UAE Law and Practice Contributed by: Brendan Hundt, Dan Feldman, Sam Anastasiou and Saiesh Kamath, King & Spalding LLP
4.6 Transmission Charges and Terms of Service Transmission charges are not established through open market negotiation. They are set or approved under the relevant emirate utility and regulatory frame- work. In Abu Dhabi, the Department of Energy has authority to propose fees, tariffs and prices within its competen- cies and submit them for Executive Council approv- al. These charges are generally reflected in the PPA signed between EWEC and the project developer. In Dubai, transmission costs are part of DEWA’s integrated tariff and utility framework rather than a separate competitive-access transmission tariff. For generators, transmission-related obligations are usu- ally addressed through connection agreements, grid codes and project documents, including connection costs, metering, testing, outage co-ordination, techni- cal compliance and any reinforcement requirements. Distributed renewable generators are treated through distribution-network connection rules rather than through a general transmission-tariff access regime. For investors, the absence of a negotiated transmis- sion tariff does not mean that network cost is irrel- evant. Connection costs, reinforcement obligations, metering requirements, outage procedures and com- pliance testing can materially affect project economics and should be priced into the bid model. 4.7 Open-Access and Non-Discriminatory Transmission The UAE does not operate a general open-access transmission regime comparable to liberalised elec- tricity markets where any generator or customer can require wheeling over the transmission grid. Transmis- sion remains part of a single-buyer, state-controlled utility structure, and the transmission and distribution networks are owned and controlled by state-owned utilities that enjoy monopoly positions in their respec- tive areas. In Abu Dhabi, a generator selling to EWEC obtains connection rights as part of the procured pro- ject framework and related licence and connection arrangements. Although generators do not have
constitution, but must be grounded in public benefit and fair compensation. For transmission projects, surface rights are usually obtained through government ownership or alloca- tion of utility corridors, leases or rights granted over government land, municipal road or infrastructure res- ervations, negotiated land rights, or statutory access powers available to the relevant licensed utility. UAE practice treats fair compensation as covering the value of the property taken and, where applica- ble, loss of profit and other damage resulting from the expropriation. For example, in Dubai, the Acquisition Committee assesses compensation, and the owner may object to the amount, although an objection does not necessarily suspend implementation of the acqui- sition decision. For lesser interference, such as access, works and maintenance rights, the usual position is for the rele- vant utility or authority to rely on statutory streetworks powers, land-use approvals, easements, leases, musataha (in rem property right) or negotiated access arrangements, with reinstatement and compensa- tion for damage where the applicable law, licence or access agreement so requires. 4.5 Monopoly Rights to Provide Transmission Services Transmission entities are effective monopolies within each relevant service territory. These exclusive or effectively exclusive functions arise from legislation, licences, government ownership and the physical nature of network infrastructure. Competitors are not permitted to build parallel transmission systems and offer competing transmission services to customers. The exclusive rights for the relevant utilities are con- ferred by legislation or by order of the relevant regula- tory body. The practical rationale is system security: transmis- sion networks require central planning, dispatch co- ordination, technical standards, efficient investment recovery and consistent treatment of outage and con- nection risk.
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