Oct 23 th 2000 MAIN DEVELOPMENTS IN

Oct 23 th, 2000

MAIN DEVELOPMENTS IN THE SPANISH ELECTRICITY MARKET MARIA LUISA HUIDOBRO President and CEO COMPAÑÍA OPERADORA DEL MERCADO ESPAÑOL DE ELECTRICIDAD, S. A. Oct 23 th, 2000

LIBERALISATION PRINCIPLES IN SPAIN LAW 54/1997 LIBERALISES THE ELECTRIC SYSTEM, CREATES THE POWER PRODUCTION MARKET MANAGED BY “COMPAÑÍA OPERADORA DEL MERCADO ESPAÑOL DE ELECTRICIDAD, S. A. ” (OMEL) è PRODUCERS participates in free competence, with freedom to build new power plants. They submit bids to the market or trade directly with qualified consumers è TRADERS participates in free competence: they buy energy in the market to sell it to qualified consumers. The can buy energy from external agents from producers to incorporate it to the market. è QUALIFIED CONSUMERS acquire energy through trading companies, directly in the market, or through bilateral contracts. Every consumer will be considered qualified on January 2003 ACCESS TO TRANSMISSION AND DISTRIBUTION NETWORKS AT ACCESS TARIFFS OR MAXIMUM TOLLS APPROVED BY THE GOVERNMENT è MARKET OPERATOR receives electricity purchase and sell bids every day, obtains a matching price for each hour and is responsible for the ELECTRIC SYSTEM ECONOMIC MANAGEMENT è SYSTEM OPERATOR is responsible for the electric system technical management Oct 23 th, 2000

PURCHASES BY RESELLERS, QUALIFIED CONSUMERS AND EXTERNAL AGENTS PERIOD FROM 01/01/1998 TO 05/22/2000 GWh/week 1200 1998 1050 1999 2000 900 750 600 450 300 Energy at free prices (period): 47, 421. 1 GWh Total energy purchased (period)(*): 380, 208. 3 GWh * Excluding pumping and self-producers 30/04/00 02/04/00 05/03/00 06/02/00 09/01/00 12/12/99 14/11/99 17/10/99 19/09/99 22/08/99 25/07/99 27/06/99 30/05/99 02/05/99 04/04/99 07/03/99 07/02/99 10/01/99 13/12/98 15/11/98 18/10/98 20/09/98 23/08/98 26/07/98 28/06/98 31/05/98 03/05/98 05/04/98 08/03/98 08/02/98 0 11/01/98 150 889. 7 GWh (29. 8 %) Energy at free prices (last week): Total energy purchased (last week): 2, 986. 0 GWh Daily Intraday Oct 23 th, 2000

POWER MARKET PARTICIPANTS SELLERS Production agent Phisical Bilateral Contract Qualified Consumer Self-production agent Special regime Selling External Agent OMEL Reseller agent Distribution agent Purchasing External Agent BUYERS Tariff Consumer Oct 23 th, 2000

DEMAND INTEGRATION IN THE MARKET è More than 70. 000 qualified consumers can access the market directly or indirectly: annual consumption greater than 1 GWh. From July 2000, 55% of the whole consumption is qualified consumers è Currently 34% of the demand goes directly or indirectly to the market è 80% of the energy liable to abandon tariff, is trading at free prices è Important development of trading activity in a very competitive environment Oct 23 th, 2000

MAIN TOPICS è INFORMATION è INTERNATIONAL INTERCONECTION CONSTRAINTS AND NEW PARTICIPANTS IN THE MARKET è FORWARD SUPPLY CONTRACTS IN ORGANIZED MARKETS è METERING è MARKET POWER AND COMPETITION Oct 23 th, 2000

INFORMATION è EQUAL INFORMATION FOR PARTICIPANTS IN THE MARKETS AND FOR THIRD PARTIES è AGREGATED DEMAND SUPPLY CURVES PUBLICATION Oct 23 th, 2000

COMMERCIAL CAPACITY (MW) Source: REE Oct 23 th, 2000

MEASUREMENT AND SETTLEMENT PROCESS Measurements Meter registers Measurements Secondary Concentrator Participants Main Concentrator SIMEL analysis Measurements System operator Settlement • Border points measurements • Border points • Losses • International deviations • Assignment of border points to units Market operator Oct 23 th, 2000

MARKET POWER AND COMPETITION è TEMPORARY LIMITATIONS TO DEVELOP NEW POWER STATIONS è TEMPORARY LIMITATION FOR CONTRACTS BETWEEN PRODUCERS AND TRADERS è NUMBER OF AGENTS Oct 23 th, 2000