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| This is an informative document and does not replace the regulation issued by the CREG. |
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| General Characteristics of the Wholesale Electricity Market
Transactions of the MEM: Bilateral Contracts |
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Bilateral financial contracts are agreements reached by generation and commercialization companies to sell and purchase energy at prices, quantities and contractual conditions negotiated freely between the contracting parties.
The market for bilateral contracts is fundamentally a financial market. The purpose of these contracts is to reduce the exposure of both the supplier and the end-user of energy to price volatilities in the short-term market. The physical delivery of the energy committed in these contracts is done through the Energy Spot Market by the generation company, which initially subscribe to these contracts, or by other generators determined by the ideal dispatch.
There is no restriction whatsoever on the energy that a generation or commercialization company can commit to these bilateral contracts and neither on the time period to be covered by these agreements. The only requirement is for the contract to specify the quantity of energy that will be used on an hourly basis to enable ASIC to do the settlement.
The energy purchased by commercialization companies through bilateral contracts to cover Regulated Users’ demand [ * ] is covered by rules that guarantee competition between generators, while energy acquisitions by commercialization companies which will go to Non-Regulated Users [ ** ] are negotiated at prices and under conditions agreed upon by the involved parties.
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This refers to end-users whose electricity consumption is subject to the rates established by the CREG. |
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Users with a monthly energy consumption higher than 55 MWh or 0.1 MW of peak demand, and whose energy transactions are done at prices freely negotiated with the commercialization company. |
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