Resolution No. 19/17 of the SEE (Secretariat of Electric Energy), issued on February 2, 2017, established a remuneration scheme for legacy capacity which was applied from January 1 to February 28, 2019, when it was amended by Resolution No. 1/19 of the SRRYME (Secretariat of Renewable Resources and Electricity Market), which entered into effect on March 1, 2019.

Resolution No. 19/17 provided for remunerative items based on technology and scale, establishing US$-denominated prices payable in AR$ by applying BCRA (Central Bank of the Republic of Argentina)’s FX (foreign exchange) effective on the last business day of the month of the transaction’s maturity date, according to CAMMESA (Compañía Administradora del Mercado Mayorista Eléctrico or the Argentine Wholesale Electricity Market Clearing Company)’s Procedures.

Thermal Power Generators

Resolution No. 19/17 defined a remuneration for power capacity based on technology and scale collectable by agents with DIGO (Guaranteed Availability Commitments) declaration for the power capacity and energy from their units not covered by PPAs (Power Purchase Agreements) with a differentiated remuneration regime. The DIGO should be declared for each unit and for a term of three years, together with information for the Summer Seasonal Programming, with the possibility to later amend availability values, on a semiannual basis. Generators may enter into a DIGO agreement with CAMMESA, which may assign it to the demand. The capacity remuneration for thermal generators with DIGO will be proportional to their compliance. The base remuneration amounted to US$7,000/MW-month, applicable to generators with DIGO. The additional remuneration for additional available power capacity amounted to US$2,000/MW-month, seeking to encourage DIGO for the periods with a higher demand. Bimonthly, CAMMESA should define a Monthly Thermal Generation Goal for the set of qualified generators and call for additional power capacity availability offers with prices not exceeding the additional price.

For those not offering DIGO, the power capacity remuneration was set at the minimum value.

Regardless of the thermal unit, the remuneration for generated energy was US$5/MWh if fired with natural gas, and US$8/MWh if fired with liquid fuels, except for internal combustion engines, which prices amounted to US$7/MWh and US$10/MWh for gas or liquid fuels consumptions, respectively. The remuneration for operated energy was applied to the integration of hourly power capacities for the period (over rotating units) at a price of US$2/MWh for any type of fuel.

Moreover, for low-use thermal generators or generators having frequent startups, an additional remuneration was established based on the monthly generated energy at a price of US$2.6/MWh multiplied by the usage/startup factor. The usage factor was set based on the rated power’s Utilization Factor recorded during the last rolling year, with a 0.5 value for thermal units with a factor lower than 30% and a 1.0 value for units with a factor lower than 15%. In all other cases, the factor equals 0. The startup factor, which was set based on startups recorded during the last rolling year for issues associated with the economic dispatch made by CAMMESA, was as follows: i) 0 for units with 74 or fewer startups; ii) 0.1 for units recording between 75 and 149 startups; and iii) 0.2 for units recording more than 150 startups.

Hydro Power Generators

In the case of CHs (Hydroelectric Power Plants), a base remuneration for capacity (determined by the actual power capacity plus that under programmed and/or agreed maintenance) and an additional remuneration for capacity (applicable to power plants of any scale for their actual availability, based on the applicable period) were established. Availability is determined independently of the reservoir level, the contributions made, or the expenses incurred.

Furthermore, in the case of pumping hydroelectric power plants, the following is taken into consideration to calculate availability: i) the operation as turbine at all hours within the period, and ii) the availability as pump at off-peak hours every day and on non-business days. In the case of CHs maintaining control structures on river courses and not having an associated power plant, a 1.20 factor is applied to the plant at the headwaters.

The allocation and collection of 50% of the additional remuneration was conditional upon the generator taking out insurance on critical equipment, as well as updating of the plant’s control systems pursuant to an investment plan to be submitted based on criteria to be defined by the SGE (former Government Secretariat of Energy).

For hydroelectric generation, independently of the scale, the prices for generated energy amounted to US$3.5/MWh, added to the price for operated energy, which amounted to US$1.4/MWh.

Other Considerations

The remuneration for wind power was composed by a base price of US$7.5/MWh and an additional price of US$17.5/MWh, which were associated with the availability of the installed equipment, with an operating permanence longer than 12 months as from the beginning of the summer seasonal programming.

Furthermore, SEE Resolution No. 19/17 abrogated the Overhauls Remuneration set by Resolution No. 95/13 of the SE (former Secretariat of Energy) and provided that, as regards the repayment of loans, already accrued and/or committed credits should be applied first, being the balance repaid discounting US$1/MWh from the generated energy until the total cancellation of the financing.