GENERAL LAW OF ELECTRICAL POWER

CHAPTER I: GENERAL PROVISIONS

Art. 1. The law herein regulates the activities of power generation, transmission,
distribution and trade of electrical energy. These provisions are applicable to all
entities that develop the above Activities, being these public, private or of mixed
property, regardless of their level of autonomy and constitution status.

Art.2. The enforcement of the precepts contained in this Law shall take the
following objectives into account :

a) To develop a competitive market in the activities of generation, transmission,

distribution and trade of electrical energy;

b) To grant free access of the generating companies to the transmission and

distribution facilities, with only those limitations imposed by Law;

c) To make a rational and efficient use of resources;

d) To promote access of the supply of electrical energy to all population sectors;

and

e) To protect user rights as well as of the entities that develop activities in the
sector.

Art. 3. The General Electricity and Telecommunications Superintendency,

hereinafter called "SIGET" (as per its Spanish acronym), shall be responsible
for applying and enforcing the compliance with the provisions in this law.

Art 4. For the legal purposes of this law, the following definitions shall apply:

a) High Voltage: the voltage level equal to or higher than 115 KV;

b) Low Voltage: voltage level lower than 115 KV

c) Trader: the entity that buys electric energy from other operators with the
purpose to resell it;

d) Connection: is the link that allows a final user to receive electric energy from
a transmission or distribution network

e) Distributor: is the entity that owns and operates the facilities to deliver electric
energy in low voltage networks;

f) Entity: Natural or legal person;.

g) Generator: any entity possessing one or more electrical generation plants,

who trades production either totally or partially;
h) Interconnection: Is the link that allows two operators to transfer electrical
power between their facilities;

i) Node: Is the spot where several elements of an electrical system meet,

j) Operator: any entity that deals with power generation, distribution or

transmission of electrical energy for commercial purposes;

k) Transmission Network: the integrated set of high voltage electric energy

transportation equipment;

l) Distribution Network: the integrated network for low voltage electric

transportation equipment;

m) Transmitter: is the entity that owns facilities for high voltage electrical
transmission activities, who commercializes its services; and

n) Final user: the one who buys electricity for its own use.

Art. 5. The generation of electrical power from hydraulic and geothermal

resources, shall require the concession granted by the SIGET, in accordance
with the provisions of this law.

Art. 6. The installation and operation of nuclear electric plants shall be regulated
by a special Law.

Art. 7. Generation activities not foreseen in Articles 5 and 6, as well as

transmission, distribution and trade of electrical power, can be carried out
provided the prior registry in the Operators Registry of the Electrical Sector kept
by the SIGET. This registration should be updated on an annual basis.

Generators shall pay SIGET, three Colones and ten cents for each megawatt-
hour generated with commercial purposes during the previous year, as a fee to
update the registry. SIGET shall adjust this amount every year, taking into
account the Consumer Prices Index, published by the Ministry of Economy. The
basis to increase figures shall be the last day of the month in which this Law
enters into effect.4

Art. 8. With the exception contained in this Article, one same entity may develop
generation, transmission, distribution and trading activities, provided that it
establishes separate accounting systems, for each one of them, and that they
are recorded as such at the SIGET.

SIGET is empowered to establish the standards to be complied by the

accounting systems of operators developing transmission and distribution
activities, as well as of the Transactions Units.

The entities developing generation, distribution and trading activities may not be
shareholders of the corporation resulting from CEL´s restructure, whose normal
business is the transmission of electric energy, and neither this corporation nor
its shareholders are allowed to participate in any other company that develops
the above mentioned activities.

Art. 9. The charges for the use of distribution and transmission networks,; and
for the coordinate cooperation of the transmission system; the operation of the
wholesale market and sales to final users, shall be subject to the regulation and
approval of the SIGET.

The prices for any electric energy services and supply not included in the
previous paragraph shall be fixed by mutual agreement among the parties
involved.

Art. 10. Operators shall have no other obligation to deliver services, or supply
other than the ones established by the law and their contracts.

Art. 11. For the construction of transmissions and distribution networks, the right
of way of state owned public parks, roads, streets, ways, sidewalks, and train
tracks shall be free, provided that the development standards set forth by the
authorities with jurisdiction are complied in every instance.

