Price of Electricity

The energy authority has continued with the policy launched in the year 2003 whereby the WEM (Wholesale Electricity Market) spot price is determined according to the available power generating units’ CVP (Costo Variable de Producción or Variable Production Cost) with natural gas, even if these units are not generating electricity with such fuel (Resolution No. 240/03 of the SE (former Secretariat of Energy)). The additional cost for the consumption of liquid fuels is recognized outside the specified market price as a temporary dispatch surcharge. Furthermore, pursuant to Resolution No. 25/18 of the SGE (former Government Secretariat of Energy), the WEM bears the costs of imported gas as from October 1, 2018.

As regards the remuneration for legacy generation capacity, the remuneration scheme established by the Resolution No. 19/17 of the SEE (Secretariat of Electric Energy) remained in force until February 28, 2019, from March 1, 2019 to January 31, 2020 the Resolution No. 1/19 of the SRRYME (Secretariat of Renewable Resources and Electricity Market) was in effect, and, as from February 1, 2020, SE Res. No. 31/20 is in effect.

Until October 2019, the approved average monthly spot price for energy was AR$480/MWh, which is the maximum price stipulated pursuant to SEE Provision No. 97/18. As from November 2019, this price increased to AR$720/MWh pursuant to SEE Provision No. 38/19.

On the other hand, the following chart shows the average monthly price that all electricity system users should pay so that the power grid would not run into a deficit. This cost includes not only the energy price, but also the power capacity fee, the generation cost, fuels such as natural gas, fuel oil or gas oil, and other minor items.


Note: Average monthly monomic price in US$/MWh. Source: CAMMESA.


Fuel Supply

Regarding fuel supply for power generation, during 2019 SGE Resolution No. 70/18 issued in November 2018 remained in force, which empowered thermal plants to self-procure fuel for power generation. For those not exercising such option, CAMMESA (Compañía Administradora del Mercado Mayorista Eléctrico or the Argentine Wholesale Electricity Market Clearing Company) remained in charge of the fuel’s operating and commercial management. For its instrumentation, maximum prices of natural gas within the PIST (Transportation System Entry Point) for power plants to be traded within the WEM, established by Resolution No. 46/18 of the MinEn (former Ministry of Energy) and SGE Notes No. 66680075/18 and 07973690/19, were observed.

Moreover, in case the generator has opted to supply its own fuel for generation and such fuel is not available at the time of dispatch, the calculation of the power capacity availability is reduced to 50% of its actual availability. Similarly, it loses its dispatch order, and in case the OED (Agency in Charge of Dispatch or Organismo Encargado del Despacho) assigns it fuel for generation, only the Generated Energy will be remunerated at 50% of the approved non-fuel variable costs.

However, pursuant to Resolution No. 12/19 of the MDP (Ministry of Productive Development), fuel supply was again centralized in CAMMESA as from December 30, 2019 (except for fuel supply for generators under Energía Plus).

As regards fuel consumption, in 2019 the country continued purchasing LNG (liquefied natural gas) and its re-gasification, as well as natural gas from the Republic of Bolivia. However, the natural gas supply remained insufficient to meet power generation needs and, therefore, liquid fuels (fuel oil and gas oil) continued to be resorted to in order to meet the demand, although in volumes significantly lower than in 2018.

Natural gas consumption for power generation recorded a 5% decrease in 2019 compared to the previous year (17.2 million dam3 (cubic decameters)). Fuel oil consumption was 67% lower than in 2018, totaling 0.2 million ton. Moreover, gas oil and mineral coal consumption also experienced a 54% and 66% decrease, respectively, compared to 2018.