ELECTRICAL CONCESSIONS LAW

Transcription

1 LAW ELECTRICAL CONCESSIONS LAW Note: This law was enacted on December 5, 1992, according to what is indicated in Article 195 of the Political Constitution of Peru of 1979.

2 Presentation The Electricity General Directorate of the Ministry of Energy and Mines is glad to present with this edition, the updated text of the Law of Electrical Concessions and its Bylaws. This legal framework has permitted to conduct a reform the balance of which is, no doubt favorable for the country, as it ensures a reliable electrical offer, the efficient operation of the system and the application of a tariff for the final consumers which considers the optimum use of available energy resources. The present legal framework of the electricity sector has permitted Peru, to enter the XXI Century with a Nationwide Interconnected Electrical System and a market ready to go on to the next expansion phase, joining the electrical systems of the neighboring countries. The Ministry of Energy and Mines as the leading entity of electricity sector, has assumed the commitment of continuing with the perfection of the legal framework in order that the electrical market will be served in an efficient and competitive manner to contribute with the social economical and sustainable development of the country

3 LAW DECREE ELECTRICAL CONCESSIONS LAW (*) Article Title I General Provisions 1 to 9 Title II Electrical Tariffs Commission 10 to 21 Title III Concessions and Authorizations 22 to 38 Title IV Committee for Economic Operation of the System -COES 39 to 41 Title V Electricity Price System 42 to 44 Maximum Prices from Generator to Public Service Distributor 45 to 57 Maximum Transmission Prices 58 to 62 Maximum Distribution Prices 63 to 73 Other Tariffs Regulations 74 to 81 Title VI Public Electricity Service 82 to 100 Title VII Supervision 101 to 103 Title VIII Guarantees and other Investment Promotion Measures 104 to 107 Title IX Use of Public and Third Parties Property 108 to 119 Title X Supplementary Provisions 120 to123 Title XI Temporary Provisions 13 Final Provision 1 Annex - Definitions 18

4 TITLE I GENERAL PROVISIONS Article1 The provisions of this Law regulate the activities related to generation, transmission, distribution and marketing of electric energy. The Ministry of Energy and Mines, and OSINERG, on behalf of the State, are responsible for enforcing compliance with this Law and can delegate, in part, the authority granted. Generation, transmission and distribution activities can be carried out by individuals or legal entities, either national or foreign. Legal entities must be constituted in accordance with Peruvian law. Text of the second paragraph according to law 26734, Law of OSINERG, published on March 31, Cc. Arts. 30 inc. a, b, c; 4, 5, 7, 9, 11 inc. d, e; 18 inc. g, h, j; 23, 24, 25 inc. g; 30,31, 32, 33, 34, 36 inc. d, e; 39, 43 inc. b, c; 45, 47 inc. a, g; 48, 49, 51 inc. b, h; 57, 58, 59, 60, 61, 62, 63, 64, 66, 67, 68, 69, 70 inc. b 71, 72, 77, 80, 81, 82, 86, 93, 94, 95, 96, 101, 106, 107, 108, 110 inc. b, c; 113, 120, 122; Fourth, Fifth, Sixth, and Tenth Transitory Dispositions of the Electrical Concessions law (Law); Arts. 63 and 71 of the Political Constitution of Peru 1993 (Constitution) Arts. 1 and 10, 11, 192 and 193 of the Bylaws of the Electrical Concessions Law (Bylaws); Art.5, Legislative Decree 757 dated 13 November, 1991 and in force as of 13 December, Article 2 Public Electricity Service is constituted by: a) The regular supply of electric energy for collective use or destined for collective use, up to the power demand limits which will be set in accordance with the provisions of the Regulations, and, b) Electricity transmission and Distribution. The Public Electricity Service is for public benefit. Text of Modification Supplementary Single Disposition of Law 28832, Law to Ensure the Efficient Development of Electric Generation, published on July 23, 2006 Cc. Arts. 30 inc. c; 24, 30, 34 incs. a, d; 43 incs. c, d; 45, 63, 82, 86, 90 inc. a; 93, inc. b; 110inc. c; 121;Fourth, Fifth, Eighth Transitory Dispositions of the Law. Article 2 of Bylaws Article 3 A concession is required for the development each one of the following activities:

5 a) Electric energy generation using hydraulic and geothermal resources whenever the installed capacity is more than 20 MW; b) Electric energy transmission, whenever the installations affect the State property and/or require that rights of way are granted by the State; c) Public service electric energy distribution when demand is more than 500 kw. Text of Modification Supplementary Single Disposition of Law 28832, Law to Ensure the Efficient Development of Electric Generation, published on July 23, 2006 Cc Inc. a 1, 9 and 107 of the Law. Inc. b 1, 9, 33 and 111 of the Law Inc. c 1, 2, 7, 9, 30, 34 and 82 of the Law. Arts. 4 and 5 of the Bylaws. Arts. 60, 22, 23, 24, 25, 26, 28, 29, 35, 36, 68, 69, 85, 94, , 104, 105, 121; Fourth and Sixth Transitory Dispositions of the Law. Arts. 30, 40, 50, 70, 10, 11 and 29 of the Bylaws Art. 66 of the Constitution. Article 4 Authorizations are required for thermal electric, hydroelectric and geothermal generation activities that do not require concession, whenever the power installed capacity is more than 500 kw. Cc. Arts. 1, 6, 7, 38, 90 inc. b; 119 inc. c. and Sixth Transitory Disposition of the Law Arts. 6, 7, 8 and 29 of the Bylaws. Article 5 Electric energy generation from nuclear sources shall be regulated by a separate law, expressly governing this matter. Cc Arts. 1 and 9 of the Law. Article 6 Concessions and authorizations will be granted by the Ministry of Energy and Mines which will establish a Registry of Electric Concessions for this purpose. Cc Arts. 3, 4, 7, 22, 23, 24, 25, 26, 28, 29, 30, 31, 35, 36, 38, 100, 104, 105; Fourth and Sixth Transitory Dispositions of the Law Arts. 7, 8, 10, 11, 29 and First Transitory Disposition of the Law. Internal Bylaws of the Registry of Electrical Concessions (Ministerial Resolution N EM-VME published on July 17, 1993). Article 7 Generation, transmission and distribution activities that do not require a concession or authorization may be freely carried out in compliance with technical regulations and environmental and Cultural Heritage of the Nation preservation regulations.

