REGULATORNA KOMISIJA ZA ELEKTRIČNU РЕГУЛАТОРНА КОМИСИЈА ЗА ЕЛЕКТРИЧНУ ENERGIJU U FEDERACIJI EНЕРГИЈУ У ФЕДЕРАЦИЈИ БОСНЕ И BOSNE I HERCEGOVINE - F E R K XЕРЦЕГОВИНЕ - Ф Е Р К
INITIAL LICENSE
FOR PERFORMANCE OF THE POWER ACTIVITY POWER DISTRIBUTION
NAME OF POWER COMPANY:
JAVNO PODUZEĆE ELEKTROPRIVREDA HRVATSKE ZAJEDNICE HERCEG BOSNE dioničko društvo Mostar
SEAT OF POWER COMPANY:
Ulica Zagrebačka 1, 88000 Mostar
ID NUMBER OF POWER COMPANY:
4227248350007
REGISTRY NUMBER OF THE LICENSE: 06-03-516/05/05
LICENSE VALIDITY: 01.12.2005. -30.11.2007.
DATE: 01.12.2005. ______Risto Mandrapa, FERK President
Đulizara Hadžimustafić, Zdenko Šimunović, FERK Commissioner FERK Commissioner
Operation License- Power Distribution for Elektroprivreda HZHB d.d. Mostar
LICENSE CONDITIONS
1. GENERAL PROVISIONS
1.1. Regulatory Commission for Electricity in Federation of Bosnia and Herzegovina (FERC) issues initial license for performance of power distribution activity to by JP Elektroprivreda HZ HB d.d. Mostar (hereinafter called The Licensee) in accordance with the Licensing Rule (Official Gazette FBIH No. 29/05), based on the application submitted on 03.08.2005.
1.2. Licensee’s Seat: Zagrebačka ulica broj 1, 88000 Mostar Phone: 036 323 216, Fax: 036 310 847
1.3. E-mail address: [email protected]
1.4. The authorized responsible person is General Manager Vlado Marić, phone number: 036 310 847, fax number: 036 317 157,
1.5. This license enters into force on 01.12.2005 and it is valid for two years. i.e. 30.11.2007
2. DEFINITIONS
The words and terms in this license will have meaning provided within the Electricity Law FBIH (Official Gazette No. 41/02, 24/05 and 38/05), as well as FERC’s rules and regulations.
3. THE PERFORMANCE OF THE LICENSED ACTIVITY
3.1. The Licensee is entitled to perform the power distribution activity on the distribution facilities and plants (lines, substations and switchyards), voltage levels 35 kV, 20 kV, 10 kV and 0, 4 kV, that are in his fixed assets or on which it has legal basis for exploitation listed in Attachment 1. 3.2. The The Licensee will perform the power distribution activity in the area of Federation of Bosnia and Herzegovina where it is registered and this includes area of Herzegovina-Neretva Canton, Central Bosnia Canton, Canton 10, West Herzegovina canton, Posavina Canton in the municipalities listed in Attachment 2. 3.3. The Licensee is authorized to issue electric power consents for connectiong to power grid within its geographic area, consistent with the terms of Grid Code, Rule on Connections and Cost Schedules that should be developed by Licensee not later than 30.06.2006. and submit it for FERC’s approval.
License Registry Number 06-03-516-05/05 Page 2 of 12
Operation License- Power Distribution for Elektroprivreda HZHB d.d. Mostar
3.4. The Licensee is authorized to administer contract agreements for access to and connection to the distribution network with the customers from its distribution area. 3.5. The Licensee shall inform FERK on all planned and realized activities related to assets for performance of licensed activity (licensed assets) and on FERC request it shall submit the contract and specifications of works related to the third party services.
4. OBLIGATIONS OF THE LICENSEE
4.1. Laws, regulations, technical standards and approved tariffs
4.1. Licensee is obliged to comply with all applicable laws, secondary legislation, technical regulations, rules, standards and rules and regulations of FERC and SERC, as amended from time to time, as the conditions of this license, consistent with EU Directives and international agreements, accepted by BIH. 4.2. Licensee is obliged to apply the FERC tariff order applicable to Licensee.
