**UNOFFICIAL TRANSLATION**
**Current as of December 20, 1999**
  THE REPUBLIC OF MOLDOVA
** **
**Electricity Act**
  
  
 The Parliament adoptsthis organic act.
  
 This Act establishesthe basic principles of the organization and regulation of theproduction, transmission, distribution, supply and consumption ofelectric energy as well as the institutional system ofconsumers’ protection.
  
 The goal of the Act isto set up the legal framework of an effective competition in theelectricity market in order to increase the efficiency of theelectricity industry.
 
 
**CHAPTER I**
  
 GENERAL PROVISIONS
   Article 1. The scope of the Act
** **
 (1) The effect of thisAct shall extend to:
 
 a)      production ofelectric energy;
 b)     transmission anddistribution of electric energy;
 c)      supply of electricenergy, including the energy import and export and energytransit;
 d)     prices for electricityand regulations for electricity industry;
 e)      license issuance
 f)      protection of theinterests of consumers;
 
 
 (2) This Act regulatesthe legal relationships between the partners in the electricitymarket: electric entities, central dispatch, suppliers andconsumers.
 
  Article 2. General conditions
 
 Electricenergy shall be produced, transported, distributed and suppliedin an efficient way from the economic point of view observing thelegislation concerning the safety of property, environment andlabor protection as well as other laws and regulations in forcein the interests of the national economy and consumers.
    Article 3. Definition of terms
 
 For the purpose of thisAct there are utilized the following terms:
 
 1.
 Balance of electric power demand and supply
 -the situation when the available capacityof power plants is sufficient to meet continuously electric loadof electricity consumers during all  hours.
  
 2.
 Central Dispatch
 Legal entity who has been given the licensefor the central dispatch activity.
  
 3.
 Connection point
 -the place where the consumer equipment isconnected to the  electricity network and which is theboundary of the property  of consumer and electricitynetwork.
  
 4.
 Consumer
 - natural (private) person or a legalentity whose electricity  consuming installations areconnected to the electricity network through one or moreconnection points.
  
 5.
 Consumer equipment
 -the installations of the consumer electricnetwork situated downstream from the connection point.
  
 6.
 Cost of service
 -actual costs necessarily and reasonablyincurred during the performing of an activity.
  
 7.
  Distribution entity
 -legal entity who has been given thelicense for distribution of electricity.
  
 8.
 Electricity distribution network
 -a system of medium and low voltageelectric lines with transforming and switching equipment as wellas the  accessories belonging to them that serve inaggregate the purpose of  distribution of a supply ofelectricity  to the connection points.
  
 9.
 Electric entity
 - producer, transmission entity anddistribution entity.
  
 10.
 Electricity network
 -electricity transmission grid andelectricity distribution networks.
  
 11.
 Electric power system
 -the totality of the elements of the chainof production, transmission, distribution and utilization ofelectric energy.
  
 12.
 Electricity transmission grid
 -a system consisting of high voltagelines,  transforming and  switching equipment as wellas the accessories belonging to them that serve in theaggregate  the purpose of electricity transmission.
  
 13.
 Natural monopoly
 -activity aimed at transmission and supplyof electricity in the course of the  performance of whichmarket rules are absent or do not operate adequately becausethe  consumer has no other choice.
  
 14.
 Pay for connection
 - payment for meter procurement, testingand installation, as well as for other equipment, apparatus andwires to the consumer necessary to satisfy requirements forconnections to the transmission and distribution grids.
  
  
 15.
 Place of consumption
 the location of the consumer equipmentincluding subconsumer’s one where there is consumed theelectric energy supplied through one or more connection points.
  
 16.
 Power plant
  
  
  
 - any installation or set of technicalinstallations which produces energy using different kinds of fuel(coal, gas, oil products, etc.) or other forms of energy.
 17.
 Power plant capacity
 -the sum of the nominal active capacities(W) of  electricity generating units at a power plantmeasured at the power plant bus-bar.
  
 18.
 Power plant for own use
 -any power plant that produces more than40% of its annual average electric output to meet  theinternal demand of the owner of  the power  plant.
  
 19.
 Producer
 -legal entity who has been given licensefor operation of power  plants and production of electricenergy.
  
 20.
 Public power plant
 -any power plant that produces at least 60%of its annual average electric energy production for publicpurposes.
  