6 The owner shall inform the Ministry of Energy and Mines when the operation is started and as regards the technical characteristics of the works and facilities. Cc Arts. 1, 3 incs. a, b, c; 4, 6,9, 120 and Tenth Transitory Disposition of the Law Art. 8 of the Bylaws Arts. 21, 67, 68 and 69 of the Constitution Arts. 1 and II TP and 130 Environmental Code and the Natural Resources (Código del Medio Ambiente y los Recursos Naturales (C.M.Ay los R.N)) :Legislative Decree. 613 dated September, 8, 1990 Article 8 The law establishes a free pricing regime for electric energy supplies which may be made under competitive conditions and a regulated pricing system for those supplies that due to their nature require it, acknowledging efficiency costs according to the criteria set forth in Title V of this Law. Contracts for sale of energy and power of the supplies which are made under the regime of Freedom of Prices should consider obligatorily the separation of the generation prices agreed to at generation reference busbar and the transmission and distribution tariffs, so they will permit the comparison to which the Article 53 of the law refers to. Those contracts will be of public knowledge and will be placed at the disposal of the Energy Tariffs Commission and OSINERG in a maximum time term of 15 days of their being signed. The non compliance with this will be sanctioned with a fine. The Ministry of Energy and Mines, with a Supreme Decree will define the minimum criteria to be considered in the contracts which are subject to the regime of price liberty, as well as the requisites and conditions so those contracts will be considered within the procedure of comparison established in article 53 of the Law. Text of article according to Law Nº 27239, published on December 22, 1999 Cc. Arts. 31 inc. c; 42, 43, 44, 47, 50, 51 incs. f, i; 53, 55, 57, 69, 70 inc. a; 76, 81 and Definition. 8 of the Law Art. 4 Legislative Decree 757. Article 9 The State promotes the environment and Cultural Heritage of the Nation preservation, as well as the rational use of natural resources in the development of the activities related to electric energy generation, transmission and distribution. Cc Arts. 1, 30 incs. a, b, c; 70, 90, 25 inc. b; 31 inc. h; 38, 107 and Tenth Transitory Disposition of the Law Art. 69 inc. b; 201 incs. 1, m; of the Bylaws. Arts. 67, 68 and 69 Constitution. Arts. I and II TP 113 and following C.M.A and the R.N.

7 TITLE II ENERGY TARIFFS COMMISSION Note 1: The Title II Electric Tariffs Commission was changed to Energy Tariffs Commission according to Law Nº 27116, published on May 17, 1999 Note 2: Article 2 of Law N indicates the following: Article 2.- Of Electrical Tariffs Commission As of the enforcement of this Law, all mention made of the Comisión de Tarifas Eléctricas, in the Law Decree N Electrical Concessions Law and its regulatory, modify norms and other norms related, should be understood as made to Comisión de Tarifas de Energía. Note 3: The Third Supplementary, Transitory and Final Disposition of Law N published on July 29, 2000 indicate the following: THIRD. At the latest, on December 31, 2000 the Comisión de Tarifas de Energía (CTE) and the Organismo Supervisor de la Inversión en Energía (OSINERG) will be integrated as one single Regulating Organization. The name of the regulating organization will be OSINERG. Note 4: The Third Transitory Disposition of Supreme Decree N PCM General Bylaws of (Reglamento General del Organismo Supervisor de la Inversión en Energía-OSINERG), published on May 9, 2001, modified by article 1 of Supreme Decree Nº N PCM published on May 17, 2001, indicates the following: Third: Fusion by Absorption of the CTE. According to what is established in the Third Supplementary, Transitory and Final Disposition of the LAW, Integrate the Comisión de Tarifas de Energía - CTE, to OSINERG. The resources, patrimony, personnel and documents of the Comisión de Tarifas de Energía (CTE) will be integrated to OSINERG; within one hundred and twenty (120) days following the enforcement of this Bylaws Note 5: According to articles 49 and 64 of Supreme Decree N PCM General Bylaws (General Bylaws of the Supervising Organization of the Energy Investment (Organismo Supervisor de la Inversión en Energía-OSINERG,)) published on May 9, 2001, modified by article 1 of Supreme Decree. N PCM published on May 17, 2001, is created the Assistant General Manager of Tariff Regulation and are established its functions. Article 10. The Energy Tariffs Commission is a decentralized technical agency of the Energy and Mines Sector with functional, economic, technical and administrative autonomy, which is responsible for setting electric energy tariffs and the tariffs for liquid hydrocarbons transportation in ducts, the transportation of the natural gas by ducts and distribution of natural gas by ducts, in accordance with the criteria established in this Law and the applicable rules and regulations of the Hydrocarbons Sub-Sector. Text of article according to Law N 27116, published on May 17, 1999 Cc Arts. 110, 12, 13, 14 inc. b; 15, 16, 170, 18 inc. b, e; 19, 20, 21, 45, 46, 47 inc. c; 51, 52, 53, 54, 55, 56, 58, 60, 61, 62, 63, 66, 67, 68, 69, 70, 72, 73, 74, 75, 76, 77, 78, 79, 81; Third and Eighth Transitory Dispositions of the Law Arts. 12, 13, 14 and 26 of the Bylaws; Arts. 3, 4, 5 and 6 Internal Bylaws of Electrical Tariffs Commission (R.I.C.T.E.) (Supreme Resolution EM dated December 29, 1994). Article 11 The Energy Tariffs Commission (*) shall have a Directive Council integrated by five members and will include:

