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| This is an informative document and does not replace the regulation issued by the CREG. |
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Auction for the Allocation of the OEF
General information and stages of the Auction |
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The allocation of the OEF among different generators and investors is done through a dynamic auction. In this transaction in the MEM, generators and investors participate actively, while the electricity demand of end-users connected to the SIN is represented by a price-quantity function previously established by the CREG. For this purpose, an auction to allocate the OEFs is undertaken three years [ * ] before the firm energy obligation can be called.
The time period that runs between the announcement of the auction date for the allocation of the OEF and the end of the commitment period of the OEF, is classified into three stages:
The Pre-qualification Period starts once the CREG announces the auction date, and this ends on the day the auction takes place. During this period, both generators and investors, send the information necessary to participate in the auction. Only those that have complied with all the requirements are qualified to offer their firm energy in the actual auction process.
To reduce the income uncertainty of certain projects whose constructions may take longer than the three-year Planning Period, the CREG incorporated a mechanism that allows generators or investors to sell a portion of their future firm energy under special circumstances, in auctions that take place seven, six and five years before the firm energy of their projects become available. Through this, the generator or the investor is given a maximum seven-year allowance to enable it to start delivering its firm energy.
For these cases, the special treatment of up to four additional years (the maximum seven-year allowance minus the normal three- year planning period) consists of giving the generator or the investor the possibility, once it knows the energy clearing price in auctions being undertaken during this time period, to express its interest to the CREG of selling part of its future firm energy but acting as observer and price taker in these auctions.
When the auction which takes place three years before the initial date of the commitment period of the OEF is undertaken, the generator or investor who has sold part of its future firm energy by making use of the special circumstances privilege, should participate with its firm energy which has not been committed, under the same rules for all the participants that are selling their firm energy in these auctions.
Table 3. Different Stages of the Allocation of OEF
| X months before the Auction |
Implementation Date of Auction |
3 years |
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1 year for existing generation resources |
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Up to 10 years for special generation resources |
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Up to 20 years for new generation resources |
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| Pre-qualification Period |
Auction |
Planning Period |
Commitment Period of OEF |
| Compliance with the requirements to participate in the Auction |
Auction of OEF to be required by year t |
Building of new generation plants or units to deliver firm energy from the first day of the commitment period of the obligation (to deliver firm energy on December of year t-1) |
The OEF can be required during this time period |
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The Auction for the Allocation of Firm Energy Obligations (OEF)
is implemented 3 years before this OEF is required. |
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The CREG can modify this term if and when necessary. |
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