Article 15 of the Saudi Electricity Law
المادة 15 من نظام الكهرباء · الفصل السابع: تطوير هيكلة الأنشطة الكهربائية
The article requires the Authority, when moving to an electricity market, to protect the rights of non-dominant investors who develop projects, protect consumers from large price fluctuations, and ensure reliable supplies.
Official text (Arabic)
This article has not been amended since the law was issued.
تقوم الهيئة -عند الانتقال إلى سوق الكهرباء- بالآتي:
1- حماية حقوق المستثمرين المطورين للمشاريع، بشرط ألا يكون المستثمر في وضع مهيمن في مجاله. ويندرج تحت تلك الحماية تحقيق المستثمرين العائد على استثماراتهم المتفق عليه بينهم وبين الجهة التي اشترت منتجاتهم، والمحافظة التامة على حقوقهم من خلال الاتفاق التجاري بينهم وبين تلك الجهة، أو من خلال استثنائهم من المشاركة في السوق.
2- حماية حقوق المستهلكين من تعرضهم للتذبذبات الكبيرة في الأسعار إن وجدت، والتأكد من موثوقية وإمدادات الطاقة الكهربائية في جميع مناطق المملكة.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 15 explained in plain English
This article sets safeguards for the stage of moving to an electricity market, which under Article 1 is a state in which electricity is bought and sold according to free market factors and the price is governed by supply and demand. At this transition the Authority must protect two parties:
1- Investors who develop projects:
- The condition: the investor must not be in a dominant position in its field. The protection does not cover a party in a dominant position.
- What the protection means: investors achieve the return on their investments that was agreed between them and the body that bought their products.
- How: fully preserving their rights through the commercial agreement between them and that body, or by exempting them from participating in the market.
2- Consumers:
- Protecting them from exposure to large price fluctuations, if any.
- Making sure electric power supplies are reliable in all regions of the Kingdom.
The idea is that moving to a free market could affect contracts that investors concluded on the basis of an agreed return, so the text protects them from losing that return because of the transition. Conversely, a free market may lead to price volatility, so the text protects the consumer from large fluctuations. The article does not specify the tools of this protection in detail.
This article comes after Article 14, which requires the Ministry and the Authority to follow the restructuring plan so as to enable the move to an electricity market, and is followed by Article 16, which allows a licensee to use a transmission or distribution system owned by another licensee without discrimination. An investor assessing the effect of the transition on its contract may consult a lawyer who specializes in commercial or investment cases.
Practical example
A company developed a solar power plant in Tabuk and signed an agreement to sell its output at an agreed return, and it is not in a dominant position. When the move to an electricity market takes place, the Authority protects its right to this return, either through the existing commercial agreement or by exempting it from participating in the market.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 15 of the Saudi Electricity Law
Does the Electricity Law protect investors when the market is liberalized?
Yes. The Authority protects the rights of investors who develop projects, provided they are not in a dominant position, including achieving the return agreed with the buying body.
Does the law protect consumers from rising electricity prices in a free market?
The article requires the Authority to protect consumers from exposure to large price fluctuations, if any.
More articles on Competition and Structuring the Electricity Sector
- Article 13
The article requires a licensee to register price, tariff and network-use agreements with the Authority, voids those that hinder competition, and requires Authority approval for mergers and for buying 5% or more of another licensee's shares.
دون إخلال بما يقضي به نظام المنافسة، على الوزارة والهيئة إيجاد بيئة استثمارية محفزة في نشاط الكهرباء بما يعزز من موثوقية إمدادات الكهرباء وتوافرها في مختلف مناط
- Article 14
The article tasks the Ministry with developing and reviewing the electricity sector restructuring plan, and requires the Ministry and the Authority to follow its implementation to achieve competition, more private participation and a move to an electricity market.
1- تقوم الوزارة -بالتنسيق مع الجهات ذات العلاقة- بتطوير خطة هيكلة قطاع الكهرباء ومراجعتها وتعديلها في ضوء السياسات المعتمدة وفقاً للمادة (الثالثة) من النظام؛ لت
- Article 16
The article lets any licensee, when needed, use or connect to another licensee's transmission or distribution system for a charge and without discrimination, and requires the network owner to issue the network code when the Authority asks.
1- يتاح لأي مرخص له -عند الحاجة- استخدام منظومة نقل أو توزيع كهرباء يملكها مرخص له آخر أو الارتباط بها بمقابل، وذلك دون تمييز، وفقاً لأحكام النظام واللوائح. 2-
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.