Transcript Argentine Power Sector

Wholesale Electric Market Management Company
Argentine Power Sector
APEX 2003 Conference
Cartagena, Colombia
CAMMESA
1
Outline
Global figures
Changes in the demand and supply
Macroeconomic changes
Impact of these changes in the
market and the operation
Expectations - Concerns
2
Wholesale Electrical Market - 2002
NOA
Installed Capacity
Generation 2002
500 kV
220/132 kV
NEA
CUYO
LITORAL
CENTRO
GBA
100%
90%
24 GW
80 TWh
9.100 km
12.000 km
Nuclear
7%
23%
80%
70%
BUENOS AIRES
COMAHUE
60%
50%
40%
77%
30%
20%
Hydro
51%
Thermal
42%
10%
0%
Spot
PATAGONICO
Contract
WEM - Participants
Generators
Distributors
Large Consumers Ma
Large Consumers Mi
Transmission COs
Traders
53
63
302
2006
10
4
3
Outstanding Variables - Generation
MW
Installed Capacity WEM
25,000
20,000
HI
CC
TG
TV
NU
15,000
10,000
5,000
0
1992 1993 1994 1995 1996
Capacity WEM:
1997 1998 1999 2000 2001 2002
1992 = 13267 MW
2001 = 23284 MW  ~70%; 10000 MW increase in Generation Capacity
4
Outstanding Variables – Peak Demand
MW
Annual peak demand
17000
16000
15000
EXPGrowth = 2200 MW
2200
1050
14000
1050 2200
13000
12000
LocalGrowth = 5000 MW
11000
10000
11243
9000
8000
9035 9325
12730
12269
11776
13754 14061 13481 14150
10104 10213
7000
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
5
Annual
Demand
Growth
Ev de la tasa de crecimiento de la demanda eléctrica
10%
8%
7.5% 7.6%
6.6% 6.3%
5.6%
6%
4%
6.7%
4.7% 4.6%
3.6%
2.3%
2%
0%
-2%
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
-2.0%
-4%
Porcentaje de variación demanda mensual Grandes Usuarios
Año 2002 vs 2001
15%
12.0%
10%
Industrial
consumers =>
6.6% 6.2%
5%
2.3%
0.3%
0%
-1.6% -0.8% -2.4%
-5%
-4.7%
-10%
-15%
-1.2%
-6.7%
-11.3%
Ene- Feb- Mar- Abr- May- Jun- Jul- Ago- Sep- Oct- Nov- Dic02
02
02
02
02
02
02
02
02
02
02
02
6
Traded Energy
Energy Traded - Contract vs Spot
100%
90%
80%
SPOT
70%
CONTR
60%
50%
40%
30%
20%
10%
0%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
• High exposure to spot volatility
7
5
0.5
0
0
Mar-03
Ene-03
Nov-02
rate $/u$s
Sep-02
30
Jul-02
Monomial u$s
May-02
35
Mar-02
Monomial $
Ene-02
40
Nov-01
Sep-01
Jul-01
May-01
Mar-01
Ene-01
Nov-00
Sep-00
Jul-00
May-00
Mar-00
Ene-00
u$s/MWh
SPOT PRICE EVOLUTION
45
4
3.5
3
2.5
25
2
20
15
1.5
10
1
8
$/MWh
Outstanding Variables
50.0
Wem Average Monomial Prices
48.76
45.0
40.0
35.74
35.0
31.78
29.73
30.0
28.56
25.25
25.0
24.38
26.13
28.92
27.63
23.35
20.0
15.0
10.8
10.0
5.0
0.0
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Competitiveness of the market and efficiency of generation units provoked a
fall in spot prices of about 40%  48.8 $/MWh1992 to 28.5$/MWh2002
9
Macroeconomic Changes
Dic 2001 => political crisis with deep
recession in economy led to the fall of
the government; social instability
Austral summer 2002
New transition government
Debt default; end of the fixed exchange
rate (1$=1u$S) and devaluation
economic emergency law => pesification
of economy
Profound economic crisis; inflation
10
Macroeconomic Changes
Since July 2002 => conditions begin to
stabilize; relative normalization of the
behaviour of economy
May 2003 => new elected government
4
$/u$s
2.5
2
1.5
1
0.5
Sep-03
Jun-03
Abr-03
Feb-03
Dic-02
Oct-02
Ago-02
Jun-02
Abr-02
Feb-02
Dic-01
Oct-01
Ago-01
Jun-01
Abr-01
Feb-01
0
Dic-00
Increase of industrial demand
due to greater competitiveness
to export and import substitution
Jan02-oct03
Exchange rate => 200%
Inflation => about 50%
3
u$s/MWh
Evolution of
exchange rate=>
3.5
11
Electricity Sector Scenario
 Tariffs to end consumers => social impossibility
to increase tariffs due to economic crisis and
people impoverishment
 Pesification of natural gas, energy and capacity
prices on the WEM
 Increase of imported fuel and maintenance
costs
 Uncertainty related with exchange rate
evolution and expected performance of the
generation units
12
Electricity Sector – Regulatory Decisions
 Keep tariffs at the initial level, absorbing the difference





