• The Council of Ministers

• Having reviewed the transaction received from the Royal Court under No. 25610 dated 25 / 11 / 1439 AH, enclosing the telegram of His Excellency the Minister of Energy, Industry and Mineral Resources, formerly Chairman of the Board of Directors of the Electricity and Cogeneration Regulatory Authority, No. 01-7166-1439 dated 28 / 10 / 1439 AH, concerning the draft Statute of the Water and Electricity Regulatory Authority.

• Having reviewed the aforementioned draft Statute.

• Having reviewed Paragraph (2) of Article (24) of the Council of Ministers Law, issued by Royal Order No. (A / 13) dated 3 / 3 / 1414 AH.

• Having reviewed the Statute of the Electricity and Cogeneration Regulatory Authority, issued by Council of Ministers Decision No. (154) dated 4 / 5 / 1428 AH.

• Having reviewed Council of Ministers Decision No. (127) dated 30 / 2 / 1436 AH.

• Having reviewed the Governance Manual for the Adjustment of Energy and Water Product Prices, approved by Supreme Order No. (48790) dated 24 / 9 / 1439 AH.

• Having reviewed Supreme Order No. (41156) dated 23 / 7 / 1440 AH.

• Having reviewed Minutes No. (1356) dated 17 / 11 / 1438 AH, No. (825) dated 9 / 5 / 1440 AH, No. (2089) dated 29 / 11 / 1440 AH, and No. (1403) dated 28 / 11 / 1441 AH, and Memoranda No. (352) dated 4 / 5 / 1441 AH, No. (471) dated 25 / 6 / 1441 AH, No. (169) dated 29 / 1 / 1442 AH, and No. (457) dated 16 / 3 / 1442 AH, prepared by the Bureau of Experts at the Council of Ministers.

• Having reviewed the recommendation prepared by the Council of Economic and Development Affairs No. (19- 13 / 42 / D) dated 26 / 3 / 1442 AH.

• Having reviewed the recommendation of the General Committee of the Council of Ministers No. (2819) dated 29 / 4 / 1442 AH.

• hereby decides as follows:

  • **First: **Approval of the Statute of the Water and Electricity Regulatory Authority, in the form attached hereto.

  • **Second: **By way of exception to Paragraph (14) of Article (Fourth) and Paragraph (7) of Article (Seventh) of the Statute referred to in Item (First) of this Decision, the review and approval of the tariff for service activities and its amendment, with all its components and for all consumer categories, shall be carried out through the Governance Manual for the Adjustment of Energy and Water Product Prices approved by Supreme Order No. (48790) dated 24 / 9 / 1439 AH.

  • Third: By way of exception to the provisions of Paragraphs (2) and (13) of Article (Fourth), Paragraph (3) of Article (Fifth), and Paragraphs (8) and (10) of Article (Seventh) of the Statute referred to in Item (First) of this Decision, the Ministerial Committee for Restructuring the Electricity Sector and the Saudi Electricity Company, formed pursuant to Supreme Order No. (41156) dated 23 / 7 / 1440 AH, shall approve the following:

    • 1- The cost of providing the electricity activity without cross-subsidization between the services produced or provided.
    • 2- The amount of the deficit resulting from the difference between the presumed revenue of the electricity activity—estimated by the Authority on the basis of commercial principles—and the actual revenue generated from the approved tariff.
    • 3- The commercial principles governing transactions of the electricity activity provided by the private sector, taking into account the costs and the pricing structure and tariffs applied by the private sector until the need for support through the budget account ends.
    • 4- Periodic review reports on the cost of providing the electricity activity—without cross-subsidization between the services produced or provided—before submitting them to the Council of Ministers.
    • This shall remain in effect until the electricity sector no longer requires financial support through the budget account.

  • Fourth: Without prejudice to the provision of Article (Sixth) of the Statute referred to in Item (First) of this Decision:

    • 1-  The Ministry of Energy shall continue to be a member of the Authority’s Board of Directors until the restructuring and privatization of the electricity sector are completed.
    • 2- Deleted.
    • 3- The Ministry of Finance shall continue to be a member of the Authority’s Board of Directors until the restructuring and privatization of the electricity sector are completed.

