business plan for 2004 - EDP

Subsequently, on June 23, 2000, Royal Decree-Law 6/2000
was published with a view to the introduction of urgent
measures designed to increase competition in the natural
gas sector, particularly:
• Simplifying the entry of new sellers;
• Introducing a new entity into the structure of the sector,
known as the System Manager, charged with managing
75% of the gas arriving from Algeria via the Maghreb
pipeline to meet the requirements of tariff customers;
• Establishing the date of January 1, 2003, for liberalisation
for all consumers; and
• Reducing to the end of 2005 the period of exclusivity
for distributors in a given geographic zone.
Lastly, on December 27, 2002, Royal Decree-Law
1434/2002 was published, governing the transport,
distribution and selling activities, supplies and natural
gas installation licensing procedures.
Other sundry legislation completed the legal framework
of the industry, defining procedures for the auction of the
remaining 25% of the gas from Algeria (ministerial order
of June 29, 2001), the remuneration for regulated activities
within the sector (ministerial order ECO/301/2002 of
February 15), gas supply tariffs (ministerial order
ECO/302/2002 of February 15) and the tolls due on thirdparty
access to the gas installations (ministerial order
ECO/303/2002 of February 15).
At the end of the first year of liberalisation of the gas
sector for all consumers, the Spanish government
published, early in 2004, Order ECO/31/2004 of January
15, updating the remuneration of the regulated activities
of the gas sector in 2004.
>> 1.2.2 Position of the EDP Group
Throughout 2003 EDP, through the group of companies
controlled by HidroCantábrico, extended the scope of its
business on the Spanish market, making progress in its
mission of becoming an Iberian operator.
Because of its approximate size five to six times that of
the Portuguese market, for its dynamics and for the
geographic continuity that it represents for EDP, the
Spanish market is a natural area of expansion of the
Group’s business, more so since the constitution is
imminent of MIBEL, to which both the Portuguese and
the Spanish governments are firmly committed.
The 40% holding in HidroCantábrico has allowed EDP to
get ahead and to adapt to the scenarios of evolution to
MIBEL since it is the only Iberian electricity company that
has acquired operating experience on both sides of the
border. Emphasis is given to the Group’s capabilities in
managing flows of electricity at Iberian / cross-border
2003 - Annual Report - EDP
level, and at the same time is aligned with the specific
regulatory characteristics of each country.
The solidity of EDP’s position in the future Iberian
electricity market also lies in the complementary nature
of the portfolios of assets of HidroCantábrico and of EDP.
Since HidroCantábrico’s production is mainly of thermal
origin (85% of gross generation in 2003), there is a natural
cover of the rainfall risk that affects the country’s
generation, allowing annual generation quotas to be met
both in dry and in wet years. The complementary nature
of the EDP / HidroCantábrico relationship is also clear to
see in EDP’s longer tradition in supply than in
production, the reverse of HidroCantábrico’s position.
Parallelism between the strategic options adopted by EDP
in Portugal and by HidroCantábrico in Spain underpins
the intensification of the Iberian role. In this connection
one should point out the increase of the
HidroCantábrico’s position in the gas sector resulting
from the acquisition of a 62% stake in NaturCorp. This
was the biggest goal that was reached in Spain during
2003 and it allowed HidroCantábrico to become the
second biggest Spanish company operating in the gas
distribution business. As in Portugal, HidroCantábrico
recognises that bringing together the gas and electricity
businesses adds value to the companies both in the
generation and in the distribution and supply areas.
There are other symmetries between the positions of EDP
in Portugal and of HidroCantábrico in Spain that
themselves strengthen the Iberian role. These include the
progressive use of natural gas as the fuel preferred in
increasing generation capacity, for reasons to do with
economy, the environment and diversification of the
sources of primary energy, and the focus on the
renewable energies sector, taking advantage of the
conditions created by the establishment of special regimes
governing the remuneration of investment in
infrastructure of this kind.
Lastly, we would call attention to the fact that, in
September, the Council of Ministers of the Spanish
government lifted the inhibition of EDP’s voting rights in
HidroCantábrico.