Expenses due to the removal, transfer and replacement of electrical facilities

necessary due to the expansion, maintenance or improvement of highways,
streets, railroad tracks, municipal ornamentation or any other similar reasons
shall be borne by the operators, as a compensation for the free use of state
owned property.

CHAPTER II

REGIME TO DEVELOP GENERATION, TRANSMISSION, DISTRIBUTION

AND TRADING ACTIVITIES OF ELECTRICAL POWER

SECTION I

CONCESSIONS

Art. 12. The grants shall be permanent and assignable.

Art. 13. Any party interested in obtaining a grant for the exploitation of hydraulic
or geothermal resources shall submit a written request to the SIGET including
the following:

a) The general information of the party, regarding its existence and legal
capability;

b) A project feasibility study, including a descriptive memoir and layouts;

c) The study of environmental impact, prior the approval of the authorities with
jurisdiction, that shall allow for a systematic assessment of the project's
environmental effects and of the attached works under construction, operation
and abandonment stages. It shall also include a comparison of various existing
options, the undertaking of preventive measures and the plan for correction, if
necessary.

d) Any other information that this law or the regulations, require.

Art. 14. The SIGET shall decide whether the request is admissible or not eight
(8) days after receiving the request.

Art. 15. The application may be declared inadmissible only when the requested
resource was granted through another concession, or in the event that the
provisions in Article 13 have not been complied with.

Art. 16. The regulations of this Law shall establish the procedure to handle grant
requests.

Said concessions shall be granted prior the establishment of competence

through a bidding process.

The procedure to be established in compliance with this Article shall include the
publication of the project data in two of the most important newspapers in the
country, with the purpose of allowing any opposing entities to express
themselves.

Art. 17. SIGET is empowered to set forth the standards to be applied for the
bidding process, in every case, bid offers shall be submitted accompanied by a
guarantee equal to the ten percent of the total bid offer amount.

Art. 18 The concession to exploit the resource will be awarded to the bidder
offering the best price, unless if the initial applicant lost the bid but is willing to
pay ninety percent of the proposal submitted by the winning bidder, in the case
of the concession of hydraulic resources, and eighty five percent of the proposal
of the winning bidder in the case of the concession of geothermal resources.

The proceeds generated by the bid, shall be transferred to The Nation’s

General Fund.

Art. 19. Within thirty days after the publication of the bid results, SIGET and the
licensee shall issue the corresponding contract through a Public Document. The
rights and obligations of the State and the licensee, the conditions under which
the grant is issued, reasons for expiration and applicable provisions of this Law,
including procedures to amend it, by mutual agreement of the parties involved,
shall be specified in the Contract.

Art. 20. Grants can terminate only through waiver or for the non compliance of
the obligations set forth in the same. The above, without prejudice of the fines
imposed on the licensee in accordance with this Law and its Regulation.

Art. 21. In the event of waiver or assignment, SIGET should approve the same.
Art. 22. Once the termination of the grant has been agreed upon due to the non
compliance of the licensee, the latter may not continue exploiting the resource.

Art. 23. Grants may be changed at the request of the licensee, following the
same procedure used for its awarding, with the exception of the bid process.

In cases where the generation capacity contained in the grant should be

increased, then this change shall be subject to the payments resulting from the
proportional comparison of the generation capacity at the moment of the
request, with the resulting capacity after its increase.

The regulations of this Law shall establish the methodology in order that the
payments for the increase are related to the real value of the original grant.

SECTION II

STUDIES

Art. 24 At the request of an interested party, SIGET may grant only once, a
temporary permit for electrical generation study projects using hydraulic or
geothermal resources.

Art. 25 The grant of said permit, shall in no way mean exclusivity, and shall
grant the interested party right to studies, tests and measures necessary in
state owned property. When these are fiscal goods, the interested party shall
obtain permit from the authority that manages these goods.

Art. 26 The maximum term of the temporary permit shall be two years. This
permit may be renewed only once at the request of the interested party. The
request for the permit, as well as the renewal, shall be made in accordance with
the requirements established by the SIGET.

SECTION III

INTERCONNECTION

Art. 27 he transmitters and distributors shall be bound to allow the

interconnection of their facilities and the use of the same for the transportation
of electrical power, except when this could endanger the system’s operation or
security, or of the facilities or persons.

Art. 28 The conditions for the interconnection, as well as the use of the facilities
shall be subject to the agreement among the parties involved.