 21.
 Subconsumer
 -natural (private) person or legal entitywhoseelectric                           equipment is connected to the electric installations of aconsumer and has  concluded a respective trade contract withthe latter.
  
 22.
 Supplier
 -a legal entity who has been given licensefor acquisition and for sale of a supply of electricity atregulated or unregulated tariffs.
  
 23.
 Supply
 - acquisition and selling the electricity.
  
 24.
 Transmission entity
 - legal entity who has been given thelicense for transmission of electricity.
  
 
 
** **
**CHAPTER II**
  
 ADMINISTRATIVE COMPETENCE AND PROTECTION OF CONSUMERS
  
**Article 4.Responsibilities of the State.**
 
 The Government of theRepublic of Moldova promotes the energy policy of the state:
 (1)   Establishes the strategy (program) ofthe development of electricity generating sources and electricinterconnections with other states and assures energy security ofthe state;
 (2)   Specifies the conditions ofelectricity import and export;
 (3)   Approves the construction of powerplants with the capacity above 20 MW;
 (4)   Approves the types of fuel to beutilized in the power plants of the capacity above 20 MW;
 (5)   Determines the minimum quantity offuel reserves.
 (6)   Promotes the interests of NationalEnergy Sector on the international level;
    Article 5. National Agency forEnergy Regulation
  
 (1) The National Agency for EnergyRegulation (hereinafter: Agency) regulates the energy system.
 
 (2) The Agency is apermanent public body with the status of a legal entity that isnot subordinated in any way in its activity to any othergovernment or private agency or institution, except the casesstipulated in Articles 5(3) and 8 (p.3,4,5,8 and 9(4)).
 
 (3) The Government inaccordance with this act shall approve the Regulations of theAgency.
** **   Article 6. The tasks and mainduties of the National Agency for Energy Regulation
 
 (1)The Agency hasthe following responsibilities:
 a)      license theproduction, transmission, central dispatch , distribution andsupply of electric energy as well as activities which ensure theincrease of efficiency and competition on energy market;
 b)     incases stipulated in this Act amends or withdraws the issuedlicenses
 c)      control the meetingof requirements and the quality of services;
 d)    elaborates and approves in accordance with the establishedprocess the methodology of calculation of regulated electricitytariffs and approves regulated tariffs;
 e)      supervise thecorrectness of calculation of the regulated electricity tariffsperformed by the licensees according to the provisions defined inthe license;
 f)      monitors thebusiness of the agents that act in the electricity market;
 g)      defines theeconomic, technical data and data that provide the functioning ofthe energy system in the whole, that shall be made public by thelicensees, taking in consideration their confidentiality;
 h)    promotes the competition on the electricity market;
 i)       establishesthe accounting model and information system to be used by thelicensees to report to the Agency, in accordance with theNational Standard Accounting System.
    Article 7. The rights of theAgency
  
(1) In the interest of thefulfillment of its duties stipulated in this Act the Agency isentitled:
 a)      to control theobservance of the conditions, stipulated in the license, by thelicense holders;
 b)     to control thecorrectness of application of regulated tariffs by the licensees;
 c)      to have access tothe documents concerning the activities subject to license evenin case they contain state or business secrets;
 d)     to obtain copies,abstracts of such documents and request additional informationfrom the  licensees;
 e)      to enforce theprinciple of minimum costs regarding the production,transmission, distribution and supply of electric energy;
 f)      to issueregulations in order to perform its duties in the most efficientway;
 g)      to exact fines.
  
 (2) The Agency may alsohave other rights stipulated in its regulations and legislationin force.     Article 8. Administration of theAgency
  
 (1) The Agencyshall be managed by the Administration Council consisting of 3Directors.
  
 (2) The decisionof the Administration Council shall be taken by a majority ofvotes. Each Director of the Administration Council has one vote.
  
 (3) TheDirectors of the Administration Council shall be appointed by theGovernment of the Republic of Moldova for a term of 6 years,except the case of their initial appointment under this Act when:one Director shall be appointed for a term of 2 years, oneDirector for a term of 4 years and one Director for a term of 6years. The Government of the Republic of Moldova shall appoint aDirector of the Administration Council every 2 years or whenevera term, for any cause, becomes vacant, in which case the newDirector shall serve the remaining time of the unexpired term. Noperson shall serve as a Director of the Administration Councilfor more than 12 years and no person shall be appointed Directorafter having served as a Director for more than 6 years,including any time remaining on the current term of the Director.
  
