Transcript Market operation - facing stress situations

Compañía Administradora del Mercado Mayorista Eléctrico
Argentine Power Sector
Market operation - facing stress
situations
APEX Conference
October 2006
Seoul, Korea
CAMMESA
1
Outline
WEM – Basic Rules - Global Figures –
Key Indicators
Macroeconomic changes - Impacts
Fuel Supply
Pre financing Maintenance
Expectations - Concerns
Basic Market Operating Rules
 Market established in 1992
 Spot Market (80%)
•
•
•
•
•
SHORT-TERM MARGINAL-COST BASED
STABILISED SEASONAL PRICES FOR
DISTRIBUTORS (regulated)
HOURLY PRICES IN SPOT MARKET (capped to
gas prices)
ADDITIONAL PAYMENT FOR CAPACITY (12
$/Mwh; 90 hours per week)
REMUNERATION FOR ANCILLIARY SERVICES
 Contract Market (20%)
•
CONDITIONS AGREED BETWEEN PARTIES
Wholesale Electrical Market - 2005
NOA
Installed Capacity
Peak LOAD
Generation 2005
500 kV
220/132 kV
NEA
CUYO
LITORAL
CENTRO
GBA
100%
Nuclear
7%
21%
90%
24 GW
18 GW
98 TWh
9.100 km
12.000 km
80%
70%
BUENOS AIRES
COMAHUE
60%
50%
79%
40%
30%
Hydro
52%
Thermal
41%
20%
10%
0%
Spot
PATAGONICO
Contract
WEM - Participants
Generators
Distributors
Large Consumers Ma
Large Consumers Mi
Transmission COs
Traders
53
63
302
2006
10
4
Macroeconomic Changes
Dic 2001 => political crisis with deep
recession in economy led to the fall of
the government; social instability
Austral summer 2002
New transition government
Debt default; end of the fixed exchange
rate (1$=1u$S) and devaluation
economic emergency law => pesification
of economy
Profound economic crisis; inflation
Macroeconomic Changes
Since July 2002 => conditions begin to
stabilize; relative normalization of the
behaviour of economy
May 2003 => new elected government
Evolution of
exchange rate=>
3.5
3
$/u$s
2.5
2
1.5
1
0.5
Ago-06
Abr-06
Dic-05
Ago-05
Abr-05
Dic-04
Ago-04
Abr-04
Dic-03
Ago-03
Abr-03
Dic-02
Ago-02
Abr-02
Dic-01
Ago-01
Abr-01
0
Dic-00
u$s/MWh
Increase of industrial demand
due to greater competitiveness
to export and import substitution
Exchange rate => 200%
Inflation => about 80%
4
Electricity Sector Scenario - Transition
 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
% GDP vs Demand
Annual Variation GDP vs Electricity Demand
15%
about 3 $/u$s
exchange rate 1$/u$s
10%
5%
0%
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
-5%
-10%
-15%
GDP
Demand
2003
2004
2005
2006
% GDP vs Demand
Annual Variation GDP vs Electricity Demand
15%
1997
2003
2004
% Annual Demand
10%
5%
2005
0%
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
-5%
2002 vs 2001 =>
-2% Dem var with
-11 % GDP var
-10%
-15%
% annual GDP
Estimated
2006 vs 2005
10%
Economics
 Strong recovery – four years in a row (03/06) with
GDP rates above 8%
 Fiscal Surplus due to the increase of economic
activity and a high exchange rate
 Meaningful decrease of unemployment rate (from
20% to 11%)
 Gain of political power and support
Electricity Sector – Scenario - Decisions
 Political => less confidence in markets; energy as an
strategic sector => more state participation
 WEM Energy Prices => Maintain short term marginal
cost system, with a cap price related with gas cost
(less than 100 $/MWh (30 u$s/MWh). Differences
recovered through uplift costs.
 WEM tariffs => average below cost; residential and
small consumers subsidised; industrial consumers
adjusted partially
0
Ago-06
Feb-06
Ago-05
Feb-05
Ago-04
Feb-04
Ago-03
Feb-03
120
Ago-02
Feb-02
Ago-01
Feb-01
Ago-00
Feb-00
Ago-99
Feb-99
Ago-98
Feb-98
80
Ago-97
100
Feb-97
Ago-96
Feb-96
Ago-95
Feb-95
Ago-94
Feb-94
Ago-93
Feb-93
Ago-92
Feb-92
Ago-91
u$s/MWh
Spot Price Evolution
Definanciation of
stabilization
fund
4
Monomial $
Monomial u$s
3.5
$ / u$s
3
Distributors
2.5
60
2
40
1.5
1
20
0.5
0
Electricity Sector – Situation
 GDP - Strong recovery => demand increase
 Focus => security of supply
 Usage of thermal reserves => fuel supply (liquid) and
maintenance (older plants)
 Short term => cover the increasing demand =>
extensive use of thermal plants – increase of liquid fuel
consumption
 Additional problem => dramatic change in oil cost
(from 30 to 60 U$S/bbl) and uncertainty
Annual Fuel Consumption - NGas Mm3/d - Gas & Alternative Fuel
35.0
GAS
Fuel Consumption
Alt Fuel
30.0
25.0
20.0
15.0
10.0
5.0
0.0
2004
2005
2006
Annual Liquid Fuel Consumption (Mton) vs $WTI (U$S/bbl)
$WTI U$S/bbl
Millones
2003
1.8
70.0
Fuel (Mton)
1.6
Liq Fuel
WTI
60.0
1.4
50.0
1.2
1.0
40.0
0.8
30.0
0.6
20.0
0.4
10.0
0.2
0.0
0.0
2003
2004
2005
2006
Thermal Dispatch – older plants
GENERATION OF OLDER THERMAL POWER PLANTS - STEAM TURBINES - avg MW/month
2500
2000
1500
1000
500
0
Ene-98
Ene-99
Ene-00
Ene-01
Ene-02
Ene-03
Ene-04
Ene-05
Ene-06
After three years without dispatch, need to use older plants
extensively => increase of maintenance requirements and
fuel supply
Electricity Sector Scenario
 Marginal signals smoothed & uncertainty related