Art. 29. In case no agreement exists, regarding the interconnection or the use of
the facilities, any of the parties can resort to SIGET in matters related to
Chapter VII of this Law.

Art. 30. Unless otherwise specified, interconnection costs shall be on the

account of the requesting party.
Art. 31. Every operator shall be responsible for the damages their facilities may
cause the equipment that is interconnected to it or a third party’s equipment.

Art. 32. The distributors shall submit the SIGET every six months, a report at
least containing the following:

a. The energy delivered per consumer type;

b. The energy delivered in a third party’s name;
c. The average prices per consumer type during the period;
d. The system’s characteristics and failures during the period;

e) The quality of the services and supplies.

CHAPTER III

TRANSACTIONS UNIT

SECTION I

ORGANIZATION

Art. 33. Every interconnected system will have a Transaction Unit, hereinafter
called TU, that shall:

a. Operate the transmission system , maintain the system’s security and

ensure the minimum quality of services and supplies:
b. Operate the electric energy wholesale market;

The TU cannot carry out electric energy purchase-sales operations per se.

Art. 34. The TU shall be organized and operate as a corporation, being

represented by rated shares.

Art. 35. The operators and final users that are connected directly to the
transmission system controlled by said unit and that abide with the following,
may be shareholders of the TU:

a. The generators with a total rated capacity of at least 5 MW;

b. Transmitters with facilities that belong to the system;
c. The distributors with a total rated capacity connected to the transmission
system of at least 5 MW; and
d. The final users with a rated capacity connected to the transmission
system of at least 5 MW;

Art. 36. The shares representing the social capital of the corporation shall be
distributed in series or groups, which shall have a special denomination.
Each series or group shares referred to in the paragraph above shall be formed
for the generator, transmitter, distributor ad final user categories.

In the Common and Extraordinary General Board meetings of the TU, each
series of shares shall be entitled to two votes, with the exception of the
transmitters that shall have the right to only one vote.

Each series, with the exception of the transmitters shall be represented by two
persons appointed by a board presided by the legal proxy of any of the parties
comprising said series.

One same person cannot simultaneously represent two or more share series.

Art. 37. The TU’s Board of Directors shall be integrated by two representatives
per each series or groups of shares; with the exception of transmitters, that will
have only one representative.

Art. 38. Each member in the firm’s incorporation deed, shall subscribe shares
proportionally related to the book value of the goods for each activity of the
sector. In case of the final users, the book value of the facilities and electrical
equipment through which the supply is received will be taken.

Art. 39. The TU shall collect the charges for the transmission system operation,
and wholesale market according to the methodology established by the SIGET.

Art. 40. Without prejudice of the provisions set forth in this Law, the TU may
provide other services to whom requests them.

SECTION II

OPERATION OF THE TRANSMISSION SYSTEM

Art. 41. Every transmitter should make available to the TU the means to control
their facilities for the coordinated operation of the system. The TU shall be
empowered to control its member’s generation units.

Art. 42. The TU’s operation decisions shall be binding for all operators.

Art. 43. Every operator shall be responsible for the maintenance, extensions
and improvements of their facilities. Generators and transmitters should
coordinate their maintenance operations with the TU.

Art. 44. The TU may disconnect from the system, any operator’s facilities, which
could endanger any other operator, the system’s security or stability and goods
and people’s lives. Operators whose facilities are in default with regards to its
obligations with the TU, may also be disconnected.

Art. 45. In case of emergency in the system, every operator shall provide the TU
control of their equipment. The costs of these operations shall be covered by
the TU’s methodology; the TU shall determine the circumstances which could
be considered an emergency, said circumstances should be related to the
correction of failures throughout the system.

Art. 46. The TU shall determine the responsibility for the failure in the
interconnected system.

Art. 47. The TU shall determine the method followed to calculate the losses for
which each

generator should be liable in accordance with its participation in the scheduled

dispatch and the System’s Regulating Market. Generators may compensate
said losses through their own generation, contracts with other generators, or
within the System’s Regulating Market.

Art. 48. The system users may obtain reactive power supply, rolling reserve and
other services at their own cost, necessary for the transmission system’s
operation. The UT can render said services at the user’s request, through the
payment of a charge agreed with requestors.

Art. 49. The TU shall determine the requirements to be complied with by

information and control systems of the operators interconnected to the system.