 (4) A Directormay be dismissed by the Government of the Republic of Moldovaonly if he/she:
a)       resigns,
b)      looses the citizenshipof the Republic of Moldova,
c)       is not able tofulfill his/her duties by reason of health,
d)      is elected in an otherfunction,
e)       is convicted bythe court,
f)       violatessystematically his/her obligations,
g)       violates thelegislation in force.
  
 (5) TheGovernment of the Republic of Moldova shall designate one of theDirectors as General Director of the Agency’sAdministration Council.
  
 (6) The GeneralDirector shall engage the staff of the Agency with the approvalof at least one member of the Administration Council.
  
 (7) At enterprises regulated by the Agencyin accordance with this act, the Director of the AdministrationCouncil shall not:
 a)      hold any office orposition;
 b)     bea shareholder, debtor or creditor;
 c)      receive or expectto receive any compensation or other financial consideration;
 d)    attempt to obtain employment for any person or himself
 .
  
 (8) The DirectorGeneral shall present to the Parliament and the Government of theRepublic Moldova a report regarding the activity of the Agency inthe previous year.
     Article 9.The Agency’s budget. The regulatory fees
  
 (1). By November 15 ofeach year, the Agency will prepare its detailed budget for thenext year based on:
 a)      annual regulatoryfees applied to license holders by the Agency;
 b)     fees for the licenseissuance;
 c)      other sourceprovided by this law.
  
 (2) The Agency willestablish the regulatory fees level in the basis of valuation ofenergy volumes for the next year, received from the licenseholders until November 1, and that will be sufficient to coverall the budgetary expenditures of the Agency during the nextyear. The level of regulatory fees shall be determined asfollows:
-                 in the case of energy production entities the fees will beimposed on the energy volume delivered at the central borders;
-                 in the case of energy transportation/dispatch entities, the feeswill be imposed on the energy volume delivered to thedistribution networks;
-                 in the case of distribution entities, the fees will be imposed onthe energy volume delivered to customers;
-                 in the case of energy supply entities the fees will be imposed onthe delivered volumes.
 
 (2) The regulatoryfees, paid by license holders, will be transferred on the currentaccount of the Agency, which is the sole user of these funds. Inthe case where the Agency’s funds are not fully utilizedduring the current year of regulation, then they should betransferred and included in the next year budget. In the casewhere it occurs a deficit of funds during the current year ofregulation, the Agency is entitled to reimburse it from the nextyear budget, applying an appropriate regulatory fee. The Agencyis entitled to contract loans at reasonable rates of interest tocover the current costs that can not be covered by regulatoryfees. The Agency will reimburse the funds received from theregulatory fees applied.
  
 (3) The Agency budgetwill be approved by the Minister of Finance at the level of0.06-0.09% from the annual cost of the energy and natural gassupplied to customers. The Agency’s budget will bepublished in the republican mass media.
 
   Article 10. Financial report
 
 By March 1 of eachyear, the ANRE will prepare and publish a financial report, whichwill include both the accounting data of the regulatory feestransferred by the license holders on the current account of theAgency, and the Agency’s expenditures during the previousyear. The financial report will identify all the loans contractedby the Agency during the given regulation year as well as otherfunds utilized by the Agency. The financial report will bepublished in the republican mass media.
    Article 11. Protection ofconsumers
 
 (1) In the course ofthe performance of its activities the Agency shall:
 a)      pay regularattention to matters affecting the interests of consumers;
 b)     elaborate detailed rulesregarding the protection of consumers;
 c)      investigate thecomplaints of consumers;
 d)     cooperate with theorganizations that represent the interests of consumers;
 e)      provide theorganizations that protect the interests of consumers as well asthe consumers with necessary data and relevant informationregarding the activity of the license holders excepting theconfidential information;
 f)      decide in disputedmatters between consumers and suppliers, as well as between theconsumers and the distribution and transmission networks.
  