4.2. Public service
4.2.1.The Licensee is obliged to perform the distribution of electricity for non-eligible (tariff) customers as the public service, pursuant to applicable laws, secondary legislation, regulations and standards of FERC, and consistent with EU Directives and international agreements accepted by BIH. 4.2.2.The Licensee is obligated to cooperate with Generation License and Tier 1 Supply License holders in negotiating the contracts required to ensure a stable public service supply. 4.2.3. FERC may adjust Licensee’s Public Service obligations during the license term.
4.3. Distribution Network Access
4.3.1. The Licensee shall inside its company organize Distribution Operator the task of which will be to control the power distribution network. Activities on establishment of Distribution Operator the Licensee shall finalize not later than 30.09.2006. 4.3.2. The Licensee shall ensure access and connection to the distribution network to all non-eligible (tariff) customers in a non-discriminatory manner and consistent with controlling FERC laws and rules, if the technical and energy criteria for connection set forth in the Grid Code, Rule on Connections and Cost Schedules that should be developed by Licensee in accordance with clause 3.3. 4.3.3. The Licensee shall enable the connecting to distribution network to all generators and eligible customers in non-discriminatory manner, consistent with controlling FERC laws and rules, if the technical and energy criteria for connection set forth in the Grid Code, Rule on Connections and Cost Schedules that should be developed by Licensee in accordance with clause 3.3. 4.3.4. Licensee shall develop procedures for approval of the access and connection to the Distribution Network for FERC approval, consistent with the requirements of Art. 4.10 of this License.
License Registry Number 06-03-516-05/05 Page 3 of 12
Operation License- Power Distribution for Elektroprivreda HZHB d.d. Mostar
4.4. Quality of Electricity
4.4.1. The Licensee shall take all necessary measures that the electricity distributed to customers is in compliance with the quality requirements defined in the regulations on electricity supply, i.e. General Conditions for Supply and Distribution Grid Code. 4.4.2. Licensee shall perform his activities in a manner consistent with the state of the art domestic and international practice, related to quality and costs of power distribution gradually approaching to the least cost principles. 4.4.3. The Licensee is obliged to increase the safety, reliability and quality of supplied electricity with adequate investments into network and proper operation and maintenanceof distribution system.
4.5. Points and voltage levels of electricity acceptance
4.5.1. The Licensee is accepting electricity regularly in substations 110/X kV or on the outlet of the power plants on voltage levels 35 kV and 10(20) kV. The acceptance of electricity from small power plants may be done also on low voltage level of 0,4 kV 4.5.2. Exceptionally, in the areas where, because of configuration of the terrain and existing middle-voltage network (35, 20, 10 kV), is necessary to accept the electricity also on the middle-voltage level and low-voltage level from the neighboring distributions. 4.5.3.On the all electricity acceptance points Licensee is obliged to provide the respective metering of electricity, i.e. to use the metering devices of the generation and/or transmission and/or neighbouring distribution for the purpose of registering accpeted electricity if it the accuracy type and class thereof is satisfactory.
4.6. Metering devices on the points of delivery and acceptance
4.6.1. The Licensee is obliged to have metering devices on the points of delivery/acceptance of electricity in accordance with General Condistions for Electricity Supply. 4.6.2. Type and class of metering devices on the points are defined in General Conditions of Supply. The devices shall be accurate, properly calibrated and sealed, and fulfill specifications mentioned in the General Conditions of the Supply. 4.6.3. In the event that Licensee’s metering devices do not comply with the requirements of the General Conditions of the Supply, Licensee shall submit to FERC a proposed action plan to address such deficits not later than 31.05.2006. 4.6.4. The Licensee shall submit to FERC the review of metering points on places of electricity acceptance/delivery from Transco, power generators and neighboring power companies. 4.6.5. In the event that Licensee on certain points accepts the electricity from the neighboring country, it shall specially mark those points and explain the necessity fro acceptance of electricity from neighboring countries on distribution voltage levels.