8 a) One representative of the Presidency of the Council of Ministers, who will be the Chairman. b) One representative of the Ministry of Energy and Mines; c) One representative of the Ministry of Economics and Finance; d) One representative of the Ministry of Industry, Tourism, Integration and International Commercial Negotiations; and e) One representative of the National Institute of Defense of Competition and of Protection of the Intellectual Property INDECOPI. Members of the Directive Council shall be appointed by Resolution endorsed by the President of the Council of Ministers and also by the Ministers of the Sectors in case of the representatives of the Ministries; and will be designated for a five year period. (*) Denomination according to Law N 27116, published on May 17, 1999 Text of article according to Law N 27010, published on December 8, 1998 Cc Inc. d) Art 31 and 32 of the Law. Arts. 10, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21 and Eighth Transitory Disposition of the Law Arts. 13, 14 and 15 of the Bylaws Article 12 A Director of the Energy Tariffs Commission (*) is required: a) To be a licensed professional with at least 15 years experience; b) Have good reputation and professional proficiency; and c) Other requirements set in the Bylaws of this Law. (*) Denomination according to Law N 27116, published on May 17, 1999 Cc Arts. 10, 11, 13, 14, 15, 16, 17, 18 and 19 of the Law Art. 16 of the Bylaws Article 13 The position of Director of the Energy Tariffs Commission (*) shall become vacant due to: a) Death; b) Permanent disability; c) Accepted resignation; d) Sustained legal incompatibility; and e) Unjustified absence from two consecutive meetings of the Directive Council, unless there is an authorized permission. (*)Denomination according to Law N 27116, published on May 17, 1999 Cc Arts. 10 and 12 of the Law Art. 17 of the Bylaws Arts. 8, 9 and 10 of R.I.C.T.E. Article 14 Cannot be appointed as Directors: a) Public officials and employees;

9 b) Shareholders, directors, officials and employees of public utilities supplying electricity at regulated prices or of consulting firms that render services to the Energy Tariffs Commission(*); c) Directors and officials of companies sanctioned for speculative or monopolistic activities and any other persons who have been sanctioned for these same offenses. d) Two or more persons that are relatives up to the fourth degree of consanguinity or up to the second degree of affinity; and e) Those that have pending legal procedures with the State. (*) Denomination according to Law N 27116, published on May 17, 1999 Cc Arts. 10 and 11 of the Law Art. 156 Ley General de Sociedades (Supreme Decree JUS dated May 13, 1985 Article 15 Are responsibilities of the Directive Council of the Energy Tariffs Commission are as follows: a) Set, review and modify the rates for electric energy sales in strict compliance with the procedures established in this Law: b) Decide as the last administrative resource all matters submitted by interested parties related to tariffs setting; c) Prepare its Internal Regulations; d) Elect the Vice President; e) Appoint the Executive Secretary and determine his/her responsibilities and remuneration: f) Approve the Energy Tariffs Commission (*) annual budget, submitting it for approval of the Ministry of Energy and Mines; g) Impose sanctions for non-compliance with its resolutions as established in the Bylaws; h) Approve and determine the pre-qualification of consulting firms proposed by the Executive Secretariat; and j) Others stated in the Bylaws. (*) Denomination according to Law N 27116, published on May 17, 1999 Cc Inc. a. Arts. 73 and 81 of the Law. Inc. b. Art. 74 of the Law. Inc. c. Art. 21 of the Law. Inc. f. Art. 20 of the Law. Arts. 27 and 28 of the Bylaws Inc. i. Art. 18 of the Law. Art. 10, 11, 12, 13, 16, 67 and Eighth Transitory Disposition of the Law Arts. 22, 24, 25, 26, 27 and 28 of the Bylaws. Article 16 The Energy Tariffs Commission s (*) Directive Council may request its members to carry out specific activities to assist in the compliance of the responsibilities assigned to it by this Law. In these cases, the appointed Directors are bound to comply with the corresponding request. (*)Denomination according to Law N 27116, published on May 17, 1999 Cc Arts. 10, 11, 12, 15, 18 and Eighth Transitory Disposition of the Law Art. 19 of the Bylaws.

10 Article 17 The Energy Tariffs Commission (*) will have an Executive Secretariat. The staff of that Secretariat shall include highly qualified professionals and efficient support staff. That staff will be governed by the labor regime of Law (*)Denomination according to Law N 27116, published on May 17, 1999 Cc Arts. 10, 11, 12, 18, 19 and Eighth Transitory Disposition of the Law Arts. 20 and 21 of the Bylaws Arts. 20 and following of R.l.C.T.E.; Ley de Fomento del Empleo y Normas Reglamentarias (Legislative Decree 728 dated December 12, 1991 modified by Law dated July 18, 1995). Article 18 The Executive Secretariat in support of the decisions the Energy Tariff Commission's (*) Directive Council has to take shall carry out the following duties: a) Pre-qualify consulting firms for preparation of the required tariffs studies and special studies b) Prepare the Energy Tariffs Commission's (*) annual budget; c) Review and evaluate studies submitted by the concessionaires: d) Prepare Terms of Reference and supervise the execution of studies which, according to the Law, must be commissioned to specialized consulting firms; e) Prepare studies for determination of Hourly Blocks to be used in calculation of Busbar Tariffs; f) Carry out studies to determine the power and energy loss factors used in calculation of Busbar Tariffs; g) Prepare studies to define the Main Transmission System and the Secondary Transmission Systems of each interconnected system. h) Prepare studies to define the Typical Distribution Sectors: i) Prepare the comparative studies referred to in Article 53 of this Law; j) Prepare studies to set and update the New Replacement Values of transmission and distribution facilities; and k) Any other duties established by the Bylaws. (*)Denomination according to Law N 27116, published on May 17, 1999 Cc Inc. b Arts. 10 and 20 of the Law. Inc. c Art. 15 inc. h. of the Law Inc. e Arts. 10, 45, 46 and 47 of the Law. Inc. f Arts. 45, 46 and 47 of the Law. Inc. g Arts. 1, 58 and 59 of the Law. Inc. h Arts. 10 and 67 of the Law Inc. i Art. 53 of the Law Inc. j Arts. 1 and 70 inc. c. of the Law Arts. 11, 12, 15 inc. i; 16, 17, 19, 53 and 67 of the Law Art. 23 of the Bylaws