with the stabilization fund
Cover variable costs (fuel, operation and maintenance)
of each generator, permitting costs declarations each
fortnight
Maintain short term marginal cost system, with a cap
price of 120 $/MWh
Modify capacity payments, turning them independent
of actual dispatch and include base payment for almost
every thermal plant available, and increasing it from 10
to 12 $/MWh
Remunerate new reserves (competitive bids) against
commitment to fulfill them, to ensure fuel (gas or
liquid) and MW availability
Create a spot market in advance, similar to a contract,
through competitive bids, to diminish volatility and
risks. Decision based on minimum cost (+risk) criteria13
Results – Prices & Fund
50.0
250
45.0
200
40.0
150
35.0
100
30.0
50
25.0
0
20.0
-50
15.0
-100
10.0
-150
5.0
-200
0.0
Sep-02
Oct-02
Nov-02
Dic-02
Spot Price Generators
Ene-03
Feb-03
Mar-03
Abr-03
Seasonal Price Distributors
May-03
Jun-03
Jul-03
Ago-03
M$
$/MWh
Spot Price (Generators collect) vs Seasonal Price (Distributors pay)
and Stabilization Fund Evolution
-250
Sep-03
Stabilization fund
14
Regulatory Decisions - Results
 Transition was managed, allowing to operate the




system in good supply conditions
Higher marginal spot prices due to increase of
maintenance and liquid fuel costs, with a cap price of
120 $/MWh. Differences between variable costs and
maximum charged as uplift costs
Spot market in advance, allowing to hedge, from mar
to oct-03, about 40% of the spot market to an energy
price of 24,4 $/MWh. The average real price resulted 3
$/MWh higher => savings => about 60M$.
Generation availability performance similar as
historical and new reserves fulfilled adequately
Stabilization fund exhausted since jul-03. Debt of the
fund with generators of abut 280 M$ (1-2 months of
payment). Priority of payment to cover variable costs
(thermal units receive more money than hydro plants)15
Expectations - Concerns
 Increase of tariffs required to gradually normalize
situation. Gas increase pending, when adopted it will
imply an additional increase to the WEM
 The whole situation seems very difficult to handle
politically
 Demand increase and exports to Brasil, along with
default of the stabilization fund may lead to a
significant increase of the deficit of supply risk
 Medium and long term viability and the lack of new
investments in generation is then one of the major
concerns, until the regulatory framework may be
adapted and political solutions adopted.
16
Next steps
From CAMMESA’s point of view
 Be flexible enough to implement changes on rules
and keep on running the system and the Market, in
a delicate environment.
 Study and analyse scenarios to identify and
anticipate risks, in order to help in the search of
solutions.
17
Quality, Technology & Transparency
For an Electrical Market without frontiers
¡Thanks for your attention!
Colombia, October 2003
Doubts => [email protected] More info => www.cammesa.com.ar
18