This is an English translation.
The original Icelandic text, as published in the Law Gazette (Stjórnartíðindi), is the authoritative text. Should there be discrepancy between this translation and the authoritative text, the latter prevails.
No. 42, 23 March 1983
Landsvirkjun is a jointly owned enterprise of the State Treasury, the City of Reykjavík and the Township of Akureyri. Its domicile and venue are in Reykjavík. The Company is an independent legal entity with independent finances and accounts. The State Treasury owns a 50% share in the Company, the City of Reykjavík 44.525%, and the Township of Akureyri 5.475%.
Each owner shall be severally liable as a guarantor of collection for all the obligations of the Company, while the division of liability among the owners shall be in proportion with their respective shares of ownership. An owner may not withdraw from the Company without the consent of the other owners.
The objectives of Landsvirkjun shall be:
1. To generate, transmit and sell electric power wholesale to public electric utilities as well as to industrial enterprises pursuant to special contracts in so far as public electric utilities do not act as intermediaries in such power sales.
2. To construct and operate power generation facilities and the principal main transmission line network of the country.
3. To carry out planning for new power generation and main transmission facilities in the power supply area of Landsvirkjun.
4. To promote, in cooperation with electric utilities in its power supply area, the substitution of electric power for other sources of energy as far as may be considered economical.
5. To have available with adequate reliability a sufficient supply of power to meet the requirements of its customers from time to time.
[Landsvirkjun may utilize the expertise and facilities in the possession of the Company in the field of energy for projects abroad by undertaking projects for companies or by founding and owning shares in foreign companies involved in research, consultation or other services in the field of energy or other energy-related activities. [Landsvirkjun may also found domestic companies or own shares in such companies engaged in research and development, provided the Company does not undertake consultation or project contracts in competition with other domestic companies in the general Icelandic market. The Company may furthermore own shares in domestic companies engaged in generation, transmission or sale of energy.]1)] 2)
1) Act No. 50/1999, § 1. 2) Act No. 9/1997, § 1.
The power supply area of Landsvirkjun is the whole country as determined by the reach of its power plants and main transmission line network.
Landsvirkjun is authorized to conclude agreements on the purchase of power plants and main transmission facilities from other parties, and to operate such facilities.
The functions of Landsvirkjun and its power supply area shall be further specified by Regulation.
Landsvirkjun is the owner of electric power plants, other facilities, water rights and equipment which the Company has acquired prior to the adoption of this Act.
In accordance with the Partnership Agreement dated 27 February 1981 between the Government of Iceland, the City of Reykjavík and the Township of Akureyri, Landsvirkjun overtakes on 1 July 1983 the ownership shares of the State Treasury and the Township of Akureyri in Laxárvirkjun.
[The State Treasury, the City of Reykjavík and the Township of Akureyri have rendered owners' contributions to Landsvirkjun in the form of initial capitalization as reflected in Article 4 and the Partnership Agreement of 27 February 1981 between the parties, and in the form of specific equity capital contributions.
Landsvirkjun shall pay its owners a dividend on owners' contributions under Paragraph 1, and on such owners' contributions as the owners may later render to Landsvirkjun.
Owners' contributions according to Paragraph 1, as revalued based on 31 December 1995, cf. the Agreement of the owners of 28 October 1996 amending the Partnership Agreement, and owners' contributions which may subsequently be rendered, shall be revalued in line with price levels at each time pursuant to the Cost of Construction Index, and the Annual General Meeting of Landsvirkjun, having received the recommendation of the Board of Directors, shall determine the dividend as a percentage of that amount.
The dividend shall be determined based on the outcome of the Company and the profits carried forward from previous years.]1)
1) Act No. 9/1997, § 2.
