s activity may also be funded by non-returnable donations of foreign governmental and non-governmental organizations. 9

10 The Regulator's budget is proposed by the Regulator and adopted by the Republika Srpska National Assembly prior to start of the budget year. Article 26 A member of the Regulator shall not participate in considering and deciding on the issues in which he has direct or indirect vested interest. A member of the Regulator shall disclose the interest referred to in the previous paragraph at any stage of the meeting, after which the interested member shall leave the meeting so as to enable the remaining members to discuss such disclosure and determine whether such member is precluded from participating in decision-making on that issue. If found that a member of the Regulator acted contrary to provisions in paragraphs 1 and 2 of this Article, such member shall be held accountable in accordance with the Code of Ethics. Article 27 The Regulator shall define the relevant rules and procedures and accordingly resolve disputes between participants. The Regulator shall specify the costs incurred by disputes between participants. The Regulator's decision specifying the costs shall be binding for parties in dispute. Article 28 At the request of a party, the Regulator shall resolve disputes pertaining to: - the right to electric power supply; - the right to access the distribution network; - the obligation to deliver electric power; - tariffs at which electric power is delivered; - delays in the supply of electric power; - refusal to supply electric power; - quality of the electric power supply. For the purpose of deciding on the request referred to in the previous paragraph, the Regulator may engage a legal or natural person to collect facts. Article 29 Decisions of the Regulator shall be final. A party dissatisfied with the decision may institute court proceedings. The decision of the Regulator shall remain in effect pending the completion of the appellate proceedings. 10

11 Article 30 The Regulator, no later than six months from the date of entry into force of this Law, shall define the general conditions for supply of electric power and to establish the tariff system for the sale of electric power, as well as the subsidies for sources that use waste materials or rely on combined generation of thermal and electric energy. Article 31 In its work, the Regulator cooperates with the State Electricity Regulatory Commission (SERC), the Independent System Operator (ISO), and the single transmission company of Bosnia and Herzegovina; the Regulator shall at least once a year report on its work to the Republika Srpska National Assembly. Article 32 The Regulator may require any licensee to provide data and information that it needs for the purpose of implementing this Law. A Licensee must supply the data and information referred to in paragraph 1 of this Article within the deadlines set and must cooperate with the Regulator. The Regulator may use the information obtained from a licensee only for the purpose of performing of its activities. A Licensee who, in the performance of its duties, obtains information for which it may reasonably assume to be of confidential character, shall be obliged to maintain the confidentiality of such data. V- REGULATOR CHARTER, RULES OF PRACTICE, RULES, REGULATIONS AND DECISIONS Article 33 Within 30 days from the date of appointment of the Regulator, the Regulator shall issue its charter and establish a schedule for prompt issuance of rules and regulations pursuant to this Law. Such rules and regulations shall include such provisions as are necessary for the Regulator to fulfill its duties under this Law and achieve the purpose and intent of this Law. Within 90 days from the date of appointment of the Regulator, the Regulator shall adopt its rules of practice and procedure in accordance with the provisions, terms and authorities set forth in this Law. The rules of practice and procedure of the Regulator shall include provisions on hearings and meetings, process of drafting, soliciting public comments, and issuing of rules and regulations. 11

12 All rules and regulations adopted by the Regulator shall comply with this Law and the laws of Republika Srpska. Prior to the adoption of its rules and regulations, the Regulator shall publish and solicit public comment on draft rules and regulations. Unless a different date is specified in the Regulator's rules, all rules and regulations of the Regulator shall be effective eight days after their publication in the manner specified by the Regulator. Directives of the Regulator shall be effective on the date and in the manner specified by the Regulator in accordance with this Law and shall remain in effect unless changed by the Regulator or a court of competent jurisdiction. Article 34 The sessions of the Regulator shall be open to the public, except in limited circumstances in which confidential information or trade secrets are involved. The manner of holding of the sessions shall be determined by the Regulator in accordance with its rules of practice and procedure. All decisions of the Regulator shall be in writing and shall explain the basis of the ruling. The decisions and resolutions of the Regulator shall be published in the Official Gazette of Republika Srpska. The Regulator s documents, records of all proceedings and the minutes shall be maintained in accordance with the Regulator's rules of practice and procedure. Such documents and records shall be open to the public. Important business information shall remain confidential, as described in the Regulator's rules of practice and procedure. VI. GENERATION OF ELECTRIC POWER Article 35 An electric power company that performs the activity of generation of electric power shall be entitled to: in its generation facilities, use sources of energy that it considers most suitable, producing the needed amounts of energy and respecting the technical characteristics and requirements for the protection of environment, as specified in the license and stipulated by regulations; contract delivery and sale of electric power under the conditions determined by this law and other regulations; access the transmission grid under the conditions determined by the State Electricity Regulatory Commission and access the distribution grids under the conditions determined by the Regulator. 12