11 Article 19 The Bylaws of this Law will establish the criteria used to set remuneration which the Directors and employees of the Energy Tariffs Commission (*) should receive. These Bylaws will also determine the number of employees of the Executive Secretariat. (*)Denomination according to Law N 27116, published on May 17, 1999 Cc Arts. 10, 11, 12 and Eighth Transitory Disposition of the Law. Arts. 18, 19, 20 and 21 of the Bylaws Article 20 The Energy Tariffs Commission's budget will be financed by the annual fees paid by concessionaires and electrical utilities and the annual contributions made by the concessionaires of liquid hydrocarbons transportation by ducts and natural gas transportation by ducts and natural gas distribution by ducts. Text of article according to Law N 27116, published on May 17, 1999 Note: Article 3 of Law N indicates the following: Article 3.- Of the contributions for the support of organizations Concessionaires of liquid hydrocarbons by ducts, of natural gas transportation by ducts and of the distribution of natural gas by ducts are obliged to contribute to the support of the ruling, regulating and supervising organizations, with contributions set by the Ministry of Energy and Mines which in no case may be more than 1% of their annual sales. That quantity will be set by Supreme Decree countersigned by the Minister of energy and Mines on November 30 of each year, and the proportion should be indicated which, of the total is set by the Hydrocarbons General Directorate of the mentioned Ministry Cc Arts. 10, 11, 15 inc. f; 31 inc. g; and 43 of the Law. Arts. 27 and 28 of the Bylaws Article 21 The Internal Regulation of the Energy Tariffs Commission (*) will be approved by Supreme Resolution endorsed by the Ministry of Energy and Mines. (*)Denomination according to Law N 27116, published on May 17, 1999 Cc Arts. 10, 11, 15 inc. c; and 53 of the Law; R.I.C.T.E. TITLE III CONCESSIONS AND AUTHORIZATIONS Article 22 The final concession and the authorization are granted for indefinite period of time to develop electric activities. A temporary concession may be granted to carry out feasibility studies. Text of single article of Law N 29178, which substitutes several articles of Law Decree Nº published on January 3, 2008 Cc. Arts. 3, 6, 23, 24, 25, 26, 28, 35, 36, 104 and Fourth Transitory Disposition of the Law Art. 29 of the Bylaws.

12 Article 23 The temporary concession allows the use of public property and the right to obtain the imposition of rights of way, The holder assumes the obligation of making the feasibility studies related with the activities of generation and transmission, specifically, of making studies of generation plants, sub stations or transmission lines, complying with a studies schedule. The term for a temporary concession will be 2 years, which may be extended only once, for one additional year, at request of the holder, only when the studies schedule has not been complied with because of force majeur or fortuitous case. Temporary concessions shall be granted by Ministerial Resolution and its term is computed from the date of publication of the resolution granting the concession. When the term is due it is totally extinguished The temporary concessions as well as the extension of the time term are subject to the requirements, conditions and guarantees established in the corresponding bylaws. The holder of the temporary concession will have the preferable right to request the corresponding final concession, according to the conditions established in the bylaws. The preferable right is extinguished in twenty (20) working days after the date of publication of the ad of the request of final concession submitted by a third party. Text of single article of Law N 29178, which substitutes several articles of Law Decree Nº 25844, published on January 3, 2008 Cc Arts. 1, 3, 6, 26, 117 and 119 of the Law. Arts. 30, 31, 32, 33, 34, 35, 36 and 57 of the Bylaws Article 24 The permanent concession allows the use of public property and the right to obtain the imposition of rights of way for construction and operation of generation plants and related works, sub-stations and transmission lines, as well as distribution networks and sub-stations for public electricity service Cc. Arts. 1, 2, 3, 6, 22, 26, 30, 95, 109, 110, 113, 116, 117, 119 and Fourth Transitory Disposition of the Law Art. 37 and following of the Bylaws. Article 25 The request for permanent concession shall be submitted to the Ministry of Energy and Mines, with the following information and requirements:

