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Cartagena de Indias, October 14&15th - 2003
The ColombianPower Market
Achievements and Achievements and ChallengesChallenges
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Contents
The Country The Reform The System The Operation The Market Colombian Market Challenges Regional Market Challenges
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The CountryThe Country
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Colombia is a country with large cities, and cultural diversity
Population (2003 P) 44.5 million
Size1.1 million square kilometers(Aprox. twice the size of France)
Cities over a million inhabitants
Bogotá, Medellín, Cali, Barranquilla
(8 cities over 500.000 inhabitants)
GDP, per capita US$ 1,881
Sources: EIA, IGAC, and Statistics and Planning Agencies of Colombia.
Economy7th economy in America and 5th economy in Latin America
Gross Domestic Product GDP
82.2 Thousand Million dollars
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Colombia has outstanding figures in the global context
Varieties of orchids (3.500) Emeralds producer Amphibious (583 species) Species of Birds (1815 species) Flowers exports Three-dimensional books Biggest open pit coal mine Most important gold museum Largest peace meeting (11 mill.)
11stst
Mulberries Species of butterflies (14.000) Agricultural exports to USA
22ndnd
Coffee producer Country in biodiversity Banana exports Lingerie exports
33rdrd
Water producer, 4500 micro basins and 1200 rivers
Species of mammals (456) Coal exports Nickel exports Palm oil
44thth
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Colombia is a country with abundant natural resources and outstanding personalities
Source: www.NationalGeographic.com
30% is Amazonic jungle The only South American country with
two oceans Longest coast over the Caribbean Sea Second in population in South America The Sierra Nevada is the tallest
coastal mountain (5.775 m) Nobel Prize Laureate García Márquez,
Artist F. Botero, sport stars JP Montoya and S. Botero, NASA scientist R. Llinás, Andrés Jaramillo Scientist, singers Shakira and Juanes, ...
Inventions Hakim valve, Iron Gas, babies Passmaker…
Cartagena has been awarded by UNESCO as World Cultural Heritage
Some Facts
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The ReformThe Reform
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In 1994 Congress approved aggressive changes that redefined the role of the Government, as well as the industry fundamentals.
PoliciesRegulationSurveillanceNon ownerJuly of 1994
Public Services Law
Electricity Law
BASIC OBJECTIVESBASIC OBJECTIVES
Changes in the Government role
ReliabilityQualityEfficient pricesCoverage
Improve
Promote Competence
Attract Private Investors
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The reform allowed the electricity sector to adapt to an economy market, according to Global Trends
National Interconnection
Constitutional Reform
El Niño 1992-1993Supply cuts
Act 142 - SSPPAct 143 - Electric
• Low Reliability• State Monopoly• Low private investment• Non-direct subsidies• State as Owner• Users paying costs of
inefficiency• All activities: Monopoly
BeforeBefore
• Reliable operation• Market (competition)• High private investment (USD $
7,000 Million)• Direct subsidies to Demand• State as Consolidate Regulator
and Policy Maker• Agents assume inefficiencies• Regulated natural monopolies
AfterAfterMarket Launch – July 20th 1995Market Launch – July 20th 1995
2000... 20031997 1998 19991994 1995 19961993199219911967...
El Niño 1997 - 1998No supply cuts
Attacks against national grid
Increase in Constraints
Decision CAN 536
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MarketMarketCoordinationCoordination
A comprehensive governance scheme was also completed.
ControlControl& Survillance& Survillance
SystemSystemOperationOperation
RegulationRegulation
PlanningPlanning
PoliciesPolicies
Ministry of Minning & Energy
Minning and EnergyPlanning Agency
National Regulatory Commission of Energy and Gas
National Operation Council
Utilities Superintendency
Advisory Trading Committee CACCAC
Presidency
Ministries M&E and Treassury
DNP
Ministry M&E
Presidency
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The industry was unblunded into regulated monopolies and activities under competition.
DISTRIBUTION
GENERATION
CUSTOMERS
TRANSMISSION
TRADING
OPERATION
ADMINISTRATION
International Electricity Transactions (TIE)
Wholesale Energy Market
NationalDispatchCentre
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The generation market counts with competitive mandatory pool and bilateral financial contracts.
COMPETITIVE MARKET
END USERS
(Freedom for choosing traders and contracting)
WHOLESALE MARKET
(Only the utilities and other agents authorized by article 15 of the Act 142/94)
LONG TERM(Financial Contracts)
SHORT TERM(Pool)
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Incentive payment for long-term reliability
Regulated income
Based on availability
Service Quality(Short-term
balance, Frecuency)
The market also includes other commercial transactions, which complement both the pool and the long-term bilateral contracts.