13 Article 36 An electric power company that performs the activity of generation of electric power shall be required to: observe the conditions set forth in the license for the performance of the electric energy sector activity; possess a metering device that enables measurement of energy transferred to the grid; comply with market behavior rules specified for the electric power market; meet and observe the specified technical, operational, and water industry requirements and environmental protection requirements. Facilities for electric power generation must meet the established criteria for the protection of environment and ensure continuous control over the impact on the environment. Article 37 An electric power company that, in an economically adequate manner and in accordance with environmental protection measures, in an individual generation facility generates electric power by using waste materials or renewable sources of energy or generates a combination of thermal and electric power, may be granted the status of eligible producer, pursuant to the conditions determined by the Regulator. VII. Distribution of electric power and access to the distribution grid Article 38 The distribution system consists of low and medium voltage electric power facilities (plants and lines) through which electric power is distributed to buyers. Article 39 For the purpose of unobstructed functioning of the electric power market, the distribution network must be accessible to all users in an objective, transparent and nondiscriminatory manner, in accordance with the criteria in this Law. Article 40 For the purpose of managing the electric power distribution network, the distribution electric power companies, pursuant to their needs and taking care to ensure the technical 13

14 and technological integration in their area of operations, shall within their respective structures found distribution operators (hereinafter: distributors). Distributors shall facilitate the transmission of electric power through their networks and the distribution of electric power on their territory at the request of the supplier, implying that distributors shall also operate the distribution network by means of distribution operators, in accordance with the technical capabilities of the network. Distributors shall be entitled and required to supply system users and buyers with electric power in their respective areas of operation, if so specified in their operation license. Electric power distributors shall: Article 41 guarantee the reliability of the distribution network operations and the maintainance of quality levels of electric power; secure coordinated operation of the distribution network and the transmission network, as well as of the connected networks and user facilities; provide information to the Independent Operator on the future needs for electric power; provide access to the distribution network for third parties in accordance with the established criteria. Article 42 Distributors shall prepare short-term and long-term plans for development and construction of the distribution network. Plans referred to in paragraph 1 of this Article shall be produced in accordance with the Republika Srpska energy development strategy. Article 43 Distributors shall ensure the secrecy of confidential business information they receive from other electric power companies and buyers, unless a special regulation requires the publication of certain information or their submission to the responsible state bodies. Information on the potential for the use of the distribution network shall be open to the public. Article 44 14

15 A distribution operator shall enable access to the network for all electric power producers and eligible buyers in a non-discriminatory manner, in accordance with the principles of regulated access by a third party. Article 45 A distribution operator may deny access to the network due to limited technical or operational capacities of the network. An electric power producer and/or eligible buyer of electric power that have been denied access to the network must be notified of the reasons for being denied access, which must be objective and non-discriminatory, as well as well-founded and properly substantiated. An electric power producer and eligible buyer of electric power that have been denied access to the network or are dissatisfied with access conditions may appeal to the Regulator. Article 46 When a producer and buyer intend to sign a contract for delivery/supply of electric power but have been denied access to the network, they may, with a previously obtained approval of the Regulator, build a direct electric line. Article 47 The operation and manner of management of a distribution network in the electric power system shall be regulated by the Grid Code. The Grid Code shall in particular regulate: the technical and other requirements for users' connection to the network; the technical and other requirements for safe operation of the electric power system in order to provide a reliable supply of quality electric power; the actions to be taken during the operation of the electric power system in critical situations, the technical and other requirements for interconnecting and operations between networks. The Grid Code shall be drafted by a distributor and approved by the Regulator. The Grid Code may not be in contravention of the ISO rules for the transmission grid. Article 48 An owner of a network may limit the transmission of electric power through the distribution network, but only under special circumstances: 15