 (2) The consumers mayaddress a claim to the Agency concerning any matters within theauthority of the Agency including the quality of servicesprovided by an electric entity or a supplier. The Agency shallexamine the mentioned complaints and will take respectivemeasures within the limits of its authority.     Article 12. Decisions of theAgency
 
 (1) The AdministrationCouncil shall perform its duties so in order to ensure thetransparency of its activity. In this order:
 a)      the AdministrationCouncil’s sessions will be public;
b)       theinterested Parties will be informed in advance about the agendaof the Administration Council’s session. Both, theinterested Parties and the public at large will have free accessto the examination of problems in discussion. In case when theproblems under discussion are confidential, they will be examinedat closed-door meeting, the session’s decisions beingaccessible to every interested party.
  
 (2) In the event of adisagreement between a licensee and a consumer or anotherlicensee, involving a matter within the jurisdiction of the ANREwhich cannot be resolved through negotiation, the matter ofdisagreement shall be analyzed by the ANRE in order to make adecision within the scope of its authority.
  
 (3) A decision of theAgency may be appealed to Court according to effectivelegislation.
  
 (4) The licenses issuedby the Agency as well as its decisions of public interest shallbe published in the Monitorul Official of the Republic ofMoldova.
  
** **
** **
**CHAPTER III**
  
 LICENSING
   Article 13. Activities subject tolicense
 
 (1) Production,transmission, central dispatch, distribution and supply ofelectric energy are activities subject to license. There can beissued licenses for other activities of the electricity industryif doing so it is stimulated the competition in the electricitymarket.
  
 (2) The license forproduction of electric energy is issued to an electricityproducer the power plant of which has the capacity equal orgreater than 5 MW and if the capacity of the power plant isutilized for public purposes. In case of power plants for own usethe license shall be issued only for power plants with thecapacity above 20 MW.
  
 (3) The producer thatowns a public power plant of the capacity under 5 MW and a powerplant for own use of the capacity under 20 MW should report tothe Agency the date of power plant commissioning and cooperatewith the electric power system according to the provisionsstipulated in the Article 24.
  
  Article 14. The conditions forlicensing
  
 (1) To perform theactivities stipulated in the Article 13 there shall be issuedlicenses to economic units that are legal entities and if theysatisfy the following conditions:
 -        areregistered in the Republic of Moldova;
 -        provethat they have financial and technical sources as well as theprofessional training in order to ensure a normal performance ofthe licensed activity;
  
 (2) The manager of the enterprise,holding the license shall have to meet the followingrequirements:
 -        to beable to perform his/her duties,
 -        to havepermanent residence in the Republic of Moldova,
 -        highereducation with demonstrated expertise in a relevant professionalfield with and at least 5 years experience
 -        to haveno previous convictions relevant to the activity regulated by thepresent Act,
 -        not tobe punished earlier - according to the criminal code - for thedeeds intentionally done.
  
 (3) There shall not beissued licenses to economic units that are under the effect ofbankruptcy or liquidation proceeding as well as to economicorganizations whose licenses were withdrawn earlier for reasonsforeseen in Art.17 (2),b,c,d,e, and there has not yet passed 10years from the moment of the withdrawal.
    Article 15. Types of licenses
 
 (1) The Agency isentitled to issue the following types of licenses:
 a)      license forproduction of electric energy;
 b)     license for transmissionof electric energy;
 c)      license fordistribution of electric energy;
 d)     license for centraldispatch;
 e)      license for supplyof electric energy at regulated tariffs;
 f)      license for thesupply of electric energy at non-regulated tariffs;
 g)      licenses necessaryfor promotion of the competition in the electricity market toreduce the tariffs and protect the consumers.  (2)The generic licensesfor every type of activity and the Regulation on license issuanceshall be approved by the Agency’s Administration Counciland shall include among other data and information the conditionsconcerning the calculation of regulated tariffs and requirementsregarding the quality of the services.
  
   Article 16. The rights and theobligations of a license holder
 
 The license holder isobliged:
 a)      to fulfill theconditions stipulated in the license;
 b)     to observe the principleof minimum costs presenting the detailed calculations proving itto the Agency in the case where the Agency decides on thenon-competitiveness of the energy market;
 c)      to fulfill itsobligations defined in the license without discriminating againstany market participant or consumers;
 d)      to providecontinuous services except for cases stipulated in the licenseand in case of non-payment, technical and safety problems, and inaccordance with the terms of contracts;
 e)      to present to theAgency annual reports on their activity during the previous yearaccording to a form and terms established by the Agency. At theAgency’s request, the license holders will submit any otherinformation necessary for the Agency’s operation under theeffective legislation;
 f)      to pay on a regularbasis the regulatory fees imposed.
  