  • Fifth:

    • 1- Approval of the continuation, up to the date of this Decision, of the Board of Directors of the Electricity and Cogeneration Regulatory Authority formed pursuant to Council of Ministers Decision No. (127) dated 30 / 2 / 1436 AH, and approval of the Board’s continued operation—with the exception of Board Member Dr. Ibrahim bin Saleh Al-Mu’taz—until a Board of Directors of the Authority is formed in accordance with Article (Sixth) of the Statute referred to in Item (First) of this Decision and the provisions of Item (Fourth) of this Decision. The Board shall exercise the powers of the Board stipulated in Article (Seventh) of the Statute referred to in Item (First) of this Decision.
    • 2- Deleted.

The following words and phrases - wherever they appear in this regulation - shall have the meanings specified next to them, unless the context requires otherwise.
Regulation: Regulation of the Water and Electricity Regulatory Authority.
The Authority: Water and Electricity Regulatory Authority.
The Governor: Governor of the Authority.
The Council: Board of Directors of the Authority.
The Services: The services regulated by the Authority in the electricity and water sectors.
The Regulations: The regulations related to the services in accordance with the Authority's missions.
The Person: Natural Personality or Legal Personality.
Electricity Activity: An activity carried out by a person or intended to be carried out in the field of electricity, including: electricity generation and combined production from any source of energy, electricity transmission, distribution, trading, retail sale, main buyer activity, and district cooling.
Main Buyer: The licensee authorized to purchase energy or any successor designated by the Authority, who engages in trading activities and proposes generation projects as determined by the Authority in the license.
Combined Production: The simultaneous production of electricity and desalinated water or steam or both.
District Cooling: Central production of thermal energy and its distribution using chilled water or any other medium through insulated pipes to cool or heat air in buildings and facilities.
Water Activity: An activity carried out by individuals or intended to be carried out, including: water desalination, purification, treatment, main buyer activities for water within the Authority's jurisdiction, and water production for urban or industrial use, through direct pumping of well or dam water or its purification, transporting this water and desalinated water to distribution points, distributing, strategically storing, trading, retail selling, collecting, transporting, treating wastewater, and reusing it for urban or industrial purposes, excluding the activities of individuals who package water in containers. 
The Consumer: Any person supplied with any of the services for their own consumption.
The License: A document issued by the Authority to a person to engage in any of the service activities under the regulations and their bylaws or the regulation.
The Permit: A document issued by the Authority concerning preparatory works - including planning and conducting studies - before commencing any activity of the services.
The Licensee: Any person holding a license or exemption.
The Tariff: An approved financial charge for providing a service or selling a commodity within any of the service activities.
The Price: An agreed financial or in-kind consideration between two or more licensees or a licensee and a large consumer for providing a service or selling a commodity within any of the service activities.
The Electricity Market: A situation in which the sale and purchase of electricity are governed by free market factors where the price is subject to the law of supply and demand.
Inter-Regional Subsidy: Financial solidarity between two (or more) regions (or parties).
The Competent Committee: The Financial Committee, or any other body designated by the Council of Ministers.
The Committees: The committees for resolution as stipulated in the regulations.

1- The authority enjoys independent legal personality and financial and administrative independence, and is organizationally linked to the President of the Council of Ministers. It carries out the tasks and responsibilities assigned to it in accordance with the regulations and organization.

2- The headquarters of the authority shall be in the city of Riyadh, and it may establish branches or offices within the Kingdom.

The Authority is responsible for organizing and supervising services within its jurisdiction, monitoring their performance, and coordinating among related institutions and entities, as well as among licensed individuals; to establish the necessary regulatory and procedural framework to ensure the provision of services at high levels of quality and reliability, and to make them available to consumers at appropriate prices and tariffs that support sustainable development.

• The Authority shall undertake the following to achieve its objectives:

• 1- Issuing regulations concerning its tasks, which shall include the following:

  • A- Technical, environmental, operational, investment, and procedural rules related to the services.

  • B- Performance standards that must be achieved by the licensed individuals.