License Registry Number 06-03-516-05/05 Page 4 of 12
Operation License- Power Distribution for Elektroprivreda HZHB d.d. Mostar
4.6.6. During the term of this initial license Metering Unit may operate also in the scope of Supply Division, to enable performance of planned activities on elimination of commercial electricity losses. 4.6.7. After the expiration of deadline of 18 months, in the period of consideration of the application fro permanent license for distribution activity, FERC will consider if the conditions are fulfilled to return the Measurement Unit in the scope of Distribution activity.
4.7. Locations, metering points and voltage levels of delivery of electricity
4.7.1. The Licensee delivers the electricity to the supply service providers, i.e. in the initial phase to the customers, on the metering points that are normally settled on the border of fixed assets distribution-customer. 4.7.2. Voltage levels of electricity delivery are 35 kV, 10(20) kV and 0, 4 kV. The voltage level on which the customer will accept the electricity will be determined in the electric power permit.
4.8. Power balance by voltage levels
The Licensee is obliged to submit to FERC any updated data on electrcity consumption by voltage levels with realized total consumption in the previous year each year, not later than January 31 of the current year in a format prescribed in the Rules on Tariff Methodology and Tariff Proceedings.
4.9. The System of Quality Improvement
The Licensee has the permanent obligation to develop a Quality Assurance System to improve the quality and operation of distributions system and providing services to end customers with the aim to be certified by independent body for certification, in note later than 24 months.
4.10. The Design of Standardization Documents
4.10.1. The Licensee shall, not later than 30.06.2006. design the proposal of distribution grid code and submit them to FERC 4.10.2. The Licensee shall, , in the 4 months from the effective date of General Condistions of Supply adopt the following normative acts and submit them to FERC for review, harmonization and approval:
a) Rule on Connections, in which the manners of connecting of new customers on distribution network, with specification of necessary materials and review of necessary works to be done on connection
License Registry Number 06-03-516-05/05 Page 5 of 12
Operation License- Power Distribution for Elektroprivreda HZHB d.d. Mostar
b) The Schedule of Costs for new customers’ connecting on the distribution network, as well as schedule of works and necessary materials in the case of modification of present manner of supply for existing customers c) The procedures of approval/refusal of the third party access (eligible customer or generator) d) Procedures for resolving customer’s objections and complaints
4.10.3. Licensee shall be obliged to revise follow all the changes in laws, regulations, specified in clause 4.110.2. from a) to d) and adjust to the changes,, and to submit its proposal of changes within 90 days following the effective date of the controlling regulation, to FERC or in the deadline prescribed by the legislator.
4.11. The Establishment of Customer Relations and Failure on Network Reporting Office
4.11.1. The Licensee shall, if it has not done it already, establish in all distribution branches seats, the organizational parts-offices for customer relations. These offices shall have the working hours adjusted for customers. 4.11.2. The Licensee shall establish the duty services for reporting failures on the network that shall receive phone reports of failures 24 hours for all 365 days in a year. 4.11.3. The data on seats of offices, working hours and contact numbers, the Licensee shall publish in proper way, through daily newspapers, and/or flyers that will be set on the visible location in their offices, on website. It is desirable that these information can be read on the backside of electricity bill. 4.11.4. Licensee shall conduct annually (at the end of each year) the survey on the customer’s level of content related to electricity quality and services provided. It shall inform FERC on the results of this survey.
4.12. Database establishment
4.12.1.The Licensee shall establish the database with registers on outages and failures, causes and duration of the failures. 4.12.2. The Licensee shall establish the database on periodical reviews and metering in power facilities and plants prescribed by law. 4.12.3. The Licensee shall, establish the database on: a) metering points for each electricity customer b) number of requests for access to network, c) power consents issued, c d) number of new connections established e) number of refusals and basis for refusal f) number of terminations of supply of customer, with causes and duration of termination g) number of customer complaints and objections, time required to resolve and outcome