Art. 50. The TU shall publish no later than March thirty first of each year, a
report detailing the investment needs to benefit the transmission system, based
on the cost benefit ratio of projects.

SECTION III

OPERATIONS OF THE WHOLESALE MARKET

Art. 51. The wholesale market shall be comprised of at least the Contract
Market and the System’s Regulating Market . The TU shall operate the
System’s Regulating Market and shall use the Contract Market for its scheduled
dispatch.

Art. 52. Every operator that is directly connected to the transmission system
coordinated by the TU, may participate in the both the scheduled dispatch ant
TU managed markets.

Art. 53. The TU shall be responsible for the programmed dispatch of energy
between generators, distributors and final consumers connected to the system.
The dispatch period shall be defined by the TU.

Art. 54. The scheduled dispatch for each period shall be initially based on the
electric energy purchase-sale transactions agreed upon among individuals in
the contract market operations.

Each one of the participants in these, should express their agreement with said
transactions in advance, in accordance with the procedure established by the
TU. The operators are not bound to inform the TU about the financial conditions
of said transactions.

Operators involved in the various transactions should submit TU price offers

due to increases or reductions with respect to the agreed upon energy amounts,
used to solve jamming situations.

The TU shall determine the scheduled dispatch and jamming charges for the
period in question, based on the information given by participants, and will
communicate the same to all operators.

Art. 55. The TU shall operate the System Regulatory Market - SRM, hereinafter
called MRS, (as per its Spanish acronym), in order to maintain the balance
between the supply and demand of electrical power.

Art. 56. The MRS shall work based on supplies and prices corresponding to
increases or decreases in the quantity of electrical energy established in the
programmed dispatch. The TU shall determine the market period and the
procedure through which the participants shall communicate their offers.

Those generators without energy sales contracts may participate in the MRS,
and their scheduled dispatch shall be conceded equal to zero.

Art. 57. The deviations of each participant, in relation to the programmed

dispatch shall be appraised according to the resulting price of the MRS
operation, as follows:

a. The distributor or final user whose consumption differs from the

scheduled one shall be charged at the System’s Regulating Market price
for each node in which it had scheduled consumption;
b. The generator whose plant generates a surplus shall be charged based
on the System Regulating Market price of the node corresponding to said
plant;
c. The generator whose plant generates below the scheduled shall be
charged based on the cost of the energy necessary to replace the
undelivered energy; and,
d. When a plant generates under the schedule due to failures in the
transmission’s network that limit its delivery capacity to the system, the
TU shall charge the transmitter responsible of the failure the replacement
value of the energy not delivered by said generator less the value of the
energy delivered to the System Regulating Market by the plant.

The TU shall determine the balances of each participant and shall settle the
corresponding amounts in accordance with what it has set forth.

Art. 58. When a jamming is detected in the transmission system, the TU shall
create as many MRS as necessary to maintain its security and stability. Price
differences among the MRss shall result in jamming charges.
Art. 59. The net income obtained by the TU due to jamming charges
management, shall be distributed among the system users, as provided for by
the SIGET.

Art. 60. The prices resulting from MRS operation or from any other market
organized by the TU shall be public.

Art. 61. The TU shall submit the SIGET every six months, a report containing at
least, the following:

a. The resulting prices of the System Regulating Market

b. The generation and energy consumption for each network node.
c. The failures that occurred in the generation and transmission systems.
d. The quality of the services and supplies of the operators.

The reports required in this article and in article 32 shall be public and include
the periods for January- June and July- December of each year, and shall be
submitted before than September 31 and March 30, respectively.

CHAPTER IV

TRANSMISSION AND DISTRIBUTION CONTRACTS

Art. 62. The generators connected to the transmission system shall have
transmission contracts in effect at all times.

The generators or traders that have entered into contracts for the supply of
energy with final users, shall have distribution contracts in effect at all times.

Art. 63. Transmission and distribution contracts should clearly differentiate the
charges to be paid for the construction, expansion, modification or replacement
of physical facilities needed for the interconnection from the charges to be paid
for the use of the networks.

The charges for the construction, modification, expansion or replacement of

physical facilities shall be established between the parties, and the charges for
the network use shall be established according to SIGET’s established
methods.

Transmission and distribution contracts should include the compensation for

failures in the respective systems. The forced non availability does not include
the maintenance period scheduled by transmitter sand approved by the TU.