  • C- Rules that define the relationship between the licensed individuals and their relationship with consumers.

  • D- Classification of types of service activities and their updates.

  • E- Rules for licenses and permits, including the basis for their financial compensation.

• Taking necessary procedures to ensure the provision of additional sources for services in the event of a clear shortage in those supplies, based on what is required by the public interest, and informing the relevant authority of those procedures.

• 3- Approving the amount of deficit resulting from the difference between the assumed income for services - which is estimated by the Authority based on commercial foundations - and the actual income achieved from the approved tariff for the relevant year, and the Ministry of Finance shall cover that deficit in agreement with the Council, and according to the approved model in this regard.

• 4- Taking necessary actions to implement the provisions of the laws and their regulations and the organization concerning the tasks assigned to it.

• 5- Monitoring the implementation of the regulations, rules, and procedures related to management, accounting, and investment that the licensed individuals adhere to.

• 6- Working - in coordination with the Ministry of Energy and other relevant authorities - to ensure the optimal use of energy sources for the licensed individuals in a manner that achieves the best return for the national economy, which includes - but is not limited to - the following:

  • A- Enhancing the efficiency of water and electricity production stations.

  • B- Considering the approved metrics and standards for environmental protection.

  • C- Encouraging high-efficiency water and electricity production projects while considering their economic feasibility.

• 7- Taking necessary actions to manage service activities in necessary cases that require it, in accordance with the provisions of the laws and based on the rules, procedures, and controls it establishes for any individual who violates the provisions of the laws or their regulations or the organization or the rules and procedures issued by it.

• 8- Issuing the necessary licenses and permits for any individual engaging in any service activities or intending to do so, renewing them, and amending them.

• 9- Monitoring the performance of the licensed individuals and taking actions that ensure their compliance with the conditions of the licenses or permits issued to them, including conditions related to the quality and level of services and ensuring the foundations of fair competition and limiting monopolies.

• 10- Taking actions that ensure consideration for the licensed individuals and consumers in light of the public interest.

• 11- Enhancing efforts related to monitoring the performance of service activities according to the rules of work and practice therein, adopting standard performance criteria regarding what is provided in service activities, and monitoring compliance with those standards.

• 12- Proposing amendments to the laws - in coordination with the relevant authority - and to the organization, and submitting it according to the legal procedures.

• 13- Establishing rules and procedures to control violations of the laws and their regulations and violations of the organization, without prejudice to what those laws and regulations stipulate.

• 14- Deciding on matters, issues, complaints, and violations related to service activities raised by the concerned parties, especially consumers or licensed individuals or those dealing with licensed individuals, and seeking to resolve them, without prejudice to the tasks of the committees.

• 15- Cooperating with relevant authorities, licensed individuals, universities, and specialized institutes in conducting research related to services, as well as in implementing programs or media plans to rationalize electricity or water consumption, in light of what is issued by the relevant authorities.

• 16- Any other task assigned to it under the laws.

The Authority shall have a Board of Directors composed of a Chairman appointed by a royal decree, and the membership of each of the following:

  1- Five specialists and experts in fields related to the Authority's work, appointed by a decision of the Council of Ministers - based on a proposal from the Chairman of the Council - for a term of three years, renewable only once. The Chairman of the Council shall designate a Vice Chairman from among the members to act in his absence.

2- The Governor.

The Council is the supreme authority of the Authority, overseeing its management and affairs, setting the general plans it operates under, and monitoring the implementation of the laws, regulations, and instructions related to the public policies of service activities and the approved plans for that. It has, in particular - but not limited to - the following:

1- Approval of the organizational structure of the Authority.  

2- Approval of the financial, administrative, and technical regulations of the Authority, and other internal regulations.

3- Adoption of regulations related to the Authority's tasks.

4- Approval of the Authority's work plan and its operational plans.

5- Approval of the Authority's budget project.

6- Approval of the Authority's final accounts and the auditor's report and the annual report; in preparation for submitting them according to the applicable legal procedures.

7- Approval of the definitions of service activities, and their modification in all their components and for all consumer categories to reflect the actual cost price, based on the energy product prices approved by the competent authority, and in accordance with the support determined by the competent committee.  

