ARTICLE

Electric energy and natural gas: new precedents from the Federal Court of Appeals in Administrative Matters

A recent ruling ratified that regulation by incentives on electric energy transportation matters is in force. Another judicial resolution extended to an industrial company the effects of a precautionary measure that had suspended the effects of the acts that had fixed charges over natural gas consumption.

November 25, 2009

1. Regulation by incentives

On the opportunity of declaring the nullity of Resolutions ENRE (National Entity of Electricity Regulation) No 519/2006 and SE (Secretariat of Energy) No 1561/2007, which had modified a AR$ 2.400.000 bonus awarded to the electric energy transportation company Transener S.A. (in re: “Transener S.A. c/ resolución 519/06 ENRE – Resolución 1561/07 SE” – File N° 2,422/2008”), Tribunal II of the Federal Court of Appeals in Administrative Matters ratified that:

(i) The transportation of electric energy in high tension is regulated by incentives, targeted at reducing availability and maximizing proper maintenance of; the service;

(ii) To the end mentioned above, a system of bonuses has been established to increase the compensation for the company acting as a concessionaire of the high tension transportation service.

(iii) The bonuses system was conceived as an instrument to promote the permanent improvement of the service rendered by the concessionaire of the high tension transportation service.

2. Extension of precautionary measures regarding natural gas charges

On October 15, 2009, Tribunal IV of the Federal Court of Appeals in Administrative Matters, decided in re: “Papelera Paysandú SAIC c/ EN-Dto 2067/08 – M° Planificación – Resolución 1451/08 1493/08 y otro s/medida cautelar (autónoma)”, that the company Papelera Paysandú SAIC was exempted from paying the charges over natural gas consumption fixed by Decree No 2067/2008. The Court held that the claimant was reached by the effects of precautionary measures obtained by the Ombudsman (“Defensor del Pueblo de la Nación”) in similar cases.

The precautionary measures requested by the Ombudsman were granted by Tribunal V of the Federal Court of Appeals in Administrative Matters, in the cases “Defensor del Pueblo de la Nación - inc med C/ EN -dto 2067/O8- MS Planificación – resol 14517/08 y otro s/ proceso de conocimiento”, dated September 10, 2009 and “Defensor del Pueblo de la Nación - inc med c/ Enargas resol 615/09 s/ proceso de conocimiento” dated September 22, 2009 (see Marval News # 87).

In those precedents, the Court of Appeals partially granted the precautionary measures requested by the Ombudsman and, therefore, instructed the ENARGAS to accept the payment of the natural gas invoices according to the tariff regime in force before Decree No 2067/08 was issued. If the challenged charges were not paid, the ENARGAS should refrain from suspending, interrupting or cutting off the natural gas service.

In order to declare that Paysandú was protected by the aforementioned precedents, the Court considered the following arguments:

(i) Precautionary measures granted to the Ombudsman are based on its legal standing to protect the collective interests of all users of the natural gas public service affected by the challenged regulation, including Paysandú;

(ii) The precedent “Halabi”, ruled by the Argentine Supreme Court, applies to this case. In that ruling, the Argentine Supreme Court considered that if there is a fact, single or continuous, which affects different and divisible individual rights, it is reasonable to conduct one only trial whose effects will apply to cases that are similar (this effect is known as erga omnes).

(iii) The Supreme Court supported the erga omnes effect of rulings passed in proceedings related to essential public services in which the Ombudsman acted as claimant.

Having taken these precedents into consideration, the Court of Appeals decided that the precautionary measures requested by the Ombudsman against Decree No 2067/2008 and its related regulation, entailed a generic challenge to the whole tariffs regime included thereto, since the charges challenged affected different and divisible individual rights.

Therefore, the Court of Appeals decided to aknowledge erga omnes effect to rulings “Defensor del Pueblo de la Nación - inc med C/ EN -dto 2067/O8- MS Planificación – resol 14517/08 y otro s/ proceso de conocimiento”, dated September 10, 2009 and “Defensor del Pueblo de la Nación - inc med c/ Enargas resol 615/09 s/ proceso de conocimiento” dated September 22, 2009.

As a consequence of this decision, Paysandú will be entitled to pay the natural gas invoices according to the previous tariff regime. Payments made pursuant to this ruling will be considered partial until a final decision is passed in this case. Until then, the natural gas distribution company shall refrain from suspending, interrupting or cutting off the service.

This insight is a brief comment on legal news in Argentina; it does not purport to be an exhaustive analysis or to provide legal advice.