License Registry Number 06-03-516-05/05 Page 6 of 12
Operation License- Power Distribution for Elektroprivreda HZHB d.d. Mostar
4.12.4. Databases from clauses 4.12.1. to 4.12.3 shall be established by the Licensee not later than 30.09.2006.
4.13. Informing Customers on costs and conditions of connecting on distribution networks
4.13.1. The Licensee shall design the Price list of connecting to distribution network that will define the conditions of connecting, specifying unit prices for equipment and services necessary for creating the connection. Documents on conditions and costs of connection shall be available to service users at website of Licensee or written flyers and brochures that may be obtained in the distributor’s branch offices. 4.13.2 The Licensee shall provide that documents from clause 4.10.2. are available for service users on web site and office for customer’s relations.
4.14. Meter reading for consumed electricity
4.14.1.The Licensee shall establish the efficient system of reading and self-reading of meters that will be in accordance with the General Conditions for Supply. 4.14.2. In accordance with clauses 4.6.6 and 4.6.7 the meterreadings will be performed in scope of Measurement Unit in the scope of Power Supply Activity
4.15. The Rulings of Authorized Inspections
The Licensee is obliged to inform FERC on taken activities related to minutes and rulings of authorized inspection bodies.
4.16. Safety and reliability of the plants
4.16.1. The Licensee shall ensure that the operation of distribution facilities and plants is safe for health and life of people in the sense of protection from electrocution injury and step voltages, protection from surface potential (voltage), protection from electromagnetic radiation, fire protection and noise protection. 4.16.2. Protection devices in power facilities shall be designed and operated in a manner that provides safe, reliable and selective operation for the purpose of reducing the duration time of the failure. 4.16.3. Licensee shall, not later than 31.12.2006. provide public education program for consumers and the public to minimize the threat of injury through use of electricity and measures for safe operation. This publication shall be available to all customers free of charge in the offices of Licensee and its web site.
4.17. Regulation of ownership rights and legal basis for exploitation
4.17.1. The Licensee is obliged to regulate the ownership rights, i.e. legal basis for exploitation of plants, facility and land through which and on which the power distribution activity is performed.
License Registry Number 06-03-516-05/05 Page 7 of 12
Operation License- Power Distribution for Elektroprivreda HZHB d.d. Mostar
4.17.2. The Licensee, for existing power facilities for which has not fulfilled the above- specified obligation, shall fulfill it in not later than 18. 4.17.3. The Licensee shall report quarterly to FERC about the activities taken pursuant clause 4.17.2.
4.18. Market Rules
4.18.1 The Licensee is obliged to comply with and apply the market rules. 4.18.2. The Licensee regulates its relations with other participants on the electricity market in accordance with the prescribed regulations.
4.19. Environmental Protection
4.19.1. The Licensee shall, in design and construction of its plants and lines, selection of route and location of facilities, provide for that disruption of the environment is reduced to the lowest possible level. 4.19.2 The Licensee shall, during exploitation of the plant, minimize the adverse impacts on the environment.
4.20. Construction and Reconstruction
4.20.1. Construction and Reconstruction of any facility for distribution should not be taken by the Licensee without prior initial license for construction issued by FERK. 4.20.2. The Licensee shall regularly submit three-year plan of construction, and usage of power facilities. 4.20.3. The Licensee shall submit to FERC for approval the annual plan of construction and reconstruction until the September 30th of current year for the next year.
4.21. The Removal and Closing the Facilities
4.21.1. After the termination of performance of the activity from the license or after the expiration of the exploitation life of the facility, the Licensee, normally, is obliged to remove all plants and facilities, and return the lend into previous condition if the license is not transferred to other person or renewed or the facilities and structures are used for other purposes. 4.21.2. For the case from clause 4.22.1. the Licensee provides the funds and guarantees for funds that will be used for de-installation of the facilities, plants and other, as well as for cleaning and recovery of the land in accordance with the Electricity Law. 4.21.3. In the exceptional cases FERC may, if it is in the general interest of Federation BIH, relieve the Licensee of the obligations from clause 4.16.2.
