ARGENTINA Law and Practice Contributed by: Héctor Pozo Gowland, Esteban de Vedia, Carlos Ernesto Miná and Francisco Pozo Gowland, Pozo Gowland Abogados
ment, Law No 19,552 provides that compensa- tion will be determined by a judicial court. In summary, an AEPL is a legal right that allows a company involved in electrical distribution to use private or public lands to install and oper- ate electrical transmission lines, thereby ensur- ing the supply of energy and the functioning of the electrical system. 5.5 Monopoly Rights for Electricity Distribution Entities Section 1 of Law No 24,065 establishes that the distribution of electrical energy is a public service, subject to a concession granted by the national government, under conditions of monopoly and exclusivity. For this reason, the concession contracts of Edenor and Edesur stipulate that the national government grants them exclusivity for the provision of the public service. As defined in the concession contracts, this means that the national government will not grant the service to third parties or provide it itself, nor will any other national, provincial or municipal authority. 5.6 Electricity Distribution System Charges and Terms of Service The tariff of the public distribution service under federal jurisdiction is governed by the principles and criteria of Law No 24,065, and the tariff regime provided in the concession contracts. Section 40 of the law stipulates that the public service will be offered at fair and reasonable tar- iffs that cover reasonable operating costs appli- cable to the service, taxes, amortisations and a reasonable return.
Law No 24,065 also provides that tariffs are determined by ENRE and set at a maximum price (price cap system) for a period of five years. Therefore, Section 42 (d) of Law No 24,065 establishes that tariffs will be subject to periodic adjustments (usually semi-annual) to reflect any changes in the concessionaire’s costs that are beyond its control. Consequently, the regulatory framework requires that the tariff must cover all the costs incurred by the distribution company and the purchases of energy in the wholesale market to provide the public service. In conclusion, the tariffs must provide the com- panies with income that allows them to cover all operating costs, pay taxes, amortise assets, comply with the Investment Plan, and generate a profit similar to other comparable risk activities, in relation to the level of efficiency in the provi- sion of the service. If tariff adjustments are not approved for reasons of public or social interest, the national govern- ment and ENRE must implement measures to maintain the income equivalence with the tariff concepts in order to comply with the tariff prin- ciples and provide a quality service to users. However, this has unfortunately not happened on several occasions since the early 2000s. Therefore, when authorities approve tariffs that are lower than those legally and contractually required, companies have the right to appeal the resolutions approving insufficient tariffs. According to Law No 24,065, ENRE resolutions may be appealed, at the company’s choice, in administrative proceedings before ENRE or the Secretariat of Energy, or directly in judicial proceedings by filing a direct appeal before the Court of Appeals.
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