 (2) In the case wherethe legal or physic person do not fulfill its obligations ofpayment in accordance with the concluded agreement or theconditions on service rendering, the license holder can not beobliged by any public or private authority to render such kind ofservices.
 
 (3) Licensee has free access to theelectricity meters located on the premises of customers with whomLicensee has a contract to provide a supply of electricity.
  
 (4) The license holder is prohibited frompurchasing shares of another license holders without theAgency’s written authorization.
  
 (5) The Agency shall regulate the right ofholding more than one license.  
   Article 17. Amendment andwithdrawal of the license
  
 (1) The license may beamended on the initiative of the ANRE or the license holder andwith the agreement of the other party in the event of substantialchanges in circumstances.
  
 (2) The Agency maywithdraw the license definitely or temporarily in case:
 a)      the license holderrequests the withdrawal of the license;
 b)     the license holder isdeclared bankrupt and is unable to fulfill its responsibilities;
 c)      the license holderobtained the license fraudulently;
 d)     the license holder doesnot observe the conditions stipulated in the license;
 e)      the license holderbreaks the present Act.
  
 (3) In case of thewithdrawal of the license the Agency is obliged to take measuresin order to ensure the reliable and efficient supply ofelectricity to consumers.
  
 (4) The Agency’sdecision on the amendment or withdrawal of the license can beargued in the Court.     Article 18. Merger or separation ofelectric entities
  
Merger of electric entities,merger of electric entities with other economic organizations andassociations, and separation or division of electric entities andsuppliers shall be done only with the approval of the Agency ifsuch a merger, separation or division can influence the regulatedtariffs. Upon the entities obtaining the appropriate approval theAgency may amend the license conditions.
** **  
** **
**CHAPTER IV**
** **
 RIGHTS TO OTHER PARTIES REAL ESTATE
   Article 19. General rights
 
 (1) An electric entitylicense holder is entitled to apply to the authorized bodies for:
 a)      the right ofpreparatory work;
 b)     right of cabling;
 c)      right of use;
 d)     other necessaryauthorizations.
  
 (2) The license holderis obliged to recompense the damages caused to the owner of thereal estate or other property as a result of preparatory, cablingworks, construction, installation, repair and the elimination ofthe consequences of the faults.
  
 (3) To prevent or avoidany imminent or real accident, the owner or the user of the realestate will allow the usage of its property, as it is necessaryby the transmission and distribution entities.
  
 (4) In the areas undernature protection, the rights listed in point (1) shall not beexercised unless a preliminary permission from the competentnature protection authority is obtained.
  
  
**Article 20.Right of preparatory work.**
 
 (1) In connection withthe construction of an electric entity or objects that belong toit’s the legal entity may apply for a permission for rightof preparatory work.
    Article 21. Right of cabling
 
 (1) The right ofcabling permits the license holder of an electric entity toperform the construction, installation, repair and replacement ofthe electric lines, supporting structures of transformers andswitching equipment.
  
 (2) The right ofcabling ceases if the construction of the electric line is notfinalized in 5 yeas.
    Article 22. Right of use
  
 (1) Any object of theelectric entities may be placed and operated on otherparties’ real estate on the basis of the right of use.
  
 (2) The right of use isestablished on the basis of an agreement with the owner of thereal estate.
  
  
 (3) In case therecannot be reached an agreement concerning the establishment ofthe right of use the license holder may request the support ofcompetent authority to solve the problem.
  
 (4) The right of useceases in case the construction of the objects defined in point(1) shall not been finalized within 5 years reckoned from theestablishment of this right.
    Article 23. Expropriation
 
 (1) In case the licenseholder has not been able to obtain the right of use in order tobuild a power plant, transformer substation and other objects forpublic use it is entitled to initiate the procedure of theexpropriation of the real estate of the other owner according tothe legislation in force.
  
