The Chilean EnergyThe Chilean EnergyRegulatory

Comisión Nacional de Energía

Framework

Andrés RomeroSecretario Ejecutivo

Comisión Nacional de Energía

Intro The Chilean electric industry is divided in 3 segmentsg

Generation DistributionTransmission

Intro The cost and payments system is guided by a clear and balanced regulation.g

Transmitters

Generators Transmission System Costs

Distributors

Generation Costs + Transmission

Generation Costs+

Distributors

Free Price

Non Regulated Clients Regulated ClientsTransmission

+Distribution Added Value

The electric system of Chile

The Interconnected and minor systems installed yCapacity of Chile: 19.030 MW (Apr. 2015)

InterconnecInterconnection planned for 2017 / 2021

Source:

Electricity consumption per person (MWh)

The electric system of Chile

y p p pvs. GPD per person (US$) (2012)Fuente: EIU, EIA

Agenda de Energía (the Chilean Energy Agenda)

According to the Chilean Energy Agenda presented by the Energy Ministry on may 15th of 2014, one of our

t t h ll greatest challenges are:

The lack of competition presented by the energy generation market.

Non competitive long term contracts between generators and distributors.

i i i i Slow developing of the transmission grid

Agenda de Energía (the Chilean Energy Agenda)

For this reasons, among the objectives and goals of For this reasons, among the objectives and goals of this Government are:

A 25% diminish on the price of energy supply contracts.

Adding more players to the energy industry Adding more players to the energy industry.

Adjusting the energy regulatory frame to better and clearer standards.

Generation market opportuni

Energy supply contract tenders results 2006-2014

160

Average price per tender SIC (indexed to Dic. 2014)

113,2

131,1135,9

108,4120

140

68,4 66,1

98,9

80

100

S$/M

Wh

66,1

40

60

US

0

20

Procesos 2006 (13.206 GWh‐

año)

Procesos 2007 (7.500 GWh‐año)

Procesos 2008 (8.756 GWh‐año)

Procesos 2010 (2.200 GWh‐año)

Procesos 2012 (1.172 GWh‐año)

Procesos 2013 (3.900 GWh‐año)

Procesos 2014 (12.705 GWh‐

año)

Contracts and demands

50.000

60.000

40.000

30.000

GWh‐añ

o

34.737 34.702 35.322 36.604

42.15139.967

37.943

33.14431.120

25.511

10.000

20.000

18.11315.177

12.227 10.878 10.877 10.877

02015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Supplied demand Demand

New energy supply contracts tender

Tender opening Awarding of Energy Energy Volume Contract lenghtTender openingyear

Awarding of the contracts

Energy supply start

Energy Volume involved (GWh)

Contract lenght

2015 2015 2017 1000 20 years2015 2015 2017 1000 20 years

2015 2016 2021 12.500 (6.000 the first year)

20 years

50.000

60.000

30.000

40.000

GWh‐añ

o

34.737 34.702 35.322 36.60442.151 39.967 37.943

33.144 31.12025.511

18.11315.177

12.227 10.878 10.877 10.877

12.500

10.000

20.000

G

02015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Supplied demand Next short term tender Next long term tender Demand

Tender process

1. Developing of the preliminary tender report by CNE

2. Developing of the tender terms document

3. A year to present bids

4. CNE defines the maximum hidden price.

5 CNE publishes a resolution with 5. CNE publishes a resolution with the results and the contracts are signed.

Contract elements

1.Private contract between generators and distribuitors.

2. The contract last for 20 years.

3 Th i i i d d t th 3. The price is indexed to the offer and it can be adjusted according to regulatory changes.

4. Five years to begin the energy 4 Five years to begin the energy supply, with the chance of delaying it for 2 years, if external problems are proven.

5. Controversy solving mechanism: private arbitrage

In short

The energy supply contracts tenders give the opportunity to acquiring a 20 year contract and materialize new electric generation investments.

Contracts for aprox. 13.500 GWh will be auctioned.

The contracts last for 20 years.

materialize new electric generation investments

Tender first call on may 2015.

Tender closes on may 2016.

Energy supply begins on jan. 2017 and jan. 2021.

Transmission market opportuni

Chilean Transmission Scenario

Every year, the Energy Ministry determines the transmission system’s expansion plan.

The biggest lines presented on the expansion plan are auctioned in open, public and international processes.

The tenders are awarded to the lowest price and they receive a fix payment for their offer, for a period of 20 years.

Agenda de Energía (the Chilean EnergyAgenda)

New energy transmission regulatory framework to be announced before June 31th

The two main electric systems (SIC – SING) will be interconnected before 2018.

Project opportunities

SICSupply start Building years Proyect Investment

cost(ref.) M US$OMAC (Ref.) M US$

Jan.2018 – July 2019

24 and 42 months Nueva Diego de Almagro Selective

59.550 893

SIC

2019 Almagro Selective Substation; New Line 2x22 kV between SUBs Nueva Diego de Almagro – Cumbresand a Autotransformer 1x750 MVA 500/220 kV

Supply start Building years Proyect Investmentcost(ref ) M US$

OMAC (Ref.) M US$

Interconnection

cost(ref.) M US$ US$

Jan.2018 –Jan.2020

24 and 54 months New 2x500 kV 1500 MW line between SS Los Changosand SS Nueva C

174.000 2.610

CruceroEncuentro; Autotranformerbanks 2x750 MVA 500/220 kV on SS Nueva CruceroNueva CruceroEncuentro; Autotranformerbank 750 MVA 500/220 kV at SS Los Changos and

The ChileanThe ChileanEnergyComisión Nacional de

EnergíaRegulatoryFramework

Andrés RomeroSecretario Ejecutivo

Comisión Nacional de Energía