Bill 705.

Summary.

The bill would add to Law 6 of 1997 a procedure allowing the National Public Services Authority (Autoridad Nacional de los Servicios Públicos) to intervene in a provider when breaches affecting service continuity persist. Intervention would require notice and a technically justified period to remedy the breaches, except where continuity faces an imminent risk. A reasoned resolution would appoint an administrator whose remuneration the provider would pay. The administrator would manage, supervise, and take essential operational measures without disposing of the provider’s assets. Administrative appeals would not suspend intervention. The bill also defines self consumers, technical fitness, administrators, majority shareholdings, and fair market value. Providers would facilitate market information, while distribution and transmission companies would publish network capacity and connection data, subject to justified restrictions protecting critical infrastructure.

Distribution concessions would last fifteen (15) years. Before expiry, the Authority would call a competitive process to sell the majority shareholding, with prequalification, uniform criteria, a timetable, and equal access to information. A prequalified incumbent could retain the shares by matching or exceeding the highest competing offer. The same process would apply after early termination, subject to exclusion where attributable breaches have been established by a final resolution. The bill specifies when a successful incumbent would pay the National Treasury (Tesoro Nacional) a concession benefit, based on its offer, fair market value, and other offers. If another bidder wins, the incumbent would receive the sale proceeds. The Authority would determine fair market value through an independent valuation and publish its methodology before the call for bids.

A concession could end upon expiry, insolvency related events, repeated breaches, the specified accumulation of tariff reductions, penalties and fines, or other contractual grounds. For generation projects on public property, the concession to use that property could match the term of the generation authorization. Self consumers could inject surplus electricity into the distribution network. Generators would be barred from restrictive practices, and limits would apply to their control of distribution companies and to the installed capacity they may serve when seeking or acquiring authorizations. The Executive Branch (Órgano Ejecutivo) could raise the capacity limit under the proposed conditions.

Distribution would include projects in unserved, non profitable, unconcessioned rural areas, identified by the Rural Electrification Office (Oficina de Electrificación Rural) and the National Energy Secretariat (Secretaría Nacional de Energía) and approved in the tariff review. Completion would automatically expand the distributor’s concession area. Distributors would have to extend networks, carry out approved investment programs, meet quality standards, maintain technical fitness, implement smart grids, measure actual consumption, handle new supply requests, and publish tariffs. They would also allocate amounts arising from quality breaches and pay the National Treasury fines under penalty clauses where their contracts provide for them. Rural projects would be included in full among their assets when calculating distribution value added.

Distributors would contract for energy and capacity through joint competitive procurement and, exceptionally, individual procurement, under the Authority’s procedures. They would sign supply contracts after the Authority raises no objection to the award; those contracts would not require approval by the Office of the Comptroller General of the Republic (Contraloría General de la República). Special tender documents would require regulatory approval and follow the National Energy Secretariat’s policy directives. Restrictions would apply to distributors’ involvement in generation, the number of customers they may serve through new concessions, and the use of privileged information to benefit related companies.

Tariff formulas would apply for four years, subject to specified grounds for early amendment. For transmission tariffs, the bill identifies recoverable costs and a return benchmark tied to United States of America Treasury bonds. For distribution, it would recognize only useful assets, prudent investments, verifiable costs, and efficient losses; the Authority would calculate distribution value added for up to six representative areas. It also sets the tariff treatment of bulk electricity purchases, authorized spot market purchases, and purchases made through other means permitted by law.

Customers affected by failures to meet quality standards would be entitled to bill credits once the relevant resolution becomes final. Customers current on their bills who dispute billing or high consumption could withhold the disputed portion pending the Authority’s decision. A distributor would have fifteen calendar days to decide a complaint; if it does not, the complaint would be deemed resolved in the customer’s favor. A customer dissatisfied with the response would have thirty calendar days to approach the Authority. The bill adds offenses for repeatedly withholding requested information and for conduct covered by contractual penalty clauses, and regulates warnings, fines, and daily fines. Certain fines would benefit customers through tariffs, while fines under penalty clauses would go to the National Treasury.

The bill would also amend Law 26 of January 29, 1996: it governs challenges to resolutions, the effect of appeals and the period for deciding them, and extends compulsory collection to proceedings for financial redress to end customers. Collection would follow the enforcement rules of the Judicial Code (Código Judicial), with repayment or offset if the underlying decision is later set aside. The National Assembly (Asamblea Nacional) would prepare an updated consolidated text and order its publication in the Official Gazette. The provisions could interest or affect providers, generators, transmission and distribution companies, investors, electricity customers, and rural communities in Panama.