16 when this is justified for reasons of safety of the electric power system, for operation-related reasons, or for reasons of safety of people, which requires special proof, when this is required by environmental protection regulations, in case of endangerment of the operation of the combined process of generation of thermal and electric power or the operation of the source of the regenerating energy from waste materials, in case of endangerment of the system of electric power generation. VIII. BUYERS Article 49 As of the date of start of application of this Law, all buyers whose annual consumption exceeds 10 GWh may be granted the status of eligible buyer. The status referred to in paragraph 1 of this Article shall be granted based on the Regulator's decision and in accordance with the criteria defined by the Regulator. An eligible buyer may not lose its status as long as it maintains the determined level of consumption and meets the criteria granting status of eligible buyer. As determined by the pace of the opening of the market, the Regulator may decide to lower the consumption level referred to in paragraph 1 of this Article and issue other criteria granting the status of eligible buyer. Article 50 An eligible buyer may freely choose the electric power supplier. The eligible buyer and electric power supplier freely chosen by the eligible buyer shall arrange the quantities and the price of the electric power that is the subject matter of their contract. Article 51. Non-eligible (tariff) buyers shall be supplied with electric power in the system of the compulsory public service supply, at the prices from the tariff system for the sale of electric power. IX- THE LICENSING SYSTEM Article 52 16

17 The following permits shall be issued in the electric power sector: - license for the performing of activities of generation, distribution and domestic trade; - technical approval; - construction license. Article 53 A license for the performing of activity of generation, distribution and domestic trade shall be issued to legal and natural persons who: - are entered in the court register for electric power activity; - are technically equipped to perform electric power activity; - meet the economic and financial requirements essential for performing the activity; - meet the workplace, fire, and environmental safety requirements. Article 54 The Regulator shall issue licenses for companies performing the activities of generation, distribution and trade of electric power in the territory of the Republika Srspka. Article 55 The Regulator issues licenses on the basis of applications. The licensing procedure is public and shall be conducted according to objective and publicly known criteria, in a non-discriminatory and transparent manner. The Regulator must consult on the requirements of each license prior to its granting and invite all interested parties to comment on the draft license through a process of public discussion and consultation. Article 56 If a licensee sells its business or seeks to transfer its license or controlling interest, the new owner must obtain a license or approval for such transfer from the Regulator. Article 57 When considering applications for the issuing, renewal, amendment or transfer of the license, the Regulator shall comply with its rules. 17

18 The rules referred to in the previous paragraph must define the application procedure and criteria for license issuance, which must comprise: - the safety of the electric power system, installations, and associated equipment; - environmental protection; - the use of land and determining the location; - the use of public land; - energy efficiency; - the nature of the primary sources; - the elements for evaluation of technical, economic, and financial capabilities and other relevant features of the applicant. The criteria and the procedures for license issuance are open to the public. Article 58 All existing legal bodies in the fields of generation, distribution, supply and trade of electric power in Republika Srpska shall apply for a license no later than 90 days from the date of establishment of the Regulator. Article 59 An application for issuing, renewal, amendment, or transfer of a license shall be filed with the Regulator in the form and the manner specified by the Regulator. 18

19 Article 60 An applicant must be notified of the Regulatory Commission s reasons because of which it was not granted the license, in accordance with the Regulator's rules and regulations. Article 61 The license for the generation of electric power is issued for a precisely defined period of time that may not exceed 30 years, counting from the date of commencement of generation. Article 62 The license for the distribution of electric power is issued for a precisely defined period of time that may not exceed 30 years and for a precisely defined area. Article 63 An end-use buyer connected to the distribution grid must pay the licensee for the expenses of installation and maintenance of the connection, pursuant to the terms of the license. The connection referred to in the previous paragraph shall be an integral part of the licensee distribution grid. Article 64 In order to connect new appliances or increase the connecting power of the existing appliances, the end-use buyers connected to the distribution network shall pay a special one-off fee for the purpose of meeting the requirements for the connection or increasing the connecting power of the existing appliances. The criteria for, the amount of, and the purpose of the resources referred to in paragraph 1 of this Article shall be determined by the Regulator in the general conditions for the supply of electric power. Article 65 A license for trading in electric power is issued for a period of up to five years, but the Regulator may decide to renew the licence to perform this activity. A trade license (purchase and sale) may be issued to companies generating electric power and companies trading in electric power that have been separated from distribution companies (traders in electric power), as well as to independent traders. 19

