CIGRÉ Workshop Market Structures and Institutions Granting of

CIGRÉ Workshop Market Structures and Institutions Granting of concessions and authorizations September 22 nd, 2003 Brasília Isaac Pinto Averbuch Director of ANEEL

Granting of concessions and authorizations I. T e G process II. Outcomes III. ANEEL’s actions

Transmission Grant management Planning Operation Determinative Program for Transmission Plan for the expansion and reinforcements Program for Grants Expansion Reinforcements Improvements Program for the Enterprises CND approves Modality Requirements for the Participation Proceedings Judgment Criteria and Maximum Prices Bid Granting of the Concession by the President of the Republic ANEEL authorizes and Establishes Revenue Concession contract with ANEEL

Transmission Bidding process Feasibility studies CCPE Document elaboration for the CND Concession Granting Decree Document elaboration for the TCU Concession Contract Signature Year 1 Constitution of the SPE Bid Proclamation Year 2 Year 3 Commercial operation

Transmission - Outcomes Auctions (1998/2002) Auctions LTs Successes 27 Failures 1* Investments R$ 5 billions * TL Ouro Preto - Vitória (authorized to FURNAS) ** For 230 k. V lines (or 430 km for 500 k. V lines) Total Benefits 8. 017 km Saved Costs** ~750 km

Transmission - Outcomes Basic Network (Annual Increase) ANEEL

Transmission – Basic network Enterprises • Enterprises : 36 – on schedule: 24 (~ 67%) • 22 normal e 2 advanced • 16 “concession” e 8 “authorization” – delayed: 12 (~ 33%) • 3 “concession” e 9 “authorization”

Transmission – Granting process • Clear rules (investor’s confidence) • Improvements in the bid’s proclamation • The winner is who offers the “lowest tariff” (final consumers are the beneficiaries) • Elimination or minimization of risks out of the business environment • Bid’s Proclamation previously approved by the Federal Audit Court (TCU) • Auditing follows a chronogram • Ongoing dialog with investors, consumers and society

Generation – Granting Management Process BID Potential Grant Concession Contract INVENTORY BASIC PROJECT FEASIBILITY Commercial Operation EXECUTIVE PROJECT/ OPERATION CONSTRUCTION Environmental Reference Term (X-ray) Renewal Environmental licenses PL: Previous License PL IL: Installation License IL OL OL: Operation License

Generation Bidding Process Technical Note TCU Concession Contract Proposal Warranty Stated period: 296 days ~10 months Proclamation AUCTION Days 60 30 50 15 20 1 Pre-qualification Document Study hand out (Data Room ANEEL) Pre-qualification Judgment Publication 90 30 Grant Contract Warranty

Annual Generation Increase (1990 – 2002) 5. 000 4. 638 4. 500 ANEEL 4. 000 (dec/1997) 3. 500 Power (MW) 4. 262 2. 929 3. 000 2. 828 2. 500 2. 000 1. 500 1. 000 2. 506 2. 327 925 1. 091 908 1. 173 1. 218 1. 407 1. 106 500 0 1991 1992 1993 1994 Average 90/94: 1. 063 MW 1995 1996 1997 1998 1999 2000 2001 2002 Average 95/99: 2. 119 MW Average 00/02: 3. 795 MW

Generation Enterprises Heavy constraints (24, 5%) Constraints (43, 9%) No constraints (31, 6%) 15. 000 Capacity (MW) 13. 000 12. 203, 1 11. 000 9. 986, 5 5. 426, 0 1. 920, 8 7. 000 5. 000 3. 000 8. 172, 0 1. 828, 5 2. 131, 2 4. 401, 4 4. 075, 9 4. 645, 9 350, 2 3. 697, 4 2. 741, 3 3. 664, 3 2. 267, 6 1. 715, 0 2. 741, 3 2004 2005 2006 2007 1. 000 2003 5. 762, 6 Data updated on 15/8/03 (not including the 2. 049 MW from the emergency thermals)

Expected outcomes by Consumers, Investors and Society Consumers e Society • Guarantee Consumer’s Rights Investors • Clear and steady rules Both • Balance • Isonomic treatment • Adequate • Accountability – remuneration Institutional Control • Improvement in the quality • Regulation • Transparency and supply of service and • Impartiality • Efficiency concession • Agile and efficient contract • Protection of the management compliance environment • Fair tariffs • Technological development • Decentralized performance • Confidence • Participation in the regulatory process • Ongoing dialog

Conclusions Regulator's challenges • Identification of the regulator as an institution that satisfies the public interest • Fulfill expectations of consumers, investors and the society • Improve participation mechanisms for consumers and transparency • Reduce asymmetry of information • Disseminate the regulation culture • Achieve autonomy • Contribute to the clear delimitation of boundaries amid the Agency, the Government and the Market • Skilled and adequately paid in-house staff • Broaden decentralization • Harmonically and complementary external controls

ANEEL’s recent actions ENVIRONMENT I B A M A S T A T E S MU N I C I P A L I T I E S WATER A N A S T A T E S MUNICIPA LITIES POWER C O M M I T T E E S A N E E L M M E A G E N C I E S S O I L US E ENTERPRISE D I R. P L A N PUBLIC ATTORNEY F E D E R A L S T A T E M U N I C I P I A L OTHERS N G O G R O U P S

www. aneel. gov. br Telephone: 0800 -61 -2010 Fax: (61) 426 -5705 institucional@aneel. gov. br