Landsvirkjun will construct and operate, in accordance with Act No. 60/1981 on Electric Power Plants and pursuant to a special Agreement with the Government of Iceland dated 11 August 1982, the following hydro-electric power plants, after obtaining the authorization of the Minister for Energy pursuant to Article 7: The Blanda Hydroelectric Project of up to 180 MW; the Fljótsdalur Hydroelectric Project of up to 330 MW. … .1)
[Landsvirkjun, having obtained the authorization of the Minister of Industry according to Article 7 of this Act, shall construct and operate in accordance with Act No. 60/1981 the following electric power plants: The Búrfell power plant, with a power capacity of up to 310 MW; the Sultartangi power plant, with a power capacity of up to 130 MW; the Hrauneyjarfoss power plant, with a power capacity of up to 280 MW; the Sigalda power plant, with a power capacity of up to 200 MW; the Krafla power plant, with a power capacity of up to 60 MW.] The Vatnsfell power plant, with a power capacity of up to 110 MW; the Búðarháls power plant, with a power capacity of up to 120 MW; the Bjarnarflag power plant, with a power capacity of up to 40 MW, when the conditions set in Act No. 36/1974 on the Protection of Mývatn and Laxá in the county of Suður-Þingeyjarsýsla have been fulfilled.] 1)
Landsvirkjun, having obtained the approval of the Minister of Industry, may take measures to secure the operation of power plants in the Thjórsá area, i.a. by the Kvíslarveita distribution system, enlargement of the Thórisvatn reservoir, and a dam at Sultartangi.] 2)
Landsvirkjun shall initiate the development of power projects in its power supply area in order to ensure that the power and energy demand of the customers of the Company may be fulfilled at all times. Landsvirkjun shall also emphasize the strengthening and further expansion of its main transmission line network with a view to enhancing to the optimum extent the reliability of the Landsvirkjun power system as a whole.
1) Act No. 48/1999, § 4. 2) Act No. 74/1990, § 4.
For the construction of new power plants and main transmission facilities, Landsvirkjun must obtain the authorization of the Minister for Energy. Prior to undertaking such new projects, whether power plants or main transmission facilities, Landsvirkjun shall submit to the Minister for Energy design drawings of the projected facilities together with a description thereof.
The Minister may require such alterations in the projected arrangement of the facilities as may be regarded necessary for the public interest.
[The Board of Directors of Landsvirkjun shall consist of seven members. The Minister for Energy shall appoint three members, the City Council of Reykjavík shall elect three members and the Town Council of Akureyri shall elect one member. The Minister for Energy shall appoint the Chairman of the Board from among the three members appointed by him. At meetings of the Board, the vote of the Chairman shall count double.
An equal number of alternates shall be elected and appointed in the same manner.
The term of office of the Board of Directors shall be one year, from the Annual General Meeting of the year in question until the following Annual General Meeting.
The remuneration of the Board of Directors shall be decided by the Annual General Meeting.
Further provisions on the procedures of the Board of Directors shall be established by Regulation.]1)
1) Act No. 9/1997, § 3.
[The Board of Directors of Landsvirkjun shall appoint a Managing Director to manage the Company. The Managing Director shall be permitted to attend meetings of the Board.
The Board of Directors of Landsvirkjun is responsible for the Company's affairs and shall ensure that the Company's organization and activities are at all times in correct and proper order. The Board of Directors and the Managing Director are charged with the administration of the Company.
The Managing Director is responsible for the day-to-day administration of the Company and shall in that respect follow the policy and instructions issued by the Board of Directors. Day-to-day administration does not include measures that are extraordinary or weighty. Such measures may only be taken by the Managing Director with special authorization from the Board of the Company unless it is impossible to wait for the decision of the Board without serious disadvantages for the operation of the Company. In such cases the Board shall be notified of the measures immediately.
The Board of Directors of Landsvirkjun shall ensure adequate supervision of the Company}s accounts and of the management of its assets. The Managing Director shall ensure that the accounts of the Company are kept in accordance with law and accepted practices, and that the management of the property of the Company is secure.
Only the Board of Directors of Landsvirkjun may confer power of procurement.
The Members of the Board of Directors and permanent employees of Landsvirkjun shall have the rights and obligations of public functionaries.
The powers and functions of the Board and Managing Director shall be further provided for by Regulation.]1)
1) Act No. 9/1997, § 4.