with evolution of oil price
Main problem => financing => fuel supply &
maintenance
Mechanisms adopted – Fuel Supply
direct fuel oil supply (agreement with Venezuela
+contracts)
through
CAMMESA.
Centralised
coordination of fuel supply
anticipation of money to the generators
Total consumption Fuel Oil =>
2003 => 0,1 M ton; 2006 => 1,6 Mton =>
more than 60 shipment
Annual - Fuel Oil Consumption - Mton
FO Mton
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
Electricity Sector Scenario
 Mechanisms adopted – Maintenance
 Anticipation of money to the generators to finance




major maintenances
Generators require the amount of money related
with the maintenance cost
CAMMESA evaluates the cost – benefit relation
(impact in operation costs of losing the group
during a year) and informs to the Energy Secretariat
In case the amount required is authorised,
CAMMESA anticipates the money to Genco
Genco gives it back in 12/24 months, beginning 1
year after the finishing of the maintenance
Expectations – Concerns
 Short term => cover the increasing demand => ensure



availability of thermal capacity and fuel; optimise the use
of hydro plants to minimise the risk of supply
new generation => an agreement was reached where the
Treasure ensures payments of variable costs (including
capacity) and 35 % of marginal rent; rest of it => derived to
a Fund (FONINVEMEM) created to finance the installation of
new generation. Recent tender=> Siemens will provide 2 x
800 MW CC plants (2008). Gencos will own shares of them.
diversification => increase of fossil fuels costs make
hydro/alternative generation more competitive, but require
a kick off from national government. The completion of
Atucha II (750 MW nuclear) and of the level of Yacyretá
reservoir (+700 MW hydro) to be available by 2009/11
Demand side management, energy savings and
emergency imports as resources to diminish supply risks.
Quality, Technology & Transparency
¡Thanks for your attention!
Seoul, November 2006
Doubts => [email protected] More info => www.cammesa.com.ar