Art. 64. The transmission and distribution contracts referred to in the articles
above, shall be registered in SIGET and shall be made public.

Art. 65. The generators and trader may demand that the transmitters and
distributors enter into contracts that totally or partially adhere to those registered
at the SIGET and that are currently in force.
Art. 66. The method to determine the charges for the use of transmission
systems, shall take the following into account:

a) The operation and maintenance costs of an efficiently operated transmission

network should be covered;

b) International efficiency standards, considering local average costs and

minimum quality levels established by the SIGET shall be used to calculate
operations and maintenance costs;

c) Operations costs should include the expected value of compensations due to

the failures corresponding to an efficiently operated transmission network;

d) The annuality of the new replacement value of the equipment necessary to

maintain an efficient network should be taken into account to calculate
maintenance costs. The annuality shall be calculated considering the typical
useful life of the corresponding equipment, and the actual discount rate defined
in this Law for that purpose;

e) In the event the parties agree on quality levels over the ones established by
the SIGET, said quality levels shall prevail; and,

f) Charges shall be calculated based on the maximum power to be transported.

Art. 67. The method to determine the charges for the use of distribution systems
should consider the following:

a) Charges shall be based on average investment, operation and maintenance

costs of a soundly dimensioned and operated distribution network. Said
average costs shall not include marketing and trading costs and other services
to the final user;

b) The annuality of the new replacement value of a distribution network that has
been efficiently dimensioned in the market shall be used as investment cost.
The annuality shall be calculated considering the typical useful life of the
distribution facilities and the actual discount rate defined in this Law for this
purpose;

c) For the calculation of the operation and maintenance costs, local costs and
international efficiency standards that consider average distribution losses in
power and energy and the expected compensation values due to failures in a
well dimensioned and efficiently operated distribution network shall be used as
operation and maintenance costs.

d) Charges shall be calculated based on the delivered power per voltage level,
without considering the energy to be supplied; and,

e) If the distributor should have received subsidies, allowances or donations to

expand and broaden its network, the value of said inputs should be excluded
from the new replacement value. This adjustment shall be made based on the
typical useful life of the facilities and the discount rate set forth in this Law for
said purpose.

Art. 68. The actual discount rate to be used for the purposes of this Law to
determine the charges for the use of transmission and distribution networks,
shall be ten percent.

CHAPTER V

EXPANSION OF THE TRANSMISSION

AND DISTRIBUTION NETWORKS

Art. 69. The expansion or extension of the transmission and distribution

systems may be executed by the operators, taking into consideration the
technical and economical feasibility of said project, and with exceptions of the
provisions set forth in Article 71, these operators cannot be bound to expand
their systems.

Art. 70. If the operators do not execute the expansion or extension referred to in
the above article, these may be carried out by the interested parties at their own
cost, after the approval of the owners of the facilities.

Art. 71. In the cases of common benefit expansions or extensions determined

by the TU, the following procedure shall be followed:

a) The Tu shall determine the investment cost ration that each benefitiary
should contribute with, based on the ratio of the corresponding total benefits;

b) The TU shall inform the SIGET about the investment ratio that each operator
shall contribute with;

c) Based on the information submitted by the TU, the SIGET shall inform each
one of the beneficiaries about their contribution to the project, which can be
made by either the transmitter or the beneficiaries;

d) In the event that he project includes transmission equipment not separable

form the existing ones, all improvements shall become part of the transmission
system of the operator owner of the existing equipment. he latter shall become
the owner of the equipment and improvements and is responsible for operating
and maintaining the same;

e) When the project includes transmission equipment that can be separated

from the existing one, said equipment shall be the property of those who
financed the project, who in turn become responsible for operating and
maintaining the equipment; and,

f) New operators connected to the transmission system or those who expand

their existing facilities, during the fifteen years after the commissioning of the
project, shall pay the costs proportionally in relation to the investments incurred,
based on the benefits established by the TU and in accordance with the method
established by the SIGET. The corresponding sum shall be transferred
proportionally to the original investors.

Art. 72. In the cases that the interested parties execute the expansion or
extension of the transmission or distribution systems, they shall pay the
operator a percentage of the total sum of the works, as a supervision fee. This
percentage shall be fixed according to the methods established in the
Regulations of this Law.