13 a) Identification and legal address of the applicant. If it is a juridical person should submit the Public Deed of social Constitution and the power of attorney of its legal representative, duly registered in the Public Registries; b) Authorizations when necessary, required using natural resources owned by the State; c) Descriptive memorandum and complete drawings on the project, with the studies of the project at least at feasibility level: d) Schedule for works execution with the indication of the start and of commercial commissioning; e) Project budget; f) Specification of required rights of way; g) Limits of the concession area in UTM (PSAD56) coordinates and formal energy supply contract in case of distribution concessions: h) Directorial Resolution approving the Environmental impact study; i) Guaranty of execution of works indicated by the Bylaws j) Verifiable support of the commitment of the investors for the contribution of capital for the execution of works for a generation concession k) Favorable report issued by a qualified risk classifying entity with respect to the financial solvency of the applicant, when it is a generation concession After the corresponding evaluation, as is indicated in the Bylaws and the admissibility requirements have been complied with the application will be admitted for procedure and the ad will be published for two consecutive days, at the applicant's cost, in the Official Gazette El Peruano and in one of the major circulation newspapers in the area where the concession is located. Text of single article of Law N 29178, which substitutes several articles of Law Decree Nº published on January 3, 2008 Note 1. Law N in its articles 1 and 2 indicates the following: Article 1 Derogate literal j) of Article 25 and the third paragraph of Article 29 of Law Decree N 25844, and the Single Supplementary Disposition of Law N 27239, as well as all the supplementary, regulatory and extension dispositions Article Guarantee for the applications of temporary concession for generation will not be more than 1% (one percent) of the budget of the study up to a top of 25 UIT (Peruvian Tributary Units) during the concession period In case of final generation concessions the amount of the guarantee will be equivalent to 1% (one percent) of the project budget with a top of fifty (50) UIT, extending its term up to the subscription of the corresponding concession contract. Note 2. Supreme Decree N EM, published on September 7, 2007 in numeral 1.1 of article 1, indicates the following «The requirement established in literal b) of Article 25 of the Electrical concessions Law, Law Decree N 25844, and in article 66 of the Bylaws of the Electrical Concessions Law approved by Supreme Decree N EM, will be understood as complied with the presentation of the Resolution issued by the Waters Authority, which approves the hydro energy project studies at pre feasibility in the part which corresponds to the intake works and return of the waters to the respective natural or artificial causeway.». Cc Inc. b...arts. 9 and 38 of the Law Inc. f Arts. 222 and 223 of the Bylaws

14 Inc. g Arts. 1, 97 and Second Transitory Disposition of the Law Inc. h Art. 118 C.M.A. and R.N. Arts. 30,60, 22, 28 and 30 of the Law; 37, 38, 39, 40 and 41 of the Bylaws Article 26. If within the period of fifteen working days after the last publication of a request for final concession other requests are submitted for the same concession, the request which will continue with the procedure will be selected according to what is established in the Bylaws. The procedure of concurrence will not be of application when one of the petitioners is or has been holder of a temporary concession and is complying or has complied with its obligations, in which case it will have the exclusive right to continue with the request of final concession. In case there exist two (2) or more petitioners that comply with these conditions, only they will be able to participate in the concurrence according to the procedure of the Bylaws. Text of single article of Law N 29178, which substitutes several articles of Law Decree Nº published on January 3, 2008 Cc Arts. 3, 6, 22, 23, 24, 25, 30 and Fourth Transitory Disposition of the Law. Arts. 42 and 43 of the Bylaws Article 27 The procedures and conditions applicable for processing of objections shall be established in the Bylaws. Cc Twelfth Transitory Disposition of the Law. Arts. 34, 37, 44, 45, 46, 47, 48, 49, 50 and 51 of the Bylaws. Article 28 An application for concession which complies with the requirements established in Article 25 of this Law shall be decided within a maximum period of 60 working days as of the date of its submission. The presentation of the incidents which are promoted will suspend the time term indicated in this article until they are solved. Final concession will be granted by Supreme Resolution countersigned by the Minister of Energy and Mines Text of single article of Law N 29178, which substitutes several articles of Law Decree Nº published on January 3, 2008 Article 29 The concession acquires a contractual characteristic whenever the applicant signs the corresponding contract, which shall be registered as a public deed within a maximum period of 60 `working days following the date the Supreme Resolution is published. The holder is obliged to hand over to the Ministry a testimony of the public deed with the certification of the Registry of Concessions for the Exploitation of Public Services within a time term of twenty (20) working days from the date of inscription.

15 The contract shall include at least the name and address of the concessionaire, its rights and obligations, conditions, works schedule with indication of works initiation and commercial commissioning date, rights of way, concession areas whenever applicable, conditions for lapse and other applicable stipulations of this Law and the Bylaws which are applicable Text of single article of Law N 29178, which substitutes several articles of Law Decree Nº published on January 3, 2008 Note: Law N in its article 1 indicates the following Article 1: -Derogate literal j) of Article 25 and third paragraph of Article 29 of Law Decree N 25844, and Single Supplementary Disposition of Law N 27239, as well as all supplementary, regulatory and extension dispositions Cc Arts. 3, 31 inc. a, b, c; 36 inc. a, b, e; 94, 101 inc. a. and 117 of the Law Arts. 53, 54, 55 and 56 of the Bylaws Article 30 The distribution of Public Electricity Service in a given area shall be exclusive for a single holder. The distribution concession cannot be reduced without authorization from the Ministry of Energy and Mines. The distribution concessionaire may carry out expansions of its concession area. For that purpose it is obliged to submit to the Ministry of Energy and Mines, previously, a report which will indicate the limits of the zone where it will make the extension, accompanying the Schedule for Works Execution and the corresponding guarantee of compliance with the Contract which is indicated in the Bylaws as well as the drawing of the new area limited with UTM (PSAD56) coordinates From the date of publication of the ad for the extension which will be made according to the Bylaws, the concessionaire acquires exclusivity for the development of the distribution activity in the area limited for extension and assumes the obligations of the distribution concessionaire The administrative procedure of regularization of an extension of the concession zone, with the purpose of incorporating the new zone to the concession contract will end when the execution of works for the extension have concluded, in accordance with the Works Execution Schedule. The cases of electrification of zones within the scope of incise a) of Article 34 and of the populated centers outside the zone of concession which are the object of the procedure of extension of the concession zone on the part of the existing distribution concessionaries will be ruled by what is indicated in Law Nº 28749, Rural Electrification Law Text of single article of Law N 29178, which substitutes several articles of Law Decree N published on January 3, 2008 Cc Arts. 1, 2, 3, 6, 25, 38, 82, 97, 101 inc. b, and Fourth Transitory Disposition of the Law Arts. 60 and 61 of the Bylaws. Article 31 Both the holders of concession and the holders of authorization are obliged to:

