Electricity: Measures adopted to provide incentives for the expansion of power generation capacity

The adoption of these measures was argued by the Secretariat of Energy on the following basis:

(i)           The essential need to immediately adopt measures targeted at expanding existing levels of power supply and at reducing the cost to the community of non supplied energy

(ii)           The need to provide economic signals in order to boost new private power supply.

1.    Distributed Auto-Generation

On May 7, 2008, the Secretariat of Energy enacted Resolution No 269/08 that created the “Distributed Auto-Generator”.

The regulations in force to date already contemplate the Auto-Generator figure as an agent of the Wholesale Electric Market (“Mercado Eléctrico Mayorista” or “MEM”) and which is at the same timeboth a generator and a consumer of energy.

Resolution No 269/08 has now created the figure of the “Distributed Auto-Generator”, an Auto-Generator whose points of consumption and generation are linked to the National Interconnection System (SADI) in different connection nodes. This figure was not contemplated before and its inclusion is meant to incentive companies with auto-generation facilities spread over the country to get into the MEM so that more power generation capacity is available.

The Distributed Auto-Generator must comply with the same requirements and its transactions in the MEM will be done in the same way as the Auto-Generator. However, some specifics must be taken into account:

(i)           The generation of the agent that applies to be recognized as a Distributed Auto-Generator within the MEM must have been commercially authorized after September 4, 2006, date of publication of the Resolution of the Secretariat of Energy No 1281.

(ii)           The Distributed Auto-Generator must have two or more exchange nodes with the SADI, corresponding to its nodes of generation, consumption, or both, all of them associated with the same company.

(iii)          The Distributed Auto-Generators, both in their role as generators and as consumers of power, may enter into supply agreements within the Term Market with other Generators, Distributors and Large Users of the MEM. However, they cannot act simultaneously both as a generator and as a consumer in the Supply Agreements.

2.    Small-scale hydroelectric unit authorization

Resolution No 280/08 issued on May 7, 2008 has empowered utilities within provincial or municipal jurisdiction to offer to the MEM the operation of hydro-power generation units of less than two thousand kilowatts (2,000 KW) capacity which had not been previously authorized for commercial operation.

The hydropower units’ authorization and operating conditions are the following:

(i)           The utility will be responsible for filing with CAMMESA an authorization application to enter into its own network. The hydro-power generation unit will be exempted from complying with the requirements of the Regulations for Access to the Existing Power Capacity and the Expansion of Power Transmission System.

(ii)           Once authorized, the hydro-power generation units may enter into Term Market Agreements, Energy PLUS Agreements and Supply Agreements pursuant to Resolution SE No 220/07.

(iii)           Owners of the hydro-power generation units may make use of the tax benefits in accordance with the provisions of Law No 26,190.