Art. 73. The State may agree to issue the financial resources for the expansion
or extension in the specific areas, with the transmitters or distributors, through
itself or through any of its institutions or departments, specially to develop rural
electricity works.

Art. 74. The differences between the parties in relation to technical or

economical matters shall be resolved by SIGET.

CHAPTER VI

ENERGY SALES TO FINAL USERS

Art. 75. Every final user shall contract the supply of electrical power with a
trader.

The Contracts shall include the trader’s compensation for undelivered energy.

Art. 76. Electric energy supply bills to final users should differentiate the
charges for the use of the distribution network form electric energy consumption
charges.

Art. 77. Any contract provision establishing a charge caused by the change of a
trader shall be deemed as non written.

Art. 78. Distribution network operators, acting as traders in the geographical

area were their networks are located, shall submit the SIGET a rate structure
every year for its approval, containing electric energy prices and supply
conditions in accordance with the voltage level, seasonability and hourly
distribution for its use.

Art. 79. The prices included in the rate structures refer to in the previous article,
should be based on:

a. The energy average price at the MRS in the respective node during the
year prior to the submission of the rate structure;
b. The charges for the use of the distribution network shall be determined in
accordance with the provisions in Article 67 of this Law; and,
c. The customer service costs.
Art. 80 The rate structure referred to in the previous Article should include an
automatic adjustment formula established in agreement with the provisions in
the Regulation of this Law, in order to preserve the actual value of prices.

Art. 81. Consumers connected to a distribution network can demand the

distributor to grant energy supply contracts in accordance with the rate structure
approved by the SIGET.

Art. 82. Not withstanding the provisions in the above Article, consumers can
negotiate the electric energy supply prices and conditions with any trader, which
may be different to those approved by the SIGET, without the intervention of the
latter.

Art. 83. Distributors can cut in the following cases:

a) Payment for the supply of electrical power is due for two or more months.

b)At the request of the traders, when the final user is pending two or more
months worth of electric energy.

c) When electric energy is used without the prior authorization from the
operator, or when the user unfulfilled contractual obligations.

d) When the facilities of the user endanger people ’s security or goods, being
these property of the operator, the user or a third party; and,

e) When the user denies access to the operator to the internal facilities that the
latter built or provided for the supply.

CHAPTER VII

RESOLUTION OF CONFLICTS

SECTION I

SIGET

Art. 84. The SIGET, if requested by any party, may administratively resolve the
conflicts between operators, between these and the final users, as well as the
ones arising between the operators and the TU.

Art. 85. The resolutions awarded by the SIGET in the exercise of the powers
granted by the previous Article, shall admit the decision of review as a last
administrative act.

Art. 86. The SIGET shall base its resolutions on the report submitted by the
expert appointed for the case. Neither the SIGET nor the expert may resolve on
matters they were not requested to resolve upon.
Art. 87. The experts should take into account the international technical
standards of the electrical industry accepted by the SIGET.

Art. 88. The direct costs incurred by the SIGET to solve the conflict regarding
the hiring of the expert, shall be covered in equal proportion by the parties.

SECTION II

PROCEDURE

Art. 89. After the request for the resolution of a specific matter has been
received, the SIGET, within three working days, shall notify the other party
involved, and shall present a tern that within five days and on mutual
agreement, shall elect the expert that will resolve the matter.

Art. 90. If no agreement is reached within those five days regarding the
appointment of the expert referred to in the previous Article, the SIGET shall
have one day to appoint an expert and notify the involved parties.

Art. 91. Within three days after the date of the notification of the expert’s
appointment, the parties shall submit SIGET their arguments and final positions
regarding the unresolved matters.

Art. 92. After the period indicated in the above article has ended, the expert
shall have sixty days to deliver his award to the SIGET.

Art. 93. The parties are bound to allow the examination of their technical and
financial information that the SIGET or its expert require.

Art. 94. After the award of the expert has been received, the SIGET shall have
fifteen days to resolve on other matters that have been submitted.

Art. 95. In order to solve any matter related to interconnection or connection, the
SIGET should take into account the following:

a. For each one of the issues of disagreement, it should select the final
conditions required by one of the parties. It cannot select a position
different from one of the ones proposed; and,
b. The SIGET should resolve in favor of the final position closest to the
expert’s position. In the event of positions opposite to the expert’s
judgement, it should solve in favor of the one requesting the
interconnection or connection.

