1 / 10

Elektro’s Short Position x Market Deregulation

This article discusses Elektro's short position in the deregulated market and the impact of market growth forecast and initial contract reduction. It also explores the regulatory framework and customer choices in the market.

marioj
Télécharger la présentation

Elektro’s Short Position x Market Deregulation

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Elektro’s Short Position xMarket Deregulation February 2001

  2. Elektro’s Short Position • Market Growth Forecast and Initial Contracts Reduction leads to the following short position at Elektro:

  3. Regulatory Framework: Deregulation • Customers can choose their power supplier according to deregulation schedule and current contracts term: • Customers’ option to choose another supplier can reduce Elektro’s short position:

  4. Scenarios • The current tariff structure for regulated customers leads to cross-subsidization benefiting large industrial customers (A2) • Unregulated customers can buy the commodity from another supplier and pay a wire tariff to Elektro • Wire tariff is currently set by ANEEL, and Elektro has filed a restructuring proposal • The level of wire tariff can significantly impact client decision to exercise the option

  5. Assumptions • Energy price for customer: • Regulated customer: based on January 2001 tariff and forecasted tariff increases (1) • Unregulated customer: competitive market price (linked to VN) • Elektro’s cost of energy: • For regulated customers: average cost of energy • For the unregulated customers: marginal cost of energy (1) (1) Except for the current free customers, for which the readjustments were made according to each contract.

  6. Current Potentially Free Customers • Based on regulation / existing contracts

  7. Customer Decision and Impact at Elektro • Scenarios: • Probable Scenario: A2 customers (except Corn Products, which has a co-generation project) are likely to remain regulated; A3a and A4 (mid-size industrial and commercial) tend to leave based on current wire tariff • Sensitivity: Wire tariff restructuring reduces incentive for the A3a and A4 customers to exercise option • In both scenarios, Elektro is not going to renew the contracts with current free customers (Melhoramentos, Serrana and Luk) • Impact on Elektro’s market: Current Wire Tariff Restructured Wire Tariff

  8. Impact on Elektro’s Short Position Current Wire Tariff Restructured Wire Tariff

  9. Scenarios Comparison

  10. Conclusion and Recommendations • Power Supply Strategy • Even considering the future deregulation steps, Elektro’s short position is around 100 MW in 2002 and 400 MW in 2003 • Considering the deals on the pipeline, prices are below pass-through limits (competitive VN) for Elektro’s tariff reviews although could be above price curve forecast back-end depending on the term of the contract • Elektro has two possibilities: • If the market reduction is smaller than expected, short position will be partially uncovered, and Elektro will be exposed to market price volatility. The already contracted energy will be passed-through • If the market reduction is greater than expected, energy surplus will have to be negotiated at the free market prices higher than contracted energy prices • Elektro should then be conservative in its market reduction forecast, using the sensitivity scenario to cover its positions up to 2003 • The negotiation of energy needs for 2004 on should wait for better market knowledge, regulation definition (e.g. the right of the customers without demand metering to choose another supplier)

More Related