16 a) Carry out studies and/or the construction of works complying with the times indicated in the corresponding schedule; b) Safeguard and maintain its works and facilities in adequate conditions for their efficient operation in accordance with the stipulations in its concession contract or according to the norms issued by the Ministry of Energy and Mines, according to what corresponds; c) Apply the regulated prices established in accordance with this Law's stipulations; d) Submit the technical and economic information to the regulatory agencies in the form and within the time limits established in the Bylaws: e) Comply with the requirements of the National Electrical Code and all other applicable technical standards; f) Enable the normative and regulating bodies to conduct the technical inspections in its facilities: g) Contribute to support of regulatory agencies through fees set by the Ministry of Energy and Mines, which in no case may exceed 1% of their annual sales; and h) Comply with the environmental and Cultural Heritage of the Nation preservation standards. Text of single article of Law N 29178, which substitutes incises a), b) and g) from the article 31, of Law Decree N published on January 3, 2008 Article 10, Law N 27332, published on July 29, Article 7, Law 27699, published April 16, Supreme. Decree. N PCM, published December 26, Cc Inc. a Arts. 101 inc. a. and 104 of the Law. Inc. b Art. 104 of the Law. Inc. c Arts. 8 and 42 of the Law. Inc. e Art. 99 of the Law. Inc. g Art. 20 of the Law. Arts. 234 and 235 of the Bylaws. Inc. h Arts. I and II TP; 73, 113 and following. C.M.A. and the R.N. Arts. 1, 6, 9, 11 inc. d; 42 and 43 inc. c; 67, 80, 94, 100, 109 and 120 of the Law. Arts. 26, 58, 59, 196, 201 inc. b, 1, m; 234 and 235 of the Bylaws; Arts. 67 and 68 Constitution. Article 32 The members of COES are obliged to commit all the dispositions given by such Text of single article of Law N 29178, which substitutes several articles of Law Decree N published on January 3, 2008 Cc Arts. 1, 11 inc. d; 39, 40, 41, 43 inc. d;47, 51, 52, 55, 61 and107 of the Law. Arts. 80 and following, 92 and 201 inc. b) of the Bylaws Article 33 Transmission concessionaires are obliged to allow the use of their systems by third parties, that will assume, when necessary, the costs of the required expansion to be carried out and compensation for their use, according to what is established in the Bylaws of the Law. Text according to Law N 27239, published December 22, 1999 Cc Arts. 1, 3 inc. b; 31 and 88 of the Law Arts. 62 and 201 inc. b) of the Bylaws.

17 Article 34 Distribution concessionaires are required to: a) Provide service to whomever requests it within their concession area or to those reaching that area with their own lines, within a period no longer than one year and which has the character of Public Electricity Service; b) Have contracts in force with generating companies which guarantee their total power and energy requirements for the following 24 months, as a minimum; c) Guarantee the quality of service as set forth in its Concession Contract; and d) Allow the use of all its systems by third parties for the transport of energy, except when the energy given is for Regulated Users within or without of their concession area, under the conditions established by the present Law and in its Bylaws. Text of single article of Law N 29178, that substitutes the article 34, incise d) of the Law Decree N 25844, published on January 03, 2008 Cc Inc. a Arts. 2, 3 inc. c; 97 and Thirties Transitory Disposition of the Law. Inc. b Art. 63 of the Bylaws. Inc. c Arts inc. a. and 104 of the Law. Art. 1, 2; 310, 36 inc. f; 67, 80 and 94 of the Law Arts. 63, 64, 65 and 201 inc. b) of the Bylaws Article 35 Concession ends through declaration of lapse or relinquishment; in each case the transfer of the concession rights and the assets required to continue operations shall be made in accordance with the provisions of this Law and its Bylaws. Text of single article of Law N 29178, which substitutes several articles of Law Decree Nº published on January 3, 2008 Article 36 Concession lapses whenever: a) The concessionaire does not record within the established period the inscription of the concession contract in the Public Services Concessions Registration for Exploitation b) The concessionaire does net comply to execute the works within the Timetable For Works Execution, unless it is due to a duly certified act of God or force majeur qualified as it by the Ministry of Energy and Mines; c) The concessionaire fails to operate its installations, without justified cause, for 876 aggregate hours during a calendar year; d) The generation and transmission concessionaire, after having been subject to the corresponding penalties, does not operate its facilities in accordance with the coordination standards of the Economic System Operation Committee, unless expressly authorized by the Ministry of Energy and Mines for a duly justified cause; e) The distribution concessionaire, after having been subject to the corresponding fines does not comply with its responsibility of providing service within the specific periods and in accordance

