The Procedures and Principles Amending the Security Procedures and Principles, with the decision of the Energy Market Regulatory Authority (EMRA) dated 14 March 2024 and numbered 12495 (Decision), was published in the Official Gazette of the Republic of Turkey and entered into force on 16 March 2024. The Decision is available here (in Turkish).
What is new with the Decision?
Pursuant to the Decision, the letters of guarantee to be submitted by market participants operating in organized wholesale electricity markets must be electronic. Existing letters of guarantee must be changed to electronic letters of guarantee by 1 January 2025. Letters of guarantee that are not changed before the aforementioned date will not be considered in security calculations.
The methodology for calculating the Turkish lira equivalent of securities in practice remains the same; however, the Decision explicitly stated the methodology. Accordingly, the calculation of the Turkish lira equivalent of securities will be based on the following:
- The Central Bank of the Republic of Türkiye (CBRT) foreign exchange buying rate announced by the CBRT at 3:30 pm one business day prior to the calculation day for foreign currency cash securities and foreign currency electronic letters of guarantee
- The indicative prices published in the Official Gazette by the CBRT on the day of calculation for government domestic debt securities issued by the Republic of Türkiye Ministry of Treasury and Finance
- The prices determined by the central settlement institution for eurobonds issued by the Republic of Türkiye Ministry of Treasury and Finance
It is now explicitly regulated that in the cases where market participants provide more than one type of security, they can replace their securities partially or completely by other instruments that are accepted as security.
If the market operator determines that the interim injunction decisions issued by the legal authorities regarding the securities that are submitted by a market participant or other situations that eliminate the performance security nature of the relevant securities, such securities will not be considered in the total security calculation of the relevant market participant.
The records of all eligible consumers registered in the Market Management System (MMS) on behalf of a market participant will be deleted effective from the first business day that the participant's security level does not meet the additional security amount required to be provided as of 11 am. Prior to the amendment, the deletion of records was carried out effective from the billing period in which the total security calculation was made for the first business day that the participant's security level did not meet the additional security amount required to be provided as of 11 am.
For the eligible consumers in the portfolio of the sanctioned market participant, the amount of energy received as an imbalance by the authorized supply company and the market participant supplying energy to the relevant organized industrial zone with a distribution license due to the power drawn by the relevant eligible consumers, will be evaluated by the market operator as of the date of being added to the portfolio. Prior to the amendment, for eligible consumers in the portfolio of the sanctioned market participant, the amount of energy received by the authorized supply company as an imbalance was evaluated by the market operator as of the beginning of the relevant month.
Conclusion
Decision clarified some practical issues regarding the security obligations of market participants operating in wholesale electricity markets. In line with the amendments, it is important to note that existing letters of guarantee should be replaced with electronic letters of guarantee by 1 January 2025.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.