 (2) In order toconstruct and operate electric lines, supporting structures oftransformers and switching equipment the procedure ofexpropriation may take place only if the license holder provesthat the right of cabling stipulated in Article 21 hinderssubstantially or even terminates the proper use of the realestate.
  
 (3) The real estateexpropriated in accordance with points (1) and (2) shall betransferred to the ownership of the state and put at the disposalof the license holder with the right of use.
** **
** **
**CHAPTER V**
  
 PRODUCTION, TRANSMISSION, CENTRAL DISPATCH, DISTRIBUTION
 AND SUPPLY OF ELECTRIC ENERGY   Article 24. The coordination of theactivities in the electric power system
 
 (1) Public electricentities shall function in a cooperating power system. Theelectricity producers, transmission entities, central dispatch,distribution entities and suppliers shall cooperate on the basisof the market economy principles and unique operational controlover the power system.
  
 (2) Subject toconditions contained in licenses and to regulations of theAgency, the electricity transmission entity and the dispatchertogether with electricity producers, distribution entities andsuppliers shall elaborate the rules concerning:
 a)      the conditions ofcooperation within the power system,
 b)     the application ofrestrictions in relationships between parties.
  
 (3) The dispatcher andthe electricity transmission entity shall ensure the operationalcontrol over the cooperating power system in accordance with theoperational regulations.
  
 (4) The legalrelationships between partners in the electricity market areestablished on the basis of the contracts, in accordance with thelicenses and regulations issued by the Agency.   Article 25. Production of theelectric energy
 
 (1) All power plantsirrespective to their capacity have the right to participate inthe electricity market on condition that the technicalrequirements for connection to the electric network aresatisfied, the quality of delivered electric energy correspond tostandards in force.
  
 (2) The license forelectricity generation is valid unless the Agency withdraws itdue to the breach of the license. The license can be cancelled bythe Agency after 25 years of the presentation of a writtennotice.
  
 (3) The license holderfor the electricity generation shall be subject to operationssupervision by central dispatch in accordance with regulationsapproved by the Agency.
     Article 26. Transmission ofelectric energy
** **
 (1) Every licensee orconsumer has the right of access to the transmission grid withoutdiscrimination.
  
 (2) The electricitytransmission entity is obliged to transport electric energy tothe place of destination in accordance with the conditionsstipulated in the contract concluded between parties, thelicense’s conditions and regulations issued by the Agency.
  
 (3) The transmissionentity can not be a supplier.
  
 (4) The electricitytransmission entity shall answer any claim relevant to itsactivity during the period of 15 days reckoned from the momentwhen the claim was registered.
  
 (5) The License forelectric energy transmission is valid unless the Agency withdrawsit due to breach of the License’s conditions. The licensecan be cancelled by the Agency after 25 years of the presentationof a written notice.
  
 (6) The license holderfor the transmission of electric energy will operate thetransmission grid in accordance with the regulations of centraldispatch, conditions stipulated in the license and effectivetechnical rules.
** **   Article 27. Distribution of theelectric energy
** **
 (1) Every licensee and consumer has theright of access to the distribution network withoutdiscrimination.
  
 (2) Theelectricity distribution entity is obliged to transportelectricity to the place of destination according to theconditions defined in the contract concluded between parties,license conditions and regulations issued by the Agency.
  
 (3) The electricitydistribution entity may be a holder of the license for theelectricity supply at regulated tariffs.
  
 (4) The electricitydistribution entity shall answer any claim regarding its activityduring 15 days reckoned from the moment of the registration ofclaim.
  
 (5) The License forelectric energy distribution is valid unless the Agency withdrawsit due to breach of the License. The license can be cancelled bythe Agency after 25 years of the presentation of a writtennotice.
  
 (6) The license holderfor the distribution of electric energy will operate thedistribution grid in accordance with the regulations of centraldispatch, conditions stipulated in the license and effectivetechnical rules.
  
  Article 28. Central Dispatch
** **
 (1) The technological and operatingactivity of the power system shall be coordinated and managed byCentral Dispatch according to the license for Central Dispatch.
  
 (2) The CentralDispatch is a state enterprise and can not be privatized.
  
 (3) Central Dispatchwill register contracts of power supply in accordance with theRegulations approved by the Agency.
  