(The Annual General Meeting of Landsvirkjun shall be held in the month of April each year. The agenda of the Annual General Meeting shall be as follows:
1. To consider the report of the Board of Directors on the activities of Landsvirkjun in the preceding year of operation
2. To receive for confirmation the accounts of the Company for the preceding financial year along with the report of the Auditor
3. To decide on dividends to the owners of Landsvirkjun and other disposal of the profits or losses of Landsvirkjun over the accounting year
4. To decide on the remuneration of the Members of the Board for the preceding term.
5. To announce the elections to the Board
6. To elect a Chartered Auditor or Auditing Firm
7. To discuss other business.
One representative of each owner, the Board of Directors and the Managing Director of Landsvirkjun and the Chartered Auditor of the Company have the right to attend the Annual General Meeting. The Minister for Energy shall appoint the representative of the State Treasury at the Annual General Meeting. The voting rights of owners at the Annual General Meeting shall be in proportion to their share in the Company.
The procedure and scope of the Annual General Meeting shall be further provided for by Regulation.]1)
1) Act No. 9/1997, § 5.
[A special consultation meeting of Landsvirkjun shall be held each year immediately following the Annual General Meeting of the Company. The representatives at the meeting shall be as follows:
Four representatives appointed by the Minister for Energy, four representatives elected by the City of Reykjavík, and four representatives elected by the Township of Akureyri. Each of the regional associations of municipalities shall have the right to elect at their Annual General Meetings four representatives to the consultation meeting. The election of representatives to the consultation meeting shall be further provided for by Regulation. Alternates shall be appointed or elected in the same manner as the principal representatives.
In the event of an increase in the number of owners, the composition of the consultation meeting shall be reviewed.
The Board of Directors and Managing Director of Landsvirkjun shall attend the consultation meeting.
At consultation meetings the performance and plans of Landsvirkjun shall be presented and the matters set out therein discussed. The meeting shall deal specifically with matters relating to the reliability in the generation and transmission of power around the country as well as matters relating to power price. The consultation meeting shall also discuss electric power affairs in relation to specific regions of the country as occasion may warrant.
The procedure and scope of the consultation meeting shall be further provided for by Regulation.]1)
1) Act No. 9/1997, § 6.
[The operational and accounting year of Landsvirkjun shall be the calendar year.
The Board of Directors of Landsvirkjun and the Managing Director shall prepare annual accounts for each accounting year. The annual accounts shall be prepared in accordance with statutory provisions and generally accepted accounting principles. They shall include a profit and loss account, balance sheet, cash flow statement and notes.
The Annual General Meeting shall elect a Chartered Auditor or Auditing Firm to audit the annual accounts of Landsvirkjun on the recommendation of the National Audit Bureau and the Municipal Auditors of the City of Reykjavík and the auditor of the Township of Akureyri.
The Auditor shall audit the annual accounts of Landsvirkjun in accordance with statutory provisions and generally accepted accounting principles and to this end examine the accounting records of the Company and other data relevant to its operations and position. Following the audit, the Auditor shall sign the annual accounts, and the signature shall accompany the annual accounts with the Auditor's report.]1)
1) Act No. 9/1997, § 7.
The same power tariff shall apply for the delivery of electric power to public distribution systems at Landsvirkjun}s respective points of delivery.
[The Board of Directors shall establish the tariff for Landsvirkjun. The provisions of the Competition Act shall apply to Landsvirkjun.] 1) In the tariff, the price of power shall be fixed so as to yield a reasonable return on the capital committed in the operation of the Company from time to time. It shall also be the aim of the Company to create such surplus as will enable it to secure for its customers at all times a sufficient supply of power through the application of its own capital resources together with reasonable borrowings.
Landsvirkjun shall enter into power supply contracts with public electric utilities and industrial enterprises within the scope of Article 2 hereof. In order to enter into long-term contracts with industrial enterprises utilizing more than 100 million kWh per year Landsvirkjun must obtain the approval of the Minister for Energy. Such contracts must not, in the opinion of the Minister, result in a higher price to public electric utilities than would otherwise have obtained.