4.22. The Inspection Certificate
4.22.1. The Licensee is obliged to have the inspection certificates for its facilities.
License Registry Number 06-03-516-05/05 Page 8 of 12
Operation License- Power Distribution for Elektroprivreda HZHB d.d. Mostar
4.22.2. The Licensee is obliged to obtain the missing inspection certificates for its facilities in no later than 18 months and submit them to FERK immediately after the obtaining or submit the evidence that it has started the proceeding and has taken all necessary measures in his power to obtain the approval 4.22.3. The Licensee shall provide quarterly reports to FERC on activities taken in accordance with clause 4.22.1.
4.23. Financial and Technical Data
4.23.1. The Licensee is obliged to submit to FERC once a year, and also on FERC’s request, the following financial data: a) Balance Sheet, b) Income Statement, c) Cash-Flow Statement, d) Gross Balance Sheet, e) The Licensed Assets Statement, f) Revaluation of the assets, g) Investment Plan (annual and three-year ) h) Realization of Investment Plan (annual, and three-year) i) The Review of Working Capital, j) Plan and realization of loan funds – long-term loans, k) Plan and realization of loan funds – short-term loans, l) As well as all the other data defined in the Rules for Tariff Methodology and Tariff Proceedings of FERC.
4.23.2. In addition to financial indicators the Licensee is obliged to submit regularly also the following data: a) Plan of providing services to power suppliers by voltage levels: - distribution of electricity for non-eligible(tariff) customers by voltage levels and suppliers - distribution of electricity for eligible customers by suppliers and voltage levels, when market comes in force b) Report on capacity losses and electricity losses on distribution network, data on capacity losses c) Report on capacity losses and electricity losses on distribution network, data on energy losses by voltage levels d) Report on realized electricity delivery to tariff customers per months e) Plan of meters calibration for the next year not later than September 30th of current year f) Plan of reconstruction of metering points for the next year not later than September 30th of current year g) Technical data on distribution networks and substations, data on MV 10(20) kV and 35 kV lines h) Technical data on distribution networks and substations, data on LV 0,4 kV lines
License Registry Number 06-03-516-05/05 Page 9 of 12
Operation License- Power Distribution for Elektroprivreda HZHB d.d. Mostar
i) Technical data on distribution networks and substations, data on substations 35 kV/10(20) kV j) Technical data on distribution networks and substations, data on substations 10(20) kV/0,4 kV k) Technical data on distribution networks and substations, summary data on power facilities l) Data on contracts for accessing power distribution network, structure of customers, category – commercial (other) consumption by activities type m) Data on contracts for accessing power distribution network, structure of customers, category – households consumption by type of facility n) Data on contracts on connecting for customers on voltage levels above 1 kV Data on calibration plan and reconstruction of metering places (clauses e and f) pursuant clauses 4.6.6. and 4.6.7. will be submitted in the initial period by Measurement Unit that is in the scope of Power Supply.
4.23.3. All specified data shall be submitted by the Licensee in the deadlines determined by FERC, in written, signed and verified, as well as in electronic form on CD.
4.24. Submission of Information
4.24.1. The licensee is obliged to cooperate related to any FERK request for information, to enable FERK in the performance of its jurisdiction in accordance with Electricity Law and FERK rules and regulations. 4.24.2. All information submitted by Licensee shall be submitted with an affidavit by the authorized officer that the information is true and complete to the best of the officer’s knowledge.
5. THE UNBUNDLING AND ACCOUNTING ACTIVITIES
5.1. The Licensee is obliged to keep business books and design financial statements for power distribution activity, separately from other power (regulated) and non-regulated activities, in accordance with Electricity Law, accounting regulations,and Action Plan FBIH for restructuring and privatization of power sector in BIH. 5.2. FERC may issue additional request related to accounting unbundling with the special decision during the initial license term.
6. FINANCIAL INTEGRITY AND STABILITY OF LICENSEE
6.1. The Licensee is obliged to provide enough financial funds or financial guarantees, as the confirmation of its solvency and liquidity, in the proportion that provides continuous performance of the distribution activity, maintenance repair or the works on whole equipment for distribution and should provide necessary inventories and spare parts.
