Power Generation



The Secretariat of Energy has modified the compensation scheme for the generation not engaged in special agreements with the Wholesale Electricity Market (MEM) and the payments for power generation of Yacyretá and Salto Grande binational hydroelectric dams.

Through Resolution No. 31/2020, published in the Official Gazette on February 27, 2020, the Secretariat of Energy amended Resolution No. 1/2019 of the former Secretariat of Renewable Resources and Electricity Market, setting forth new parameters for the compensations to the generation not engaged in special agreements with the MEM and the payments of the hydropower stations managed by binational entities.

Explicitly mentioning Emergency Law No. 27,541 in its recitals, Resolution No. 31 – which is only applicable to those generators that have not compromised their available capacity and generated electricity in agreements in the MEM – establishes that the compensation generators receive will be set in Argentinean pesos (ARS), while it was previously set in US dollars convertible to ARS at an exchange rate set by the Central Bank.

The Resolution also provides a procedure for the monthly indexation of such compensation through a polynomial formula contained in its Annex VI. This formula contemplates the evolution of the Consumer Price Index (IPC) and the Wholesale Internal Price Index (IPIM) published by the INDEC, and will be applicable to transactions carried out starting the second month after the resolution comes into effect.

In addition to the above, the Resolution also amended Resolution 1/2019 Annexes I to V, the most relevant aspects being the following:

- Annex I - Guaranteed Capacity Offered: modifies the procedure for the Guaranteed Capacity Offered (DIGO) and its oversight. It adds that the Authorized Thermal Generators (GHT) may propose the way to oversee the availability of each one of the offered machines, for which they must choose between a monthly or a quarterly period;

- Annex II - Compensation of the Authorized Thermal Generation, which regulates the new compensation scheme of the GTH and contemplates payments for: (i) monthly available capacity, (ii) generated electricity, (iii) operated electricity, and (iv) generated electricity during hours of maximum thermal requirement. To this effect, the Annex establishes ARS-denominated reference prices for capacity; prices for DIGO and capped prices depending on the technology and type of fuel used by the generator, which will be adjusted through the indexes previously mentioned;

- Annex III - Compensation of the Hydroelectric Generation and from Other Energy Sources (GHH), which regulates the new ARS-denominated compensation scheme for GHH and contemplates payments for: (i) monthly available capacity, (ii) generated electricity, (iii) operated electricity, and (iv) generated electricity during hours of maximum thermal requirement;

- Annex IV - Compensation of Hydroelectric Dams Managed by Binational Entities, which regulates the transactional conditions for Yacyretá and Salto Grande Binational Hydroelectric Dams and is applicable to provide electricity and power made available to the Argentine Interconnection System.

- Annex V – Financing Repayment/Return for Major and/or Extraordinary Maintenance, which modifies the formula used in the financing cancellation procedure granted for the execution of non-recurring maintenance by Authorized Generators (pursuant to Resolutions of the former Secretary of Energy No. 146/2002, No. 529/2014 and their modifications).

- Annex VI - Indexation of ARS-denominated prices: it establishes the procedure for updating the prices established in local currency in the Resolution.

The Undersecretariat of Electricity, dependent of the Secretariat of Energy of the Ministry of Productive Development is empowered to issue complementary or clarifying rules necessary for the implementation of the Resolution.

The Resolution will enter into force and will be applicable to economic transactions made in the MEM as of February 2020.

To access the Resolution No. 31/2020, click here (available only in Spanish).

Should you require further information, do not hesitate to contact María Inés Corrá, Tomás M. Araya, Cecilia Garibotti and/or María Agustina Antoci Richieri.