The Electricity IndustryIn Argentina

Structure & ownership

This presentation is confidential to the intended recipient and may not be divulged to any other parties without the explicit written permission of Utility Consultants.

This slide show is for promotional purposes only. Utility Consultants accepts no liability for any action or inaction arising from its use.

This presentation is copyright, and may not be reproduced in whole or in part without explicit written authority from Utility Consultants Ltd.

Contents

• Contents

• Historical background

• Political background

• Industry breakup

• Generation

• Transmission

• Distribution

• Wholesale market

Historical Background

• Pre-1990, industry was vertically integrated and owned by central and provincial governments - Segba, Eseba etc.

• Industry was plagued with poor service, energy shortages, low productivity and unreliable supply.

• State electrical companies became very indebted in the early 1990’s.

Political Background

• Successive military governments had increased state-intervention.

• Carlos Meném became President in 1989, pledging continued state intervention.

• Policy U-turn in 1990 saw the privatisation of ENTel and Aerolineas Argentinas in 1990 with minimal industry or policy reform.

Industry Breakup

• Legislation introduced in 1992 with the aim of reducing state intervention and promoting market efficiencies.

• Generation, transmission and distribution were separated and sold to the private sector.

• Nuclear plant is still state-owned, but the sale is being considered.

Industry Breakup

• Transmission & distribution operate as regulated monopolies.

• Ownership is now largely private, although government still holds some minority interests.

Industry Structure

• Vertically disintegrated structure.…• Eleven key regional distribution

companies that also retail energy.• Five transmission companies operating at

several different voltages.• Numerous generators.• Wholesale market company.• Regulatory body.

Regulation• Overseen by the regulator, Ente Nacional

Regulador (ENRE).

• Regulatory framework defined in Decree 1398/92.

• Regulates on technical, billing, access and service levels.

• Prevents monopolistic practices (rate setting and negotiating concessions).

Generation

• Installed national capacity of 19,600 MW.• Annual generation approx. 64,670 GWh.• Hydro approx. 48%.• Thermal approx. 43% (mainly gas).• Nuclear approx. 3%.• Numerous generators.• Some generation still owned by provincial

governments.

Generation

• Some remote areas still using local supplies.

• Significant foreign investment in gas-fired plant.

Transmission

• Three historical and two new entrant companies provide high-voltage transmission through out 90% of Argentina.

• Considerable foreign investment eg. a 1,000 MW inter-connect to Brazil owned by Companhia de Interligacao Electricia of Brazil.

Transener• Compañia de Transporte de Energía en

Alta Tensión SA de 500 kV.• Owns and operates the 500 kV and 220

kV grids, including an interconnect with Uruguay.

• Original privatisation was a 65% stake, although several original participants have since withdrawn.

• Government has retained a 25% share due to lack of industry interest.

Transnoa• Empressa de Transporte de Energía

Eléctrica por Distribución Troncal del Noroeste Argentino operates in north-eastern Argentina.

• Owns and operates the network linking the Salto Grande hydro in Entre Rios with Transener’s grid in the Chaco province.

Transpa• Empressa de transporte por

Distribución Troncal de la Patagonia comprises 5,200 km of transmission lines.

• Owns and operates the network that was formerly part of Eseba.

• A 90% stake was acquired by Transener in 1997 against tough competition.

Distrocuyo• Operates the 220 and 132 kV lines from

the Los Nihuiles and Rio Diamante hydro plants in the Mendoza province.

• A 51% stake is owned by an EdF-led consortium.

Yacyreta Transmission• The Yacylec SA consortium was

awarded a 15 year concession to build and operate a 2,700 MW link from Yacyreta hydro to Chaco.

Distribution

• Eleven key distribution companies.• Significant degree of privatisation, with

some minority stakes still held by government.

• Distribution activities operate with concession areas.

• Line pricing subject to incentive regulation.

• Average retail price about US$43/MWh.

Edelap• Empressa Distribuidora La Plata

supplies 278,000 customers around La Plata city in Buenos Aries province.

• Annual energy sales 1,800 GWh.

• Originally sold in 1992 to Houston Industries Energy and Techint .

• AES Corp acquired a 90% stake in 1998.

• PSEG Global acquired a 30% stake from AES in 1998.

Edenor• Empressa Distribuidora Norte has 2.1

million customers in the northern half of Buenos Aries city.

• A 51% stake was sold to EASA in 1992.

• Government’s remaining 19.5% stake was sold through a public offering.

• EdF and Endesa are now the largest shareholders in Edenor.

• Empressa Distribuidora Sur supplies 2.1 million customers in the southern half of Buenos Aries city.

• A 51% stake was privatised in 1992, with a further 39% stake being sold in late 1995.

• Perez Companc recently bought out Entergy’s 10% stake.

• Annual revenue of US$820 million.

EDEN• Empressa Distribuidora de Energia Norte

supplies 270,300 customers in the northern part of Buenos Aries province.

• Formerly owned by Eseba.

• Sold in June 1997 to AES and PSEG Corp along with EDES for US$565 million.

• Annual energy sales 3,572 GWh.

• Operates under exclusive concession for 95 years.

EDES• Empressa Distribuidora de Energia Sur

supplies 128,500 customers in the southern part of Buenos Aries province.

• Sold in June 1997 to AES and PSEG Corp along with EDEN for US$565 million.

• Annual energy sales of 1,182 GWh.

• Operates under exclusive concession for 95 years.

EDEA• Empressa Distribuidora de Energia

Atlantica serves 391,000 customers in the Atlantic coast region of Buenos Aries province.

• Sold to Inversora Electrica de Buenos Aires in June 1997 for US$404 million.

• Operates under exclusive concession for 95 years.

ERSA• Empresa Electrica de Rio Negro serves

customers in the Rio Negro province in the west of Argentina.

• A 90% stake was sold to Sodielec and Empresas Nacional de Electricidad in August 1996 for US$97 million.

EDEMSA• Empresa Distribuidora de Electricdad de

Mendoza serves 286,000 customers in the Mendoza province, adjacent to the Chilean border.

• Comprises distribution assets spun off from the integrated EMSE.

• Annual revenue about US$143 million.

• Annual energy sales of 2,000 GWh.

EDEER• Empresa Distribuidora de Electricdad de

Entre Rios serves 217,000 customers in the Entre Rios province.

• Comprises distribution assets spun off from the integrated EMSE.

• Annual revenue about US$105 million.

• Annual energy sales of 1,130 GWh.

Edelar• Empresa Distribuidora de Electricdad La

Roija serves 60,000 customers in the western area of the La Roija province.

• Emdersa purchased a 90% stake in Edelar in 1995 for US$13.7 million.

• GPU in turn bought 100% of Emdersa from Exxel and Union Fenosa in 1998.

Edesal• Empresa Distribuidora de Electricdad de

San Luis serves customers in the San Luis province near Mendoza in central Argentina.

• Part of the holding company Emdersa (100% owned by GPU).

Wholesale Market

• Compañia Administrdora del Mercado Mayorista Eléctrico S.A was established by Decree 1192/1992.

• Key objectives….• Manage dispatch operations.• Establish & manage pricing.• Administer transactions.

• Owned 80% by industry players and 20% by Ministry of the Public.

For more information….

Visit UtilityConsultantsWeb Site

Email UtilityConsultants