ELECTRICITY MARKETELECTRICITY MARKET
Generation Control Market,
Penalties forDeviations
Capacity Charge
National and Regional Grids
Payment based on cost
Security generation
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The Electrical SystemThe Electrical System
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A system able to supply the demand with efficient and reliable conditions
44.8 TWh/yearEnergy Demand (2002)
13.3
8.1
5.2
Installed Capacity [GW]
Reserve[GW]
Peak Demand [GW]
10,725 kmTransmission 220-230 kV
1,449 kmTransmission 500 kV
621 MWInternational Interconnections Capacity
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… even under critical situations like the El Niño drought of 1997-1998
Evolution of the Efective Capacity of Generation [GW]
0
24
6
8
1012
14
16
1995 1996 1997 1998 1999 2000 2001 2002 2003
Hydro Thermal
Evolution of the Number of Generation Plants
0
2040
6080
100120
140
1995 1996 1997 1998 1999 2000 2001 2002 2003
Hydro: 24 plants Thermal Units: 103 plants
Hydro (65%)Hydro (65%)
Thermal (35%)
Thermal (35%)
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Investors have been attracted to do businesses within the market scheme.
Evolution
8 8
2518
14
5
31
3
6
11
21
3
0
20
40
60
80
Trading Generation Transmission Distribution
Both
Private
Public
2426
28 2831 31 32
10 10 11 12 12 11 11 11
0
5
10
15
20
25
30
35
1995 1996 1997 1998 1999 2000 2001 2002
DISTRIBUTORS TRANSMISORS
3440
45
55 55
6457 58
17 1923
29 26
35 3338
0
10
20
30
40
50
60
70
1995 1996 1997 1998 1999 2000 2001 2002
TRADERS GENERATORS
In 2003
66
44
32
11
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Until 1998, there were 50 years of continuous growth in the electricity demand. From 2000, the growth has restarted.
40
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140
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01
-20
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GWh/day
8 Millon of End Users
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-6
-4
-2
0
2
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6
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19
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01
The electricity demand is highly correlated with economic growth (92% correlation factor between 1995 and 2003).
Year growth rates 1950-2003
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The electricity demand is highly correlated with economic growth (92% correlation factor between 1995 and 2003).
Quarterly growth rates 1995-2003
-8
-6
-4
-2
0
2
4
6
8
10
03
-19
95
09
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09
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09
-20
02
03
-20
03
GDP DEMAND
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The OperationThe Operation
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However, the transmission grid has suffered many terrorist attacks since 1999 (1,726)
9 2 15
1 10 3
0
22
1 5 0 17 5
3
24
4
45
4
28
2
26
3
8
38
48
3
19
85
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20
03
Number of Number of Attacks against the high voltage National Grid SystemAttacks against the high voltage National Grid System
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Despite the attacks, no overall blackouts have affected the country, only 0.1% of the National Demand has been rationed by this cause.
Non-served demand as a percentage of the annual electricity demand
0.10%0.07%
0.12% 0.11%
0.19%
0.13%
0.28%
0.22%
0.0%
0.1%
0.2%
0.3%
0.4%
0.5%
2000 2001 2002 2003
Other causes
Terrorism
Terrorism
0.29
0.40
0.20
0.33
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Frequency Deviations
One Each Sixty Days
0
1
2
3
4
Ene
-96
May
-96
Sep
-96
Ene
-97
May
-97
Sep
-97
Ene
-98
May
-98
Sep
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Ene
-99
May
-99
Sep
-99
Ene
-00
May
-00
Sep
-00
Ene
-01
May
-01
Sep
-01
Ene
-02
May
-02
Sep
-02
Ene
-03
May
-03
Sep
-03
Promedio mensual Acumulado anual Meta anual
Resolución 080 de 1999
Resolución 023 de 2001
Resolución 064 de 2000
No
. Var
. po
r m
es
Meta 2003: 0.0164 var/mes
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Indicadores de la OperaciónN
° d
e ve
ces
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
Ene
02
Feb
02
Mar
02
Abr
02
May
02
Jun
02
Jul 0
2
Ago
02
Sep
02
Oct
02
Nov
02
Dic
02
Ene
03
Feb
03
Mar
03
Abr
03
May
03
Jun
03
Jul 0
3
Ago
03
Sep
03
@Mensual @Acumulado @Meta
MáximoAcumuladoMensual
MensualMeta
Meta
One Each Six Days
Voltage Deviations
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The MarketThe Market
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Market transactions (pool + contracts) in September reached 137% of total demand, showing increasing liquidity.
