Annual Report 2010 - Enel.com

On July 2, 2010, the CNC had undertaken similar proceedings
against a number of companies in the Iberdrola
Group. The CNC has up to 18 months from the start of the
proceeding to adopt a resolution.
Argentina
Update of wholesale market rules
With its Note SE no. 496 of January 19, 2010, the Argentine
Secretaría de Energía (SE) announced that it would
not be possible to change the wholesale market rules
(MEM, Mercado Eléctrico Mayorista) so as to bring them
into full compliance with Resolution 1427/2004 and the
2004 and 2005 agreements with the generation companies
that contributed to the funding of FONINVEMEM (the
fund used to build two CCGT plants that came into operation
at the start of 2010).
Resolution 1427/2004 contained, among other things,
the commitment to increase the remuneration for capacity
and the precio estacional (price paid by the distribution
companies to the generation companies) and to eliminate
the cap on the spot market introduced by SE Resolution
240/2003.
Negotiations were conducted over the course of 2010 between
the SE and the generation companies to establish
temporary rules for the remuneration of the generation
companies for the 2010-2011 period. Pending agreement
for the entire two-year period, the Argentine government
intends to reach specific agreements with individual
plants, on the basis of Resolution SE 724/08 (Mantenimiento
Plus) to facilitate extraordinary maintenance
programs that increase the availability of existing plants.
On November 25, 2010, the SE and the electricity generators
reached a final agreement that provides for new
instruments for payment of electricity and generation capacity
and a new mechanism (for the 2008-2011 period)
to foster investment in new generation capacity (along
the lines of the FONINVEMEM approach).
Generation
On September 1, 2010, the SE and Endesa Costanera
signed an Acuerdo de Intenciones to increase the availability
of steam turbines at the plant. The agreement provides
for investments of about $60 million (with no costs
charged to Costanera) and will allow recovery of capital
expenditure carried out between 2007 and 2010 totaling
another $60 million. Within this framework, on December
12, a Contrato de Compromiso de Disponibilidad de Equi-
pamiento MEM was signed between Endesa Costanera
and CAMMESA, the Argentine electricity market operator.
Mecanismo de Monitoreo de Costos and the PUREE
incentive program
With Resolution 45 of March 8, 2010, the SE established
that the new mechanism for calculating incentives under
the PUREE program (Programa de Uso Racional de la Energía
Eléctrica) for residential consumers with consumption
above 1,000 kWh per bi-monthly period would apply
starting from March 10, 2010. By applying this standard,
the amount of the incentives agreed will be reduced, further
increasing the difference between the PUREE penalties
and incentives that the distribution companies are
authorized to withhold to offset their higher costs when
the increases for the Mecanismo de Monitoreo de Costos
(MMC – an indicator of price developments introduced by
the Acta de Acuerdo in 2005) are not incorporated into
the rates. This generates a benefit for Edesur, the distribution
company operating in Argentina.
In August 2010 the appellate court issued a ruling in favor
of distribution company Edenor requiring the regulator,
ENRE, to rule on the possible recognition of the increases
in the MMC not incorporated in. In March 2010, the court
of first instance had ruled in favor of recognizing the
MMCs.
Remuneration of distribution activities
On November 12, 2009 the Argentine government reopened
the RTI process (Revisión Tarifaria Integral) for the
distribution companies Edenor, Edesur and Edelap, which
had been suspended in February that year.
Accordingly, Edesur submitted its proposed RTI to ENRE
for the next five years, which envisages an increase of
100% in rates from their current levels.
It is possible that the rate review process may be delayed
in view of the presidential elections scheduled for 2011.
Service quality regulations
Following a number of supply interruptions by Edesur between
December 22 and 31, 2010 (due to high temperatures
and high demand), on January 4, 2011, ENRE Resolutions
525 and 551/2010 were published. With the first
resolution, ENRE asked Edesur to upgrade its 2010 investment
program and submit a “Programa de Regularización
Operativo” to remedy the shortcomings found by ENRE
with regard to service quality. With the second measure,
ENRE (at the request of Edesur and to avoid penalties)
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