 (4) Central Dispatchcannot be a supplier.
    Article 29.Supply of electric energy
  
 (1) Thesupplier is obliged to supply electric energy to consumers inaccordance with the stipulations of the license and Chapter VI.
  
 (2) In marketsconsidered by the Agency to be non-competitive, the suppliershall purchase electric energy at the lowest level of tariff thatare consistent with reliable electric energy supply. Thecontracts regarding the purchasing of electricity by the supplierin a market considered by the Agency to be non-competitive shallhave to be approved by the Agency.
  
 (3) There shall not bequalified as supply of electricity the passing on of electricenergy by a consumer to a subconsumer within the place ofconsumption.
  
 (4) The supplier shallundertake responsibility for any damages related to a failure bythe supplier to obey the electric quality standards in force.
     Article 30. Extension of electricgrid
 
 (1) The transmissionand distribution entities are responsible for connecting theirnetworks to other licensees or consumers requesting an electricservice connection from the transmission or distributionnetworks, subject to paragraph (5) below.
  
 (2) The transmissionand distribution entities are responsible for the optimalextension of their electric grid in accordance with the increaseof demand of electricity.
  
 (3) Expenditures forthe extension of the transmission network will be covered by thetransmission entity and they will be taken into consideration ontariff calculation, if the latter is done according to licenseconditions or regulations issued by the Agency.
  
 (4) Expenditures forthe extension of the distribution network will be covered by thedistribution entity and they will be taken into consideration ontariff calculation for distribution of electric energy if thelatter is done according to license conditions or regulationsissued by the Agency.
  
 (5) The transmissionand distribution entities may require from other licensees orconsumers who require an extension of transmission ordistribution networks to meet the their specific needs financialsupport for the design and construction of such networks, if thelatter is done according to license conditions or regulationsissued by the Agency.
** **
** **
**CHAPTER VI**
  
 LEGAL RELATIONSHIPS BETWEEN SUPPLIERS AND CONSUMERS   Article 31.  Legalrelationships
  
 (1) For electricity markets determined by the Agency to benon-competitive the Agency shall elaborate and adopt regulationsthat control the legal relationships between the participants inthe electricity market. .
  
 (2) In the competitive electricitymarket, the legal relationships between the electricity suppliersand purchasers shall be established within the conditions of thecontract signed between these parties. The contract will includethe effective date and term of the contract, specify the cases ofbreach of contract, suspension and limitation of contract as wellas other responsibilities of the suppliers and purchasers ofelectricity.
     Article 32. Electric energy supplycontract
 
 (1) Electric energyshall be supplied only on the basis of a contract concludedbetween the consumer and the supplier. The contract stipulatesthe effective date and term, provisions for suspension orlimitation of contract action as well as the responsibilities ofsuppliers and buyers.
  
 (2) The provisions ofthe contract may be further detailed and completed in appendixesand other additional documents.
  
 (3) The consumer isentitled to conclude individual contracts of electric energysupply with any supplier including the suppliers from outside theborders of the Republic of Moldova. (4) Consumer requirements concerning purchasing electricity andrevisions of existing contracts will be considered and satisfiedby the appropriate licensee taking into account technicalfeasibility.
     Article 33.The effects of the electric energy supply contract
  
(1) The supplier is obliged toassure the continuous supply of electric energy at the parametersstipulated in the standards in force and according with theconditions contained in the contract.
  
 (2) The consumers areentitled to pass on the electric energy to other consumers(subconsumers) only with the prior agreement of the supplier. Thelegal relationships between consumers and subconsumers shallcease in the moment of expiration of the electric supplycontract, as well as in case the subconsumer does not fulfill itsobligations.
  
 (3) The operation ofconsumer equipment shall not endanger life, health, and propertyand destabilize the proper operation of the electric entity andthe receipt of electric energy by other consumers.     Article 34. Suspension andrestrictions
 
(1) The electric entities areentitled to suspend the supply of electric energy for theshortest possible period when the life of people and property areendangered, there is an imbalance of demand and supply capacitiesin the co-operating power system, operational breakdowns in theoperation of the electric units as well as for carrying outconnections and other maneuvers that cannot be performedotherwise.
  
 (2) The electricentities shall inform the consumers in advance of the date andexpected duration of suspension because of maintenance andelimination of the consequences of faults.
  