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
10
-19
95
04
-19
96
10
-19
96
04
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97
10
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97
04
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10
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98
04
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99
10
-19
99
04
-20
00
10
-20
00
04
-20
01
10
-20
01
04
-20
02
10
-20
02
04
-20
03
Pe
rce
nta
ge
of t
he
De
ma
nd
Pool
Contracts
Hedging
2827
23252424
17
8
13
0
5
10
15
20
25
30
1995 1996 1997 1998 1999 2000 2001 2002 2003#
Typ
es o
f Con
trac
ts
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Wholesale transactions in 2002 reached nearly US$ 2,500 Million
0
50
100
150
200
250
300
350E
ne
-97
Jul-
97
En
e-9
8
Jul-
98
En
e-9
9
Jul-
99
En
e-0
0
Jul-
00
En
e-0
1
Jul-
01
En
e-0
2
Jul-
02
En
e-0
3
Jul-
03
US
$ M
illio
ns
Long Term Contracts FAERFazni Payments to the gridServices Pool PurchasesDeviations Payments per CapacityConstraints AGCFinancial Surplus (Congestion Protifs)
Long Term Contracts
Payments to the grid
Pool Purchases
Capacity Payments
Constraints
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Currently, more than 30% of the demand is traded between suppliers and Non-Regulated Consumers, under the free market
0
500
1.000
1.500
2.000
2.500
3.000
3.500
4.0001
0-1
99
5
10
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96
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97
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00
10
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01
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# users
Freedom for choosing supplier. Prices and conditions negotiated with supplier.
1 MW 0.5 MW or 270 MWh/mes
0.1 MW or 55 MWh/mes
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Regulated Users have also switched from the incumbent supplier: more than 2,500 (~2% total demand) new frontiers of aggregated users have registered to the market.
0
500
1.000
1.500
2.000
2.500
3.000
10
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96
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10
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01
10
-20
02
# Frontiers of Agregated
Users
Regulated formula. However, freedom for choosing supplier with some limitations.
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Pool price reflects market conditions. Contract prices have allowed pool price volatility hedging.
0
20
40
60
80
100
120
07
-19
95
01
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96
07
-19
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01
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Contracts PoolUSmills$/kWh
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In 5 years, the tariff for regulated consumers reflects the benefits of competition in the market.
6
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8
9
10
11
12
01-1
998
04-1
998
07-1
998
10-1
998
01-1
999
04-1
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07-1
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10-1
999
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04-2
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07-2
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10-2
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01-2
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10-2
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04-2
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07-2
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10-2
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04-2
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07-2
003
US
D c
ents
/kW
h
Average tariff for Regulated Consumers
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Compared to other Latin American Countries, Colombia shows the lowest non-subsidized tariffs for end consumers.
Tariff for end-consumers (Dec. 2000)
0
6
12
Bra
sil
Arg
entin
a
Per
ú
Chi
le
Méx
ico
Col
ombi
a
US
cen
t / k
Wh
Planning National Department
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Colombian Market Colombian Market ChallengesChallenges
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Market Challenges
Implementing Financial Derivatives
Fast recovering of damaged Transmission
Network maintaining market conditions
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Market Challenges
Maintain a competitive market that supports
the country economic growth
Power Sector development by balancing:
Market Economy and
Social Policies
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Regional Market Regional Market ChallengesChallenges
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Ecuador-Colombia
Ecuador and Colombia Markets have been
operating totally coordinated since March
2003. Transactions have risen more than
50 million dollars. That represent around
10 percent of the Ecuadorian demand and
4 percent of Colombian demand.
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Market Challenges
Increase Market Integration with Neighbour Countries:
Consolidate the Andean Electricity Market Harmonizing regulation and implement coordinated
operation and commercial transactions between Venezuela and Colombia (2004)
Interconnection and TIE Peru-Ecuador (2004) Implementing Bilateral Contracts for International
trading Bolivia-Peru Interconnection studies (2004)
Linking integrated markets of CAN and SIEPAC Interconnection Panama-Colombia (2007-2008)
MERCOSUR
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Where we want to go?
22
33
11Andean Market
Central American Market (SIEPAC)
MERCOSUR Market
Latin American Market
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COLOMBIAA leading power market in a
country full of opportunities
COLOMBIAA leading power market in a
country full of opportunities
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The ColombianPower Market
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