20 Independent traders and traders in electric power shall separately be issued licenses for the trading of electric power with consumers located in their respective areas of operations (area trading license) and licenses for the trading of electric power with consumers located outside their respective areas of operations. The criteria for being granted a license shall specify the obligation to supply electric power to consumers who are not allowed to freely choose their suppliers outside of the area of operations (non-eligible buyers) and regulate the manner in which prices and the standards of quality for the supply of the electric power for such consumers. Independent traders may be licensed to trade in electric power with consumers that have the right of choice and with traders. In order to be granted a trade license, the applicant must provide sufficient proof of its technical, administrative, and financial capabilities, in accordance with the Regulator's rules. Trade of electric power shall be conducted freely, in accordance with the terms of this Law and the issued license. Article 66 If a license user licensed by the Regulator violates this Law or fails to fulfill duties arising from the license, the Regulator shall warn the licensee of the infraction in writing, setting the deadline for remedying the infraction. Sanctions or proceedings instituted against the licensee shall not delay the action to eliminate the consequences referred to in the previous paragraph. If, following the expiration of the period referred to in paragraph 1 of this Article, the infraction or failure to fulfill duties has not been remedied, the Regulator may revoke the license, regardless of the proceedings that may have been instituted against the licensee. Article 67 For the duration of validity of the license, the licensee, at the request of the end-user, shall within the scope of its activity remedy disturbances of the regular supply of electric power. 20

21 Article 68 The licensee shall be obliged to connect, and distribute electric power to, all end-use buyers permitted to connect to the network within the area for which the distribution license has been issued. End-use buyers may not arbitrarily connect their electric power facilities, devices and installations to the electricity network. Article 69 If the electric power facilities, devices and installations of the end-use buyer do not meet the prescribed technical requirements, such end-use buyer may be temporarily disconnected from the electricity network and given a deadline to eliminate the deficiencies. Article 70 To use the hydroelectric potentials for the generation of electric power, a person licensed to generate electric power in the existing hydroelectric power plants shall pay a fee to the municipalities in whose territories the potential is used, in the amount equal to 4 percent of the charges for the electricity delivered from power stations using coal from mines located in the respective territories of such municipalities. Article 71 A person licensed to generate electric power in thermal power plants shall pay to the municipalities in whose territories the thermal power plant is located a fee in the amount equal to 4 percent of the charges for the electricity delivered from power stations using coal from mines located in the respective territories of such municipalities. Article 72 The Regulator issues licenses for construction of electric power facilities. The Regulator, in accordance with this Law, shall issue a certificate of compliance with construction requirements for each electric power facility. Article 73 After the expiration of the construction license, if the license was not renewed or transferred or if the facility is used for other purposes, the licensee must dismantle and remove all facilities and clear the land in accordance with the request of the Regulator within two years from the date of expiration of the license. 21

22 The licensee must provide a guarantee for the funds needed for the execution of works referred to in the previous paragraph. If this is considered to be in the interest of the Republika Srpska, the Regulator may exempt the licensee from the dismantling and removal of facilities referred to in paragraph 1 of this Article. The provisions of this Article do not apply to a trade license user. Article 74 In exceptional cases, when this is in the public interest, the Regulator may change the conditions set forth in the construction license. Prior to deciding on changing the conditions set forth in the construction license, the Regulator shall consider the possible costs incurred for the licensee over the change of conditions and the general benefits and disadvantages that may result from such change. The Regulator may change the conditions set forth in the construction license at the request of the licensee or at its own initiative. The licensee may request that conditions in the construction license be changed pursuant to the Regulator's rules. X TECHNICAL APPROVALS Article 75 Technical approval may be preliminary and permanent. Article 76 A preliminary technical approval is a confirmation that the envisaged power facility complies with the development plans, technical standards and conditions for electric power facilities under the Republika Srpska Physical Plan. The preliminary technical approval is necessary for obtaining zoning and building permits. 22