Art. 96. Once the term established in this chapter has elapsed, if SIGET has not
resolved, it will

have the following effects:

a. In the technical interconnection aspects, in favor of the party to whom

access was requested; and,
 b. In economic aspects, in favor of the party that requests the
interconnection of the use of the other parties facilities.

SIGET’s or the judicial authority’s later resolution shall result in the

corresponding compensation.

Art. 97. In order to solve matters regarding charges for the use of the
transmission and distribution systems or for the services provided by TU, the
expert should follow the methodology established by the SIGET and the
information provided by the parties. In these cases, SIGET’s resolution should
provided that the charges determined by SIGET be applied based on the
expert’s report.

Art. 98. Once the term established in this chapter has elapsed, if SIGET has not
resolved, the charges contained in the last contract recorded by the operator to
whom the services are requested, shall be applied.

SIGET’s or the judicial authority’s later resolution, shall result in the

corresponding compensation.

CHAPTER VIII

INTERNATIONAL TRANSACTIONS

Art. 99. Final operators and users may enter into contracts with the purpose of
supplying energy and services with entities outside the national territory.

The transactions under said contracts, should be subject to the provisions of

this Law, and they should be coordinated through the dispatch entity in the
country where the above mentioned entities are located.

Art. 100. Dispatch costs incurred by the TU to carry out international

transactions shall be covered by national operator’s or final users participating
in the same, based on MRS prices in the respective node.

Art. 101. The TU shall establish the mechanisms to resolve matters related to
electric energy disturbances or unadverted transferences caused by the
interconnected operation with electric systems of other countries.

Art. 102. SIGET’s opinion should be heard before entering into international
interconnection agreements.

CHAPTER IX

PENALTIES

Art. 103. The violations to this Law are classified as serious and very serious,
and shall be sanctioned by the SIGET.

Art. 104. The following are serious violations:

 a. failure to update its registration at the respective Registry;
b. Carry out studies in State owned property without SIGET’s authorization,
with the purpose of establishing electric energy generation facilities;
c. Failure to timely submit the reports mentioned in Articles 32 and 61 of
this Law;
d. Failure to timely record transmission and distribution contracts;
e. Failure to differentiate the charges for the use of the distribution network
from the charges for electric energy consumption in the bills sent to final
users;
f. Cut the service to final users for causes other than the ones set forth in
this Law.

Art. 105. The following are very serious violations:

a. To exploit hydraulic or geothermal resources for electric energy

generation without being licensed to do so;
b. Carry out electric energy generation, transmission, distribution or
commercialization activities without being registered at the SIGET;
c. Failure to update the registration at the respective Registry when this
should be done by electric energy generation operators;
d. Failure to separate the accounting systems when one same entity carries
out various activities in the sector;
e. To use accounting systems to develop electric energy transmission,
distribution, wholesale market operation and transmission systems
operations, that do not comply with SIGET’s standards;
f. Deny or restrict SIGET’s access or that of SIGET’s experts to the
required technical and financial information;
g. To refuse to interconnect transmission or distribution networks, without
due cause;
h. Not allow the use of transmission or distribution networks, without due
cause;
i. Interconnect transmission or distribution facilities without the prior
agreements of the owner of the network;
j. Apply charges for the use of the transmission and distribution networks,
as well as for the wholesale market operation and the transmission
system not complying with SIGET’s methodology; and,
k. Disconnect an operator’s facilities without due cause.

Art. 106. Serious violations shall be sanctioned by the SIGET with a fine
amounting to fifty thousand colones and very serious violations with a fine of
five hundred thousand colones.

Art. 107. In the event of operator’s reiterated non compliance with the provisions
of this Law, the amount of the fines shall be increased in ten percent for the
second violation, and in twenty five percent for the third violation.

In the event an operator relapses in four occasions for the same non
compliance, the SIGET, in accordance with the Regulation of this Law, shall
initiate the process to terminate with the grant, or cancel the registration,
whichever the case.
Art. 108. The SIGET will impose a fine of one thousand colones to the final user
that consumes electric energy without the operator’s authorization, or that does
not comply with the contract conditions, without prejudice of the judicial actions
proceeded by the operator.

Art. 109. The fines established in this chapter, shall have executive force and
should be annually adjusted by the SIGET, taking into account the Consumer
Prices Index published by the Ministry of Economy. The basis to increase
calculations shall be the last day of the month in which this Law enters into
effect.

