Systep’s report indicates that, “considering that only 52% of the projected energy demand to 2028 has been contracted, a 0.5% reduction in the tariff to 2028 is expected”.

Low prices of latest tenders will lower current electricity tariffs from 2028 onwards

The low average energy prices recorded in the last four supply tenders for regulated customers will allow reducing the current electricity tariffs as of 2028, “when the contracts with an indexed average price of US$98 MWh end their term”, according to the analysis of the consulting firm. Systep in its November report.

According to the report this result is due to the fact that in the last four tenders an average indexed price was obtained, as of July 2017, of US$68 MWh for a volume of 27,710 GWh per year, which compares with supply contracts signed before 2009 and due to expire in 2025 for a total of 27,894 GWh per year at an average indexed price of US$83 MWh. In addition, there is another group of contracts whose supply is between 2012 and 2027, equivalent to 9,375 GWh/year with an average indexed price of US$98 MWh.

“Taking into account the above, and considering that there are other components in the tariff besides energy, an increase of 5% is expected by 2024 in the final supply tariff with respect to the current value for a typical customer, which would encourage the transfer of regulated customers to the free segment in the coming years. Likewise, considering that only 52% of the energy demand projected to 2028 has been contracted, a 0.5% reduction in the tariff to 2028 is expected”, Systep points out.

Demand

Another important aspect mentioned in the report is the demand projections used to define the amounts of energy to be tendered. which -according to Systep- have “overestimated the real growth of demand, so that, considering the current demand projection of the CNE, there will be an average overcontracting of 18% in the period 2017-2023, even reaching 28% in 2019”.

The report states that “it would have been better to postpone the bidding process by at least one year, in order to have a clearer view of demand projections, and thus avoid a possible over-contracting”.

Systep’s conclusions point out the need to review “the demand projection to reduce over-contracting, and to evaluate the effectiveness of the current design of hourly and seasonal blocks”, in addition to planning and operating an electricity system “with greater variable generation, especially in relation to complementary services and price signals”.

“Finally, the great aspect that must continue to be monitored is the effective materialization of new generation projects, so that the success of the bids translates into clean and efficient energy that displaces the most expensive generation. In this line, special care must be taken to avoid the participation of speculators or agents with little capacity to carry out their projects in future processes”, concludes the consultant’s report.

[Los planes de los ganadores de la licitación de suministro 2017]