8- Approval of the cost of providing services without intermediation between what is produced or provided as services.  

9- Approval of periodic reports on the status of services, including achievements, obstacles, and developments, and submitting them to the Council of Ministers.

10- Approval of the amount of deficit resulting from the difference between the assumed income from services - estimated by the Authority based on commercial foundations - and the actual income achieved from the approved tariff.

11- Approval of the rules related to licenses, permits, services, and works provided by the Authority, and determining the financial compensation for them.

12- Approval of the rules of operation for the committees working within the Authority, their procedures, and the rewards for their members. 

13- Issuance of controls specific to managing service activities in necessary cases that require it, in accordance with the provisions of the laws and based on the rules, procedures, and controls established for any person violating the provisions of the laws or their regulations or the organization or the rules and procedures issued by them.

14- Approval of the purchase, sale, leasing, and renting of real estate for the benefit of the Authority, in a manner that achieves its objectives, after coordination with the State Properties General Authority.

15- Formation of any committees it deems necessary and granting them the powers required to accomplish the tasks assigned to them.

The Council may delegate some of the tasks mentioned above to its President or to any of its members or to the staff of the Authority as required by the workflow in the Authority.

1- The meetings of the Council are held at the headquarters of the Authority, based on an invitation from its Chairman, or whenever requested by two of its members. It is permissible, when necessary, to hold them in another location within the Kingdom. The validity of the Council's meeting requires the presence of at least the majority of the members, including the Chairman or his Deputy, and decisions are made by a majority of the votes of those present at a minimum. In the event of a tie, the side that the Chairman of the meeting voted for shall prevail.  

2- The deliberations and decisions of the Council are recorded in minutes signed by the Chairman of the meeting and the attending members. The licensed individuals are notified of the decisions that the Council deems necessary to inform them about, and decisions that affect consumers are published in the official gazette and in any other means deemed appropriate by the Authority, provided that this publication does not compromise the public interest or business secrets. The Authority shall communicate these decisions to the relevant parties directly and in an appropriate manner.  

3- A member of the Council may not abstain from voting nor delegate another member to vote on their behalf in their absence. A dissenting member has the right to record their objection and the reasons for the objection in the minutes of the Council meeting.  

4- A member of the Council may not disclose any information they have come across regarding the secrets of the Authority.

5- The Council may invite individuals whose information and expertise it deems beneficial to attend its sessions, without granting them the right to vote.

The Authority shall have a Governor who is appointed and relieved by a Decision from the Council, which specifies his salary and other financial benefits. He is the executive responsible for managing the Authority and conducting its affairs, and his responsibilities are confined to what is stipulated by the regulations and the organization and what is decided by the Council. The Governor shall specifically exercise the following powers and duties:

1- Supervising the Authority's staff in accordance with the powers granted to him and as determined by the regulations.

2- Issuing orders for the Authority's expenditures according to the approved annual budget.

3- Proposing regulations, procedures, rules, technical, environmental, operational, and procedural standards, presenting them to the Council, and supervising their implementation after approval.

4- Following up on the implementation of the decisions issued by the Council.

5- Submitting periodic reports to the Council regarding the Authority's activities, achievements, and operations.

6- Proposing the Authority's plans and programs and presenting them to the Council, and following up on their implementation after the Council's approval. 

7- Providing suggestions to the Council and recommendations regarding the competencies stipulated in Articles (Fourth), (Fifth), and (Seventh) of the organization.

8- Preparing the Authority's budget draft and the annual report, supervising the preparation of the final accounts, and presenting them to the Council. 

9- Representing the Authority before judicial, administrative, and other entities.

10- He may delegate others in this regard. Issuing the necessary licenses and permits to conduct any of the service activities according to the approved regulations and procedures. 

11- Issuing the necessary decisions to implement the provisions of the organization and the approved regulations, according to the powers delegated to him.

12- Exercising the powers granted to him by the Council's decisions and the regulations specific to the Authority.

He may delegate some of his powers and duties to other staff members of the Authority in accordance with the Authority's internal regulations.