Art. 110. The waiver of a violator to adjust to the provisions of this Law, after
receiving SIGET’s order, in the term indicated by the SIGET, shall be
considered as a different violation.

Art. 111. The fines not paid, shall prescribe within two years from the date of the
resolution.

Said term shall be interrupted by the actions towards a forced execution of said
sanction.

In the event that the operator does not voluntarily pay the fine, the
Superintendent shall submit a report to the Republic’s Attorney General, within
one year following the resolution.

If the Superintendent fails to submit the report refereed to in this Article, he shall
respond for the damage caused.

Art. 112. The proceeds generated by the SIGET’s fines, shall be transferred to
the Nation’s General Fund.

CHAPTER X

TRANSITORY PROVISIONS

Art. 113. The licensees authorized to exploit geothermal or hydraulic resources

shall have sixty days form the entering into effect of this Law to request the
SIGET a modification in the grants, in order to adjust them to this Law.

The SiGET should grant the concession to generate electric energy with
hydraulic resources to those entities that at the entering into effect of this Law
carry out said activities without a license.

Art. 114. The operators that carry out electric energy generation, transmission
and distribution, should request the SIGET the corresponding registration within
sixty days from the entering into effect of this Law.

Art. 115. The operators of generation, transmission and distribution facilities

should enter into the respective transmission and distribution contracts and
register them at the Registry kept by the SIGET, within two hundred days from
the entering into effect of this Law.

Art. 116. Traders should subscribe the supply contracts with final users within
two hundred and seventy days from the entering into effect of this Law. Once
this term has elapsed, the commercializer can suspend the service, with the
exception of consumers referred to in Article 122.

Art. 117. While CEL is the owner at any title, of the transmission network and
more than fifty percent of the generation installed capacity, the TU will be ruled
by a transitory internal regulation guaranteeing the existence of transparent and
equitative mechanisms to make decisions regarding the system’s operation.

Art. 118. Until the TU carries out its normal operations, dispatch shall be carried
out by CEL’s System Operation Center, according to the operation marginal
costs method, with the participation of representatives of existing operators.

Art. 119. CEL shall restructure itself within three years from the entering into
effect of this Law so that the transmission system maintenance and the power
system operation be carried out by independent entities and that generation be
carried out by the greatest number of operators possible.

The TU should be set up within one year from the entering into effect of this
Law.

The corporations set up by CEL as a result of its restructure shall not be subject
to the legal provisions regarding the incorporation of firms by means of mixed
capital stocks.

Art. 120. The firms resulting from CEL’s restructure whose normal business is
the exploitation of the various facilities of said institution, should receive the
concessions granted by the SIGET when necessary, within ninety days from the
date of their incorporation.

Art. 121. Distributors may use networks that are not owned by them nor other
distributors, to deliver electric energy, but in these cases the maintenance costs
of these facilities will be borne by the users.

Art. 122. The SIGET is empowered to periodically establish the maximum prices
and the conditions for the supply of electric energy to final users in the
residential sector with a monthly average consumption below five hundred
kilowatts hour, within eighteen months from the entering into effect of this Law.

Once this term has elapsed, the maximum prices and conditions for the supply
of electric energy to final users of the residential sector with an average monthly
consumption below two hundred kilowatts hour shall be established within the
following eighteen months.
 CHAPTER XI

FINAL PROVISIONS

Art. 123. The terms in this Law which referred to SIGET’s attributions cannot be
extended.

Art. 124. The President of the Republic should issue the regulations necessary
for the enforcement of this Law, within one hundred and eighty days after the
entering into effect of the same.

Art. 125. In the event of disagreement the provisions in this Law, shall prevail
over the provisions in CEL’s Law and any other that disagrees with it.

Art. 126. The Decrees indicated below have been depeeled.

a) Legislative Decree No. 177 dated December 31st, 1935, published in the
Official Gazette No. 4, Volume 120, January 6, 1936 and its amendments;

b) Legislative Decree No. 8, dated May 27, 1941, published in the Official
Gazette No. 122, Volume 130, dated June 4, 1941, and its amendments; and
Legislative Decree No. 109, dated September 7, 1946, published in the Official
Gazette, No. 209, Volume 141, dated September 20, 1946 and its amendments.

Art. 127. This Law shall enter into effect eight days after its publication in the
Official Gazette