23 Article 77 A permanent technical approval is issued for all constructed electric power facilities. The permanent technical approval specifies all technical requirements related to the work of the facility, the terms and conditions for running the facility, and the requirements related to the use of public property and infrastructure, as well as other terms established by the Regulator. Article 78 The Regulator issues provisional and permanent technical approvals for electric power facilities with a rated power of over 10 MVA and with a rated voltage of over 20 kv. The competent electricity distribution company issues technical approvals for electric power facilities with a rated power of up to 10 MVA and with a rated voltage of up to 20 kv. Article 79 For each individual connection to the electric power grid, the end-use buyer must receive a technical approval for connection, provided that electric power and technical requirements under the general conditions for electric power supply have been met. The application for obtaining technical approval for connection to the distribution grid shall be decided on by the publicly authorized distribution licensee within 30 days from the date of submission of application, in accordance with the provisions of the Law on General Administrative Proceedings. The Regulator shall decide on the appeal against the decision referred to in paragraph 2 of this Article within 15 days from the date of reception of the appeal. Article 80 In accordance with the general conditions for electric power supply, a technical approval specifying the electricity and technical requirements for connection shall be required for the connection of electric power facilities of end-use buyers or for the increase of electric power consumption by existing consumers or the increase of power previously allocated to existing consumers. If a new facility is being constructed or if an existing facility is being reconstructed and if such facilities need to be supplied with electricity or will require the increase of the consumption of electricity or the allocated power, the approval referred to in paragraph 1 of this Article must be obtained prior to obtaining the construction approval. In the case under paragraph 2 of this Article, an investor must also meet the technical requirements for drafting the technical documentation for facility construction, as well as 23

24 for reconstructing existing facilities, if such construction or reconstruction shall require an increase of electricity consumption or allocated power. The technical requirements referred to in paragraph 3 of this Article shall be defined by the licensee whose electric power facilities provide connection to the facilities, equipment, and installations of the applicant. XI- SUPPLY OF ELECTRIC POWER Article 81 Electric power shall be supplied in accordance with this Law, the general conditions for electric power supply, the tariff system for the sale of electric power, and a contract that may be signed between the supplier and the buyer. Electric power supply shall comprise delivery and/or sale of electric power. Article 82 The general conditions for the supply of electric power shall particularly specify: 1. the conditions and the manner for the issuance of technical approvals for connecting new appliances or increasing the connecting power of existing electric appliances, as well as the substance and the manner of conclusion of contracts on conditions for connection or increase of connecting power of electric appliances; 2. the manner of increase of power or consumption of electricity; 3. the terms under which the electric power appliances are connected to a distribution grid; 4. the conditions for, manner of, and deadlines for concluding contracts on electric power supply; the obligations of the supplier in the continuous supply of end-use buyers with quality electric power and the obligations of end-use buyers. 5. the conditions for and manner of supply of electric power in accordance with a connection contract; 6. the manner of measuring and determining the consumption of electric power and the accuracy of metering equipment; 7. the manner of consumption accounting and conditions for payment for electric power consumed; 8. the measures to be undertaken in case of electric power system interruption and the measures to protect the electric power system from excessive consumption; 9. the conditions for and the manner of disconnection of a supply of electric power; 10. the conditions for, the manner, the measures, and the sequence of restricted delivery of electric power in case of electric power shortage; 11. the manner of determining the quantity and the capacity of illegally consumed electricity, as well as the manner of accounting and charging such quantities of electricity; 24

25 12. the conditions for and the manner of connecting of electric power facilities, construction sites and temporary buildings; 13. the manner of notifying end-use buyers of delays and restrictions in the supply of electric power. Article 83 The tariff system shall establish categories of end-use buyers, tariff elements for pricing of electric power supplied, and the manner of their application. Article 84 The contract on sale of electric power is concluded in accordance with the Law on Obligatory Relations. Article 85 A contract on sale of electric power to tariff (non-eligible) buyers shall in particular specify: 1. the quantity of electric power and the manner of pricing electric power; 2. the manner of and deadlines for delivery; 3. the point of delivery and the metering point; 4. the manner of accounting and payment; 5. the duration of contract; 6. the accountability for noncompliance or partial compliance with contractual obligations; 7. other rights and obligations in accordance with the law, the general conditions for the supply of electric power, and the tariff system for the sale of electric power. 25