18 with the quality standards established in its Concession Contract; and f) The distribution concessionaire does not provide evidence of the guaranteed supply for the period provided for in paragraph b) Article 34 of the present Law, unless they have invited to public bid according to the actual normative and haven t got enough offers to comply their total requirement for the established time. g) In case of continue failure to comply with the payment to the Generation Companies for the supply of energy and power for Public Energy Service, unless that payment is not in discussion. Text of single article of Law N 29178, which substitutes incises a), b), e) and f) from the article 36 l of Law Decree N published on January 3, 2008 Cc Inc. a Arts. 29 and 104 of the Law. Inc. b Arts. 29 and 104 of the Law. Inc. d Art. 1 of the Law. Inc. e Arts. 1 and 29 of the Law. Arts. 3, 6, 22 and 105 of the Law. Art. 73 of the Bylaws. Note 1.- The Urgent Decree N , published on July 20, 2004, i9n its Article 2 rules the following «Suspend the effects of what is indicated in literal f) of Article 36 of the Law of electrical Concessions, Law Decree N 25844, until December 31 of this year.» Nota 2.- The First Transitory Disposition of the Law N 28447, published eon December 30, 2004 rules the following: «Suspend the effects of what is indicated in literal f) of Article 36 of the Law of electrical Concessions for a time term which will extend fro the enforcement of this Law until December 31,2007. Likewise, suspend for the same time term any other administrative sanction derived from non compliance of what is ruled by literal b) of Article 34 of the Law.» Article 37 The lapse shall be declared by Supreme Resolution signed by the Minister of Energy and Mines. In this case, its provisional administration shall be provided for in order to ensure the continuity of its operation. The rights and assets of the concession shall be publicly auctioned. The expenses incurred in will be deducted from the proceeds obtained in the auction and the balance will be delivered to the former concessionaire. Creditors of the lapsed concession may not object under any circumstance to the above indicated auction. Cc Art. 36 of the Law Arts. 73, 74, 75, 76, 77, 78 and 79 of the Bylaws. Article 38 Authorizations shall be granted through Ministerial Resolution for an indefinite period within 30 calendar days from submission of the application. The application should include: a) Identification and legal address from the petitioner. If it is a company must include the Public Registry of the Social Constitution

19 and the power of their legal representative, duly registry in the Public Registries. b) A sworn statement of compliance with technical standards, environmental and Cultural National Heritage protection and preservation standards. When it s about thermoelectric generation with installed power more than 10MW, should include the Directorial Resolution approving the Environmental Impact Study. c) Descriptive memorial and complete designs of the project with the project studies unless in a feasibility level d) Works Schedule with the indication of the beginning and start of commercial operation e) Project budget f) Technical information with statistical purpose including : installed power, number of generators, kind of each generator unit, model of each generator unit, design flow, specific fuel use, kind of fuel; when it is about generation centrals in use or improved also the historic registries of operation and all related information that support the adequate operation; g) A sworn statement of compliance of execution of the works indicated in the Bylaws; h) Checkable support of the compromise of the investments to collaborate with the money for executing the works i) Favorable report made by a qualified Risk Qualification entity about the finance reliability of the solicitor. The Bylaws will establish the mechanisms to control and verify its compliance Text of single article of Law N 29178, which substitutes articles of Law Decree N published on January 3, 2008 Cc Arts. 4, 6, 9, 25 inc. b; 30 and Sixth Transitory disposition of the Law. Arts. 66, 67, 68 and 69 of the Bylaws. TITLE IV COMMITTEE FOR ECONOMIC OPERATION OF THE SYSTEM - Note- The article 2 of the SUPREME DECREE N EM Publisher on July 18, state: Starting with the validity of this Supreme Decree, every mention to the Sistema Interconectado Nacional (SINAC) (National Interconnected System), must be understand as Sistema Eléctrico Interconectado Nacional (SEIN) (National Interconnected Electric System), the same that will be its new denomination. Article 39 The owners of generation plants and transmission systems, installations of which are interconnected, shall form a technical organism known as the Committee for Economic Operation of the System (COES), in order to coordinate their operations at least cost, guaranteeing the reliability of the electrical energy supply and the best use of energy resources.

20 For that purpose, operation of the generating plants and transmission systems will be subject to decisions of this Committee. Cc Arts. 1, 32, 43 inc. a; 47, 51, 52, 55, 80 and First Transitory Disposition of the Law. Arts. 80, 81, 82 and 83 of the Bylaws. Note.- The SUPREME DECREE N EM Published on September 18, 2000 in its first transitory disposition state: It concerns to the actual Economic Operation of the Interconnected System North and South Committee coordinate the accomplish of all the procedures related for the operation of the Committee for Economic Operation of the System (COES) COES, the National Interconnected System SINA and adopt all the necessary actions to get the physical inter-connexion between both systems and make easy the coordination on real time in order to comply with the objectives of the Article 39 of the Law Decree N 25844, Law of Electric Concessions. Article 39 DEROGATED Text of the Complementary Derogation of the Law 28832, Law to Ensure the Efficient Development of the Electric Generation published on July 23, Article 40 The Committee for Economic Operation of the System work will be governed by the stipulations stated in the Bylaws, regarding the following: a) Requirements to become part of the Committee; b) Mechanisms for decision-making; c) Procedures to optimize operations: d) Procedures for valuation of power and energy transfers; e) Mechanisms to solve differences and/or controversies; and f) Information required to be provided to normative and regulatory agencies. Cc Inc. a Arts. 81, 82 and 83 of the Bylaws; Inc. b Arts. 84 and following. of the Bylaws; Inc. c Arts. 92, 93, 94, 95, 96, 97, 98, 99; 115 and 116 of the Bylaws. Inc. d Arts. 100, 111, 112, 113 and 114 of the Bylaws; Inc. e Art. 88 of the Bylaws; Inc. f Art. 117, 118, 119, 120 and 121 of the Bylaws. Arts. 39 and 41 of the Law Arts. 81, 82 and following, 117and following. of the Bylaws. Article Derogated Text of the Complementary Derogation of the Law 28832, Law to Ensure Efficient Development of the Electric Generation published on July 23, TITLE V ELECTRICITY PRICE SYSTEM Article 42 Regulated prices will reflect the supply marginal costs and will be structured in such a way that they will promote efficiency of the sector. Cc Arts. 8, 31 inc. c; 51 inc. e; 83, 86 of the Law. Art. 122 of the Bylaws. Article 43 Will be subject to regulated prices:

