Generation and Transmission

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Generation and Transmission of Electric Energy
Auctions
Francisco Romário Wojcicki Deputy Executive
Secretary
United States, June 2008
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PLAN OF PRESENTATION

• Brazilian Economic Overview
• PAC - Growth Acceleration Programme Electrical
  Infrastructure
• Generation of Electric Energy Auctions
• Transmission of Electric Energy Auctions

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Brazilian Economic Overview
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BRAZIL ECONOMIC DATA
Country Numbers

• Population
• 190 million
• Area km2
• 8.5 million
• GDP
• PPP US 1.79 trillion (9th in world) - 2007
• Nominal US 1.31 trillion - 2007
• Real Growth 5.4 - 2007
• Industrial GDP Growth 4.9 - 2007
• Investments
• 17.6 of GDP - 2007
• US 37.4 bi de FDI² - 2007
• Qualified as BBB- - 2008³
• International Reserves
• US 196 billion - 2008
• Commercial Surplus
• US40 bi - 2007
• 1 Estimated values

Sources World Bank, Unctad, IBGE, Ipeadata, BC
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(No Transcript)
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PAC - Growth Acceleration Programme Electrical
Infrastructure
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PAC GENERATION OF ELECTRIC ENERGY ACTIONS

• 247 actions in the area of Generation of Electric
  Energy are distributed as follow
• 58 hydroelectric plants
• 52 thermoelectric plants
• 15 small hydroelectric plants
• 100 alternative sources plants (PROINFA)
• 10 studies of inventory and
• 12 studies of technical-economic viability.

US 52,486 million
US 284 million
Total Investment
US 52,770 million
UHE hydroelectric plants UTE thermoelectric
plant PCH small hydroelectric plants PROINFA
programme of alternative sources
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PAC TRANSMISSION OF ELECTRIC ENERGY ACTIONS

• 82 actions in the area of Transmission of
  Electric Energy are distributed as follow
• 63 transmissiom lines and
• 19 substations

US 12,502 million
US 760 million
Total Investment
US 13,262 million
TL transmission line SE substations
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Generation of Electric Energy Auctions
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INSTITUTIONAL ROLES IN ELECTRIC SECTOR
Formulate Policies
Government
Planning
Fiscalization ANEEL
Regulation ANEEL
Promotes Guarantee of Supply

• MME - Ministry of Mines and Energy
• CNPE - National Council for Energy Policy
• ANEEL - National Electric Energy Agency
• CCEE - Board of Trade of Electricity
• CCEARs - Contract for Electric Energy in
  Regulated Market

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MARKETING OF ELECTRIC POWER IN BRAZIL

• The marketing of electric energy in Brazil takes
  place in two environments
• The Regulated Market (ACR), which seeks the care
  of urban and rural households and small
  businesses and industries
• The Free Market (ACL), covering the major
  commercial and industrial power that can
  negotiate the electric energy without the
  mediation of the companies of distribution of
  electric energy
• The supply of electricity is provided based on
  market rules that generate the necessary signals
  achieve adequate investment.
• In the specific case of the ACR, such rules of
  the market are demonstrating through a chain of
  public auctions in which the distributors seek
  long term contracts.

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MARKETING OF ELECTRIC POWER IN BRAZIL
Competitiveness in the generation
Rates of supply resulting from auctions
Prices of supply freely negotiated
Regulated Market ACR
Free Market ACL
D
CL
C
D Distributors/ Captive Consumers CL Free
Consumers C Merchant
Relationship of proximity between ACR And ACL
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MARKETING OF ELECTRIC POWER IN BRAZIL
Competitiveness in the generation
Gn
G1
G2
Gk
C
...
D1
D2
Dn
CL
CL
CL
Regulated Market (ACR)
Free Market (ACL)
Hiring bilateral treaty Auctions promoted by
CCEE (long-term contracts)
Hiring freely negotiated
Recruitment adjustment Auctions promoted by CCEE
(hiring by up to 2 years)
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MARKETING OF ELECTRIC POWER IN BRAZIL

• The electric energy traded at ACR auctions can be
  purchased on arrangements for hiring by
  availability (real option) or quantity
• Investors can participate in the auctions with
  private equity exclusively or in partnership with
  state enterprises
• The thermoelectrics plants are usually objects of
  Societies of Specific Purpose - SPE with minority
  participation of Petrobras
• Investment in hydroelectric plants have been
  driven by partnerships (consortia or SPEs) among
  major consumers, banks, financiers, contractors,
  state enterprises (of Federal Government and of
  States) and private generators.

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ANNUAL AUCTIONS OF ELECTRIC ENERGY
Liquidation EX-POST
HIRING OF NEW ENERGY
ADJUSTMENT CONTRACT
HIRING OF EXISTING GENERATION

• 1st Auction of reserve of power (07/30/08)
• Auction of New Energy A-3 (08/12/08)
• Auction of New Energy A-5 (08/28/08)

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STAGES UNTIL THE ENTRY INTO OPERATION




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AUCTIONS OF NEW ENERGY
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PROJECTS FOR FUTURE AUCTIONS
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PROJECTS FOR FUTURE AUCTIONS
Auction 2010 - Generation
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Transmission of Electric Energy Auctions
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TRANSMISSION OF ELECTRIC ENERGY AUCTIONS

• Compose the Transmission of Electric Energy
  Auctions, as provided in Section IV of Law
  9.074/1995, installations of Basic Network.
• The Power Licensor define, among the facilities
  for transmission
• those intended for training of Basic Network of
  the interconnected systems
• those on the scope of the dealer's own
  distribution and
• those for exclusive interest of central
  generation.
• The granting of the concession will be through
  auctions with operating rules approved by ANEEL
• The contracts of concession period is 30 years.

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TRANSMISSION OF ELECTRIC ENERGY AUCTIONS

• Can participate in the auctions of transmission
• Domestic or foreign companies, either alone or in
  consortia
• Investment funds with participation registered in
  the Securities Commission - CVM, that attend the
  conditions of prior-qualification (legal,
  financial and technical-economic)
• Distribution Companies may not participate in the
  prior-qualification, because it is forbidden to
  them, among others, the activities of electric
  power transmission (Basic Network).

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DEFINITION OF ENTERPRISES FOR BIDDING AT AN
AUCTION

• MME leads to consolidate of the PAR and PET,
  aimed at the development of the Transmission
  Granting Programme, which is the elaboration and
  distinction of all works that will be auctioned
  and all works that will be permitted.

MME - Ministry of Mines and Energy ANEEL -
National Electric Energy Agency ONS - National
System Operator EPE - Company Energy Research
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STAGES UNTIL THE ENTRY INTO OPERATION


EVTE/R1 Feasibility Study Technical And
Economic R2 Detailing the Alternative
Reference R3 Characterization and Analysis
Socio-Environmental R4 Characterization of the
Existing Network
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PROJECTS FOR FUTURE AUCTIONS
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PROJECTS FOR FUTURE AUCTIONS
() New enterprises will be included by the
planning cycle from 2008 to 2010
() New enterprises will be included by the
planning cycle from 2008 to 2010
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Thank you!
Francisco Romário Wojcicki Deputy Executive
Secretary
United States, June 2008