Market Structures and Institutions Granting of concessions and authorizations Market Structures and Institutions Granting of concessions and authorizations September 22nd, 2003 Brasília September 22nd, 2003 Brasília CIGRÉ Workshop Isaac Pinto Averbuch Director of ANEEL Isaac Pinto Averbuch Director of ANEEL

Granting of concessions and authorizations I.T e G process II.Outcomes III.ANEEL’s actions I.T e G process II.Outcomes III.ANEEL’s actions

Transmission Grant management Transmission Grant management CND approves Planning ExpansionReinforcementsImprovements Determinative Program for Transmission Modality Requirements for the Participation Proceedings Judgment Criteria and Maximum Prices Operation Plan for the expansion and reinforcements Program for Grants Program for the Enterprises ANEEL authorizes and Establishes Revenue Bid Granting of the Concession by the President of the Republic Concession contract with ANEEL

Transmission Bidding process Year 1 Year 2 Year 3 Proclamation Commercial operation Document elaboration for the TCU Document elaboration for the CND Concession Granting Decree Concession Contract Signature Feasibility studies CCPE Constitution of the SPE Bid

Transmission - Outcomes Auctions (1998/2002) Transmission - Outcomes Auctions (1998/2002) AuctionsSuccessesFailuresInvestmentsTotalBenefits LTs271*R$ 5 billions km Saved Costs** ~750 km * TL Ouro Preto - Vitória (authorized to FURNAS) ** For 230 kV lines (or 430 km for 500 kV lines) * TL Ouro Preto - Vitória (authorized to FURNAS) ** For 230 kV lines (or 430 km for 500 kV lines)

ANEEL Transmission - Outcomes Basic Network (Annual Increase) Transmission - Outcomes Basic Network (Annual Increase)

Enterprises : 36 –on schedule: 24 (~ 67%) 22 normal e 2 advanced 16 “concession” e 8 “authorization” –delayed: 12 (~ 33%) 3 “concession” e 9 “authorization” Enterprises : 36 –on schedule: 24 (~ 67%) 22 normal e 2 advanced 16 “concession” e 8 “authorization” –delayed: 12 (~ 33%) 3 “concession” e 9 “authorization” Transmission – Basic network Enterprises

Transmission – Granting process Clear rules (investor’s confidence) Improvements in the bid’s proclamation The winner is who offers the “lowest tariff” (final consumers are the beneficiaries) Elimination or minimization of risks out of the business environment Bid’s Proclamation previously approved by the Federal Audit Court (TCU) Auditing follows a chronogram Ongoing dialog with investors, consumers and society Clear rules (investor’s confidence) Improvements in the bid’s proclamation The winner is who offers the “lowest tariff” (final consumers are the beneficiaries) Elimination or minimization of risks out of the business environment Bid’s Proclamation previously approved by the Federal Audit Court (TCU) Auditing follows a chronogram Ongoing dialog with investors, consumers and society

Generation – Granting Management Process Environmental Reference Term (X-ray) Commercial Operation PL ILOL Renewal Environmental licenses PL: Previous License IL: Installation License OL: Operation License BID Potential Grant Concession Contract INVENTORYFEASIBILITY BASIC PROJECT EXECUTIVE PROJECT/ CONSTRUCTION OPERATION

Study hand out (Data Room ANEEL) Technical Note TCU Proclamation Pre-qualification Document Pre-qualification Judgment Publication AUCTION Grant Concession Contract Warranty Proposal Warranty Days Stated period: 296 days ~10 months Generation Bidding Process Generation Bidding Process

Annual Generation Increase (1990 – 2002) Annual Generation Increase (1990 – 2002) ANEEL (dec/1997) ANEEL (dec/1997) Power (MW) Average 90/94: MW Average 95/99: MW Average 00/02: MW

Capacity (MW) 3.664, , , ,24.401, , , , , ,8 350, , , , , , Heavy constraints (24,5%) Constraints (43,9%) No constraints (31,6%) 4.645,9 Data updated on 15/8/03 (not including the MW from the emergency thermals) 1.828,5 Generation Enterprises 2005

Expected outcomes by Consumers, Investors and Society Expected outcomes by Consumers, Investors and Society Consumers e Society InvestorsBoth Guarantee Consumer’s Rights Fair tariffs Improvement in the quality and supply of service Efficiency Protection of the environment Technological development Decentralized performance Clear and steady rules Adequate remuneration Regulation and concession contract compliance Balance Isonomic treatment Accountability – Institutional Control Transparency Impartiality Agile and efficient management Confidence Participation in the regulatory process Ongoing dialog

Identification of the regulator as an institution that satisfies the public interest Fulfill expectations of consumers, investors and the society Improve participation mechanisms for consumers and transparency Reduce asymmetry of information Disseminate the regulation culture Achieve autonomy Contribute to the clear delimitation of boundaries amid the Agency, the Government and the Market Skilled and adequately paid in-house staff Broaden decentralization Harmonically and complementary external controls Identification of the regulator as an institution that satisfies the public interest Fulfill expectations of consumers, investors and the society Improve participation mechanisms for consumers and transparency Reduce asymmetry of information Disseminate the regulation culture Achieve autonomy Contribute to the clear delimitation of boundaries amid the Agency, the Government and the Market Skilled and adequately paid in-house staff Broaden decentralization Harmonically and complementary external controls Conclusions Regulator's challenges Conclusions Regulator's challenges

IBAMAIBAMA STATESSTATES MUNICIPALITIESMUNICIPALITIES ANAANA STATESSTATES COMMITTEESCOMMITTEES ENVIRONMENTWATER ANEELANEEL MMEMME AGENCIESAGENCIES POWER SOILUSESOILUSE D I R. P L A N F FFEDERAEDERALLFFEDERAEDERALLLSTATE MUNMUNIICCIIPPIIAALLMUNMUNIICCIIPPIIAALLICIPIAL NGONGO GROUPSGROUPS PUBLIC ATTORNEY MUNICIPA LITIES OTHERS ANEEL’s recent actions ENTERPRISE

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