 (3) The electricentities are entitled to restrict or suspend the supply ofelectric energy in case of fuel crisis at the national scale orbecause of the interests relevant to foreign trade, nationaleconomy, environmental protection and national defense.
  
 (4) The electricentities shall not compensate the damages caused as a result ofsuspensions and restrictions carried out because of circumstanceslisted in point (3) of the present Article if the actions of thesupplier have complied with the provisions of the points (1) and(2).
 (5)Transmission anddistribution licensees may suspend or terminate electricitysupply to a customer or other licensee for failure to comply withapplicable contracts.
     Article 35. Measurement ofelectricity consumption and payment settlement
 
 (1) The holders oflicenses for electricity transmission and distribution areresponsible for the installation, operation, maintenance andperiodic recalibration of the electric meters of consumersconnected to their network.
  
 (2) The holders oflicenses for electricity transmission and distribution shallmeter the volume of the electric energy in accordance with thestandards in force, using only tested meters.
  
 (3) The contractingparties may initiate an unplanned testing of the electric meter.In case the complaint has not been proved the complainant shallincur the expenses related to this unplanned testing. If thecomplaint has been proved then there shall be performed a newpayment settlement.
  
 4) The consumer shall:
     (a) pay for connection;
     (b) pay for electricity consumed basedon meter readings and concluded contracts.
** **
** **
 CHAPTER VII
  
 TARIFF REGULATION
   Article 36. Tariffs of electricenergy
  
(1) Regulated tariffs shall becalculated and applied by the respective license holdersaccording to a methodology established beforehand.
  
 (2) The methodology ofcalculation and application of regulated tariffs shall beelaborated and approved by the Agency in accordance with theestablished process for definite periods of time.
  
 (3) The methodology ofregulated tariff calculation mentioned in p.2 shall include:
 a)the calculation of the expenditures:
 aa) related to the cost of service;
 ab) related to efficient development of the electric entitiesand central dispatch;
 ac) related to the fulfillment of the obligation regarding theenvironment protection;
 ad) the necessary profit in order to continue the activity ofthe license holders;
  
b) the allocation of expenditures and necessary profit betweenelectric energy production and thermal energy production at theplants that produce on a combined basis electric energy andthermal energy;
  
 (4) The methodology ofregulated tariff calculation should take into account the statepolicy concerning the development of the national energy system,as well as the transit, the import and the export of the electricenergy and the promotion of reliable supply of electricity atminimum costs as well as the efficient utilization of theproduction capacities;
  
 (5) The license holdersshall provide the Agency with all information that is necessaryfor the activity of supervising the correctness of costs andcalculations of regulated tariffs.
 
** **
 CHAPTER VIII
  
 FINAL ANDTRANSITORY PROVISIONS
** ** Article 37.The settlement of disputes between the contracting parties
  
 Except asprovided in Article 12 (2), the disputes between the parties inthe electricity market shall be solved in the court of law.
  
  Article 38. Final provisions
 
  
 (1) Until 31 Decemberof the year 2000 the holders of the license for the supply ofelectric energy at regulated tariffs have the exclusive right tosupply the electricity within the territory specified in thelicense.
  
 (2) The date when otherconsumers will be able to choose freely their supplier ofelectricity according to the Article 32 point (3) will beestablished by the Agency later and the decision about it will bepublished in the Monitorul Oficial of the Republic of Moldova oneyear before the application of this decision.
  
 (3) The transportationentity shall hold the license for dispatching activity. Thechange of this function of the transportation entity may takeplace in accordance with a decision of the Agency but not earlierthe year 2002.
  
 (4) Until the year 2001Central Dispatch under its Central Dispatch license shall obtainelectricity supply as needed by the holders of the license forthe supply of electric energy at regulated tariffs in accordancewith regulations adopted by the Agency.
  
 (5) The Agency mayamend a license, without the agreement of the licensee, duringthe first year after publication of this Act provided suchamendment is necessary to protect the interest of licensees andconsumers.
  
 (6) The Governmentwithin two months shall:
 a)     submit the proposals to the parliament in order to amend thelegislation in force in accordance with the present Act; and
 b)    amend its legal rules according to the present Act.
  
  
 Chairman of the Parliament
 Dumitru Diacov
  
 Chisinau, September 17, 1998.
 Nr. 137-XIV.