Landsvirkjun shall enter into agreements for the coordination of operations with other power producers who are connected to the main transmission line network of the Company.
1) Act No. 9/1997, § 8.
Landsvirkjun is authorized to borrow for the requirements of the Company and to provide guarantees for payments and other obligations for the same purpose. In so far as new obligations and guarantees are in excess of 5% of Company net worth (the booked equity capital at the end of the previous year) within each year, Landsvirkjun must seek the consent of the owners.
On the part of the State, such consent must be confirmed by the Ministers of Industry and Finance.
In respect of hydroelectric power projects pursuant to Paragraph 1 of Article 6 hereof, import duties, special temporary excise tax on goods and sales tax applicable to materials, equipment and machinery for power projects and related main transmission lines may be waived or refunded. The same shall apply to fuel power stations.
The waiving of charges pursuant to Paragraph 1 does not apply to construction machinery for the projects. However, it shall be permitted to refund charges in respect of the use of construction machinery on power projects pursuant to Paragraph 1. In determining the refund of charges on construction machinery, account shall be taken of the depreciation of the machinery resulting from their use in the projects.
The Minister of Finance shall lay down further rules with respect to the implementation of this Article and may provide therein, among other things, for the depreciation base and depreciation rates for purposes of the refunding of charges on construction machinery.
[Landsvirkjun shall be exempt from income tax, property tax, stamp duties in respect of loans incurred by the Company or of deeds of property to the Company, municipal rate, municipal business tax as well as other charges to county treasuries and municipalities. Landsvirkjun shall, however, pay to municipalities those public charges that are imposed on the housing facilities of Landsvirkjun pursuant to other provisions of law.]1)
1) Act No. 108/1998, § 21.
[Counties, municipalities, and their associations and partnerships among them are permitted to become owners of Landsvirkjun, subject to the following conditions:]1)
1. A party who intends to utilize the right to become an owner shall notify this to the Board of Directors of Landsvirkjun 12 months in advance.
2. The party requesting participation in ownership takes upon himself the obligations which ensue from participation as owner of Landsvirkjun.
3. The party requesting participation in ownership shall contribute assets amounting to not less than 1% of the revalued equity capital of Landsvirkjun at the beginning of the year in which the participation becomes effective.
Before participation in ownership becomes effective the new owner shall render his contribution to the Company. If the ownership share of the State as a result of this becomes less than one-half, the Government shall make a new contribution of funds to Landsvirkjun or take over payment of debt in such extent as to ensure ownership by one-half on the part of the State.
If a new owner owns a smaller share in Landsvirkjun than the party who owns the smallest share upon the entry into force of this Act, the consent of such owner need not be sought for purposes of borrowing according to Article 14 hereof.
If an increase in the number of owners results in a new owner having an equal or larger share than the party who owns the smallest share upon the entry into force of this Act, the composition of the Board of Directors shall be taken up for review and the number of Directors be increased without, however, disrupting the proportionate representation on the Board between the State on the one hand and the municipalities on the other hand.
1) Act No. 108/1998, § 22.
The Minister may authorize Landsvirkjun to expropriate water rights, lands, facilities and other rights necessary for project developments under this Act. Such expropriation shall be carried out in accordance with Act No. 11/1973 on Expropriation Procedures.
Any matters respecting the implementation of this Act and the participation of the State in Landsvirkjun shall be referred to the Minister for Energy.
A new Partnership Agreement on Landsvirkjun between the Government of Iceland, the City of Reykjavík and the Township of Akureyri, concluded 27 February 1981, will enter into force on 1 July, 1983. At the same time the Partnership Agreement dated 1 July 1965 between the Government of Iceland and the City of Reykjavík on Landsvirkjun will terminate.
The owners shall, in consultation with the Board of Directors of Landsvirkjun, prepare a Regulation1) for the Company where further provisions shall be laid down with regard to the implementation of this Act. The Regulation shall be issued by the Minister for Energy.
1) Regulation No. 259/1997.