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The flow of electrical power, and of funds to pay for electricity received, across borders must occur within a long-term legal framework that ensures trust between partners, as well as structuring straightforward and transparent dealings between the trading countries and the public and/or private institutions that support grid interconnections.
A legal framework is necessary in order to identify the parties responsible for paying for power interconnection infrastructure, for the power itself, and for the costs of operating the infrastructure. In addition, and as indicated in Chapter 3 of this report, legal agreements must specify the prices to be paid for electricity (and how those prices are to be calculated), what form of payment is acceptable, and other parameters of international funds transfer. Also, for example, legal agreements are needed to indicate which parties are responsible to any third parties harmed by interconnection-related activities, and describing how disputes between parties are to be addressed.
The legal agreements needed to establish and operate a grid interconnection are both affected by and affect the status of the legal systems within the interconnected countries—these effects can be both positive and negative. The Chapter that follows reviews the legal issues associated with international electricity grid interconnections, including providing a summary of the types of institutions likely to be involved in power trading (and thus required to be involved in legal arrangements related to power trading), describing the types of country-to-country legal agreements needed to establish and operate power lines (including legal agreements related to contractor selection), identifying some of the internal requirements needed to implement international legal agreements related to power trading—including characteristics of
National legal systems that can make international legal agreements more complex, and noting some of the potential benefits to a national legal system from being involved in international agreements related to grid interconnections. In general, this Chapter focuses on legal agreements between and involving national governments, though agreements with others are described to some extent as well.