26 XII-SUSPENSION AND RESTRICTION OF ELECTRIC POWER SUPPLY Article 86 A distribution licensee may interrupt the delivery of electric power in cases of: - regular and extraordinary maintenance; - inspection and overhaul; - review and the control of metering; - grid expansion. A distribution licensee shall carry out the anticipated interruption in the shortest time possible. A distribution licensee shall announce the interruption of delivery of electric power referred to in paragraph 1 not sooner than 24 hours prior to taking action referred to in paragraph 1 of this Article. Article 87 A distribution licensee, after issuance of a warning, shall disconnect an end-use buyer, if the end-user buyer fails to fulfill his/her obligations within the deadline set in the warning in the following cases: - if the end-use buyer is hindering the delivery of electric power to another buyer; - if the end-use buyer forbids or denies the personnel authorized by the transmission or distribution licensee access to his/her parts of the connection, protective and measuring devices, electric appliances and devices, including when such equipment causes interference; - if the end-use buyer fails to comply with the special conditions for restricting the delivery of electric power, in accordance with this Law. Article 88 A distribution licensee, after advance notice, shall disconnect an end-use buyer, if the end-use buyer fails to fulfill the following requirements within the deadlines specified in the advance notice: - upon the warning of the distribution license user, to decrease the power or the quantity of electricity used as defined in the contract within the deadline set; - if the end-use buyer prevents accurate metering of consumed quantities or consumes electricity without the required meters or bypasses the required meters; - to pay for the delivered electricity within the deadline set forth in the contract on electric power supply or the general conditions for electric power supply. Article 89 26

27 A distribution licensee shall disconnect an end-use buyer without advance warning or notice: - if the end-use buyer with the operating of his/her electric power appliances and facilities endangers human lives and health and the environment; - if the end-use buyer fails to remove or reduce to acceptable level the interferences caused by its equipment and facilities within the deadlines set by the distribution licensee or the responsible inspection body; - if the end-use buyer, without the approval of the distribution licensee, connects to the grid its facilities, equipment, or installations or enables others to connect their own facilities, equipment, or installations to the grid through its facilities, equipment, or installations, not later than 48 hours following the receipt of the notice. Article 90 Upon the end-use buyer's removal of causes of disconnection, the distribution licensee shall reconnect the end-use buyer to the network at the expense of the end-use buyer. If the distribution licensee disconnects the end-use buyer without cause, it will, within 24 hours from the time the disconnection without cause has been identified, reconnect to its grid at its own expense all of the end-use buyer's facilities, devices and installations. Article 91 The end-use buyer who has been disconnected from the electricity distribution grid because of injury done to the distribution licensee shall compensate the distribution licensee for the damages. The end-use buyer whose delivery of electricity has been disconnected without cause by the distribution licensee shall be entitled to compensation for damages thus caused. The Regulator shall determine the damages under paragraphs 1 and 2 of this Article. 27

28 Article 92 If an unanticipated and unforeseen shortage of electric power occurs in the electric power market, endangering human safety and the integrity of the grid, the Republika Srpska Government, with previous consultation with the Regulator, shall issue decrees restricting the delivery of electric power to some of the end-use buyers, specifying the sequence of the restrictions, defining the manner of use of electric power, and identifying the compulsory level of generation of electric power. The Republika Srpska Government, the Regulator, and the licensees must do everything in their power to restore sufficient levels of electric power supply as soon as possible. The measures and the activities arising from paragraphs 1 and 2 of this Article shall be enforced by the Republika Srpska Government through its decrees. XIII- CONSTRUCTION AND MAINTENANCE OF ELECTRIC POWER FACILITIES Article 93 In order to construct or maintain electric power facilities constructed on real estate without direct access to a public road, a licensee may pass through land owned or used by other persons. A licensee shall exercise the right under paragraph 1 of this Article pursuant to the approval issued by the responsible municipal administrative body at the request of the licensee. Exceptionally the licensee, with the aim to provide conditions for regular and undisturbed supply of end-use buyers with electric power, may in cases of emergency exercise the right to access electric power facilities without the approval of the responsible municipal administrative body. The licensee shall compensate the land owners and users referred to in paragraphs 2 and 3 of this Article for the damages caused to them by the licensee's passage over their land. Article 94 Without the approval of the licensee, owners or users of immobile property situated under, above, or near the electric power facilities or facilities associated with electric power generation, may not perform any works that obstruct the operation of such facilities, the performing of the electric power activity, or endanger the safety of people and property. 28