License Registry Number 06-03-516-05/05 Page 10 of 12
Operation License- Power Distribution for Elektroprivreda HZHB d.d. Mostar
6.2. Licensee shall inform FERC of its proposed reservation of financial funds to meet the requirements of previous clause. FERC may order the modification of proposed plan of providing funds for the purpose of approval of justified costs, taking care of the financial integrity and stability of the Licensee.
7. CONFIDENTIAL INFORMATION
7.1. The Licensee shall ensure the confidentiality of customer confidential business data received by other power companies and customers, except if the special rule requires public disclosure of certain data or their submission to state or federal bodies. 7.2. The Licensee shall ensure that information important to enable non-discriminatory access to the distribution network is readily accessible to interested persons. 7.3. The Licensee shall request confidential status for customer information submitted to FERC that qualifies for confidential status under FERC laws and rules in order to protect confidential business information. These information are handled in accordance FERC rules on confidential information.
8. PUBLIC LIGHTING
8.1. If the facilities of public lighting are not owned by local administration community (city, municipality) the Licensee is obliged to handover them in the ownership of the local administration unit in the shortest possible deadline.
9. QUALIFICATION STRUCTURE OF LICENSEE’S STAFF
The Licensee is obliged to employ staff only in accordance with systematization and organization in accordance with the number and qualification structure necessary for undisturbed, safe and quality business of the Licensee.
10. THE ABANDONING OR THE MODIFICATION OF THE ACTIVITY
10.1. The Licensee is obliged to perform the activities specified in the license. If, during the performance of the licensed activity, circumstances appear for which the Licensee, reasonably, is not able to perform the activities specified in the License, the licensee shall immediately inform FERK about this. 10.2. The Licensee shall not, without prior approval of FERK, abandon or modify the activities or licensed distribution assets for which this license is issued. 10.3. Licensee may not decrease the capacity available to the Licensee by more than 10% in any distribution facility in the period longer than 12 months, without prior approval of FERC.
11. MONITORING
License Registry Number 06-03-516-05/05 Page 11 of 12
Operation License- Power Distribution for Elektroprivreda HZHB d.d. Mostar
11.1. FERK monitors the compliance with the conditions form this license by the Licensee, and perform the inspection of all financial statements, technical and organization data, submitted by Licensee. 11.2. FERK may, in any moment, perform the review of all data of the Licensee form the clause 11.1. 11.3. FERK has right to access to the facilities of Licensee and to perform the inspection of equipment, plants and documentation, related to compliance with the conditions from this license.
12. THE MODIFICATION, TRANSFER AND REVOCATION OF THE LICENSE
12.1. The Licensee is obliged to submit, in not later than 180 days before the expiration date of this license, application for the issuance of the power distribution license. 12.2. During the validity period of the License, on Licensee’s request or on FERK initiative, it is possible to start the process of modification, amendment, transfer or revocation of the license according to Articles 42, 43, 44 of FERK Licensing Rule.
13. SANCTIONS
If Licensee has not complied with the license conditions or has violated them, the penalty provisions form the Law and Licensing Rule will be applied.
14. RESOLUTION OF THE DISPUTES
14.1. The Licensee is obliged to inform FERK, in the form of every six months regular reports, on the disputes conducted before courts of jurisdiction. 14.2. The Licensee shall cooperate in the resolution of disputes brought before FERC by third parties, related to Licensee’s activity.
15. CONTRACTS
15. 1. The Licensee shall, on FERC request, submit information on all contracts entered into by Licensee. 15.2. The contract on procurement of necessary materials necessary for construction, maintenance and rehabilitation of distribution facilities well as contract with sub- contractors and suppliers related to planned works for services provided for power distribution shall be signed by Licensee, not later than 30.09. of the current year for the next year.
16. REGULATORY FEE
16.1. The Licensee is obliged to pay regulatory fee for the performance of the distribution activities, in the amount determined by FERK with special decision. 16.2. The regulatory Fee is paid in equal quarterly amounts.
License Registry Number 06-03-516-05/05 Page 12 of 12