21 a) Power and energy transfers between generators, which will be determined by COES, in accordance to what is established in Article 14 of the Law to Ensure the Efficient Development of the Electric Generation. This regulation will not rule in the case of contracts between generators for the part that will be greater than the firm power and energy of the purchaser; b) The retires of power and energy in the COES made by the Distributors and Free Users, the same that will be determined according to what is established in the article 14 of the Law to Ensure the Efficient Development of the Electric Generation. c) The tariffs and compensations to title bearers of transmission and Distribution Systems; d) Energy sales from generators to distribution concessionaires destined to Public Electricity Service; except when a bid have taken place to cover that Service, according to the Law Ensure the Efficient Development of the Electric Generation. e) Sales to users of the Public Electricity Service. Text of the Complementary Derogation of the Law 28832, Law to ensure the Efficient Development of the Electric Generation published on July 23, Incise b) according to Law N 27239, Publisher on December 22, Cc Inc. a Art. 39 of the Law. Inc. b Art. 1 of the Law. Inc. c Arts. 10, 20 and 31 of the Law. Inc. d Arts. 2 and 82 of the Law. Arts. 8, 20, 41 and 57of the Law. Article 44 Transmission and distribution tariffs will be regulated by the Energy Tariffs Commission independently if these correspond to the sales of electricity for public service or for those supplies which will be made under competition conditions, according to what is established in the Bylaws of the Law. For the latter, the prices of generation will be obtained by agreement of the parties. In the sales of energy and power which are not destined to the electricity public service, the invoices should consider obligatorily and separately the prices agreed to at generation reference busbar and the charges for transmission, distribution and commercialization. Text according Law N 27239, published on December 22, 1999 Cc Arts. 8, 43 and 45 of the Law.

22 MAXIMUM PRICES FROM GENERATOR TO PUBLIC SERVICE DISTRIBUTOR Article 45 Electricity sales to a distribution concessionaire destined to the Public Electricity Service shall be made at the points where the concessionaire installations start. Text of the Single Complementary Modification Disposition of the Law 28832, Law to Ensure the Efficient Development of the Electric Generation, published on July 23, Cc. Arts. 1, 2, 10, 18 inc. e, f; 43 inc c; 44, 63, 82 and Definition 1 of the Law. Arts. 123 and following. of the Bylaws. Article 46 Busbar tariffs and their respective readjustment formulas shall be set annually by OSINERG and shall become effective in the months of May of each year. Tariffs will only be effective after their publication in the Official Gazette El Peruano and a newspaper of large circulation. The supporting information will be included in the webpage of OSINERG Text according Law N 28447, Published on December 30, 2004 (*) In accordance with Law N published on May 17, 1999 the Electric Tariffs Commission became the Energy Tariff Commission. Actually the Assistant General Manager of Tariff Regulation (OSINERG-GART) according to Law N published on July 19, 2000; Supreme Decree N PCM published on May 09, 2001 and Supreme Decree N PCM published on May 17, Cc Arts. 10, 18 inc. e, f; 56, 63, 69, 73 and 81 from the Law ; Article 47 To set the Busbar Tariffs, the Generators sub-committee and the Transmission sub-committee in their correspondent activity will make the corresponding calculation as follows: Text of the Single Complementary Modification Disposition of the Law 28832, Law to Ensure the Efficient Development of the Electric Generation, published on July 23, a) Will calculate for each busbar of the system the energy nodal factors according to what is established in the article 48. The nodal factor will be equal to 1,00 in the busbar in which the Basic Energy Price will be set. Text of the Single Complementary Modification Disposition of the Law 28832, Law to Ensure the Efficient Development of the Electric Generation, published on July 23, b) The operation program will be determined to minimize the sum of updated operation cost and that for rationing for the period under study, taking in consideration, among others: hydrology, impounding, fuel costs, as well as Updating Rate to which refers Article 79 of this Law; The period of study will include the projection of 24 months as it is established on incise a)precedent and the 12 months before to March of each year. About the last ones it will be consider the demand and the schedule of the historic works

23 c) Short Term Marginal Costs expected for the System energy will be determined, for the Hourly Blocks the Electrical Tariffs Commission (*) will determine, corresponding to the operation program referred to in the previous paragraph; d) The Basic Energy Price per Hourly Blocks will be determined for the period under study, as a weighed average of the duly updated marginal costs which were calculated first and the demand projected, updated to March 31 of the correspondent year. e) The most economical type generating unit will be determined to supply additional power during the annual peak demand hours in the electric system and will calculate the annual investment cost using the corresponding Updating Rate established in Article 79 of this Law; f) The Basic Price of Peak Power will be determined according to the procedure established in the Bylaws, considering as upper limit the annualized investment cost obtained in the previous sub-item. In case the reserve of the system is insufficient for this purpose will be considered an additional margin, to the price established in the previous paragraph. g) Calculation for each one of the busbars of the system a power loss factor and an energy loss factors in transmission. These factors will be equal to 1.00 for the busbar in which the basic price is calculated; h) Will determine the Peak Power Busbar Price, for each busbar of the system, adding to the Basic Power Busbar Price the unitary values or the Transmission Toll and the Connection Toll referred to in Article 60 of this Law; Text of the Single Complementary Modification Disposition of the Law 28832, Law to Ensure the Efficient Development of the Electric Generation, published on July 23, i) Will determine the Energy Busbar Price, for each busbar of the system, multiplying the Basic nodal Energy Price corresponding to each Hourly Block by the respective nodal energy factor. Text of the Single Complementary Modification Disposition of the Law 28832, Law to Ensure the Efficient Development of the Electric Generation, published on July 23, (*) In accordance with Law N published on May 17, 1999 the Electric Tariffs Commission became the Energy Tariff Commission. Actually the Assistant General Manager of Tariff Regulation (OSINERG-GART) according to Law N published on July 19, 2000; Supreme Decree N PCM published on May 09, and Supreme Decree N PCM published on May 17, Cc Arts. 10, 18 inc. e, f; 56, 63, 69, 73 and 81 from the Law ;