MADRID, Spain, June 29 /PRNewswire/ --
NERA Economic Consulting, a leading global adviser on market design and auctions to government agencies and electricity service providers, has completed the first in a series of auctions of bilateral energy contracts for regulated supply in Spain (CESUR Auctions).
The auction, held on 19 June 2007, was carried out under the legal framework of Orden Ministerial ITC/400/2007, which regulates bilateral contracts between electricity distributors for the supply of energy to regulated customers. NERA was commissioned by Comision Nacional de Energia (CNE), the Spanish energy regulator, to design and manage the CESUR Auctions. The CNE supervised the auction and has validated its competitive results.
The first auction was held in successive descending price rounds, a format generally used for the purchase of large volumes of energy. Total volume bought during the auction was 6,500 MW, to be supplied in base load to distribution companies that serve captive customers in Spain and Portugal over the next three months (for a total of 14,352 GWh).
The auction began with a starting price of 70Euros/MWh, with 25 domestic and international sellers participating in the bidding. The auction closed after 25 bidding rounds, with the product awarded to 21 sellers at a price of 46.27Euros/MWh.
Base load contracts resulting from the auction have been assigned to the main distribution companies in Spain and Portugal according to the pre-established percentages in the Resolucion, dated 19 April 2007, of the Secretaria General de Energia (Endesa 35%, Iberdrola 35%, EDP 12%, Fenosa 11%, Hidrocantabrico 4%, and Viesgo 3%). These contracts will cover 30-40% of the energy for captive customers supplied by the distribution companies in Spain during the period July-September 2007.
The resulting auction price for the energy will be part of the allowed energy costs of the distribution companies, which results in clear benefits for the Spanish electricity system. Through forward energy contract cover, the exposure of distribution companies in Spain, who normally purchase energy in the volatile spot market is reduced. Also, by providing a transparent price signal for energy procurement, the energy component in regulated tariffs can be set using market comparisons. This will foster competition in the retail energy market and will eliminate the disparity between energy costs and regulated tariffs that generates deficits for distribution companies.
Future CESUR auctions administered by NERA will be held in September and December 2007, and in March 2008.
To obtain further information about the CESUR Auctions, please visit: www.subasta-cesur.eu.
About NERA
NERA Economic Consulting is an international firm of economists who understand how markets work. Our more than 45 years of experience creating strategies, studies, reports, expert testimony, and policy recommendations reflects our specialization in industrial and financial economics. Our global team of over 600 professionals operates in over 20 offices across North and South America, Europe, Asia, and Australia.
NERA Economic Consulting (www.nera.com), founded in 1961 as National Economic Research Associates, is a unit of the Oliver Wyman Group, an MMC company.
Media Contact
Benjamin Seggerson
Media Specialist
+1-202-466-9232
ben.seggerson@nera.com
Web site: http://www.nera.com
http://www.subasta-cesur.eu
Benjamin Seggerson, Media Specialist of NERA Economic Consulting, +1-202-466-9232, ben.seggerson@nera.com
