| REGULATORY FRAMEWORK | NOTE
2 2.1 Generation
2.1.1
Generation units The
Company’s revenues from the electric power generation activity come from: i) sales contracts with large users within the
MAT (Resolutions No. 1,281/06 and No. 281/17); ii) supply agreements with CAMMESA (Resolutions No. 220/07, No. 21/16, No. 287/17
and Renovar Programs) and iii) sales to the Spot market pursuant to the provisions applicable within the WEM administered by CAMMESA
(SEE Resolution No. 19/17, from February 2017, SRRYME Resolution No. 1/19 as from March 2019 and SE Resolution No. 31/20 from
February 2020). Furthermore, energy not committed under sales contracts with large users within the MAT and with CAMMESA are remunerated
at the Spot market. The
Company’s generating units are detailed below, directly and through its subsidiaries and joint businesses:
In
operation:
Generator Generating
unit Tecnology Power Applicable
regime (1)
CTG GUEMTG01 TG 100
MW Energy
Plus Res. No. 1,281/06
CTG GUEMTV11 TV ≤100
MW SE
Resolutions No. 31/20
CTG GUEMTV12 TV ≤100
MW SE
Resolutions No. 31/20
CTG GUEMTV13 TV >100
MW SE
Resolutions No. 31/20
Piquirenda PIQIDI
01-10 MG 30
MW SE
Resolution No. 220/07
CPB BBLATV29 TV >100
MW SE
Resolutions No. 31/20
CPB BBLATV30 TV >100
MW SE
Resolutions No. 31/20
CT
Ing. White BBLMD01-06 MG 100
MW SEE
Resolution No. 21/16
CTLL LDLATG01 TG >50
MW SE
Resolutions No. 31/20
CTLL LDLATG02 TG >50
MW SE
Resolutions No. 31/20
CTLL LDLATG03 TG >50
MW SE
Resolutions No. 31/20
CTLL LDLATV01 TV 180
MW SE
Resolution No. 220/07 (1)
CTLL LDLATG04 TG 105
MW SEE
Res. 220/07 (75%)
CTLL LDLATG05 TG 105
MW SEE
Resolution No. 21/16
CTGEBA GEBATG01/TG02/TV01 CC >150
MW SE
Resolutions No. 31/20
CTGEBA GEBATG03 TG 169
MW Energy
Plus Res. No. 1.281/06
CTGEBA GEBATG03/TG04/TV02 CC 400
MW SE
Resolutions No. 287/17
Ecoenergía CERITV01 TV Renewable ≤
50 Energy
Plus Res. N° 1,281/06 (1)
CT
Parque Pilar PILBD01-06 MG 100
MW SEE
Resolution No. 21/16 (1)
CTB EBARTG01
- TG02 TG HI
– Small 50<P≤120 SE
Resolution No. 220/07 (1)
HIDISA AGUA
DEL TORO HI HI
– Small 50<P≤120 SE
Resolutions No. 31/20
HIDISA EL
TIGRE HI HI
– Small 50<P≤120 SE
Resolutions No. 31/20
HIDISA LOS
REYUNOS HB HB
– Media 120<P≤300 SE
Resolutions No. 31/20
HINISA NIHUIL
I - II - III HI HI
– Chica 50<P≤120 SE
Resolutions No. 31/20
HPPL PPLEHI HI HI
– Media 120<P≤300 SE
Resolutions No. 31/20
P.E.
M. Cebreiro CORTEO Eólica 100
MW Renovar
PEPE
II PAMEEO Eólica 53
MW SEE
Resolution No. 281/17
PEPE
III BAHIEO Eólica 53
MW SEE
Resolution No. 281/17
(1)
In
construction:
Generator Tecnology Capacity Applicable
regime
CTLL MG 15
MW SE
Resolutions No. 31/20
CTB CC
280
MW SE
Resolution No. 220/07 2.1.2
Remuneration at the Spot market Resolutions
SEE No. 19/17 and SRRYME No. 1/19, applicable as from February 2017 and March 2019, respectively, established remunerative items
based on technology and scale with US$-denominated prices payable in AR$ by applying BCRA’s exchange rate. On
February 27, 2020, SE Resolution No. 31/20 was published in the BO, which superseded the remuneration scheme established by SRRYME
Resolution No. 1/19, and provided as follows: i) a reduction in U.S.-denominated values for power capacity availability, maintaining
the values of the remuneration for generated and operated energy; ii) converted remuneration values to Argentine pesos at a 60
$/US$ exchange rate; and iii) an additional remuneration, in pesos, for the power capacity generated during the hours of maximum
thermal demand of the month, taking into consideration the average power capacity generated by thermal generators and the average
power capacity operated by hydroelectric generators. Finally,
it established that the new values set would be updated monthly from the second month of implementation, through a factor that
envisages a 60% adjustment by IPC and a 40% adjustment by IPIM. However, on 8 April 2020, through Note No. 2020-24910606-APN-SE-MDP
of 8 April 2020, the SE instructed CAMMESA to postpone until a new decision the implementation of the above-mentioned automatic
adjustment mechanism, which has not been restored to the date of issuance of these Consolidated Financial Statements. 2.1.2.1
Remuneration for Available Power Capacity 2.1.2.1.1
Thermal Power Generators Resolution
SEE No. 19/17 set a minimum remuneration for power capacity based on technology and scale, and allowed generating, co-generating
and self-generating agents owning conventional thermal power plants to offer guaranteed availability commitments for the energy
and power capacity generated by their units and not committed under sales contracts with large users within the MAT and supply
agreements with CAMMESA. This scheme remains in force until the current resolution. In
Resolution SEE No. 19/17, the availability commitments for each unit were declared for a term of three years, together with information
for the summer seasonal programming, with the possibility to offer different availability values for the summer and winter six-month
periods. The thermal generators’ remuneration for committed power capacity was proportional to their compliance. In SRRYME
Resolution No. 1/19 and SE Resolution No. 31/20, an offer scheme for quarterly periods was established: a) summer (December through
February); b) winter (June through August), and c) ‘Other’, which comprises two quarters (March through May, and September
through November). The
power remuneration for thermal generators with commitments is proportional to their compliance. The
minimum remuneration for generators with no availability commitments includes the following scales and prices:
Technology
/ Scale SEE
No. 19/17 (US$
/ MW-month) SRRYME
No. 1/19 (US$
/ MW-month) SE
No. 31/20 (AR$
/ MW-month)
Large
CC Capacity > 150 MW 3,050 3,050 100,650
Large
ST Capacity > 100 MW 4,350 4,350 143,550
Small
ST Capacity > 100 MW 5,700 5,200 171,600
Large
GT Capacity > 50 MW 3,550 3,550 117,150 The
remuneration for guaranteed power capacity to generators with availability commitments is:
Period SEE
No. 19/17 (US$
/ MW-month) SRRYME
No. 1/19 (US$
/ MW-month) SE
No. 31/20 (AR$
/ MW-month)
Summer
– Winter 7,000 7,000 360,000
Fall
- Spring 7,000 5,500 270,000 Under
SRRYME Resolution No. 1/19 provided for the application on the power capacity remuneration of a coefficient derived from the average
utilization factor over the unit’s last twelve months: with a minimum 70% of the utilization factor, 100% of the power capacity
payment was collected; if the utilization was between 30% and 70%, the power capacity payment ranged from 70% to 100%; and if
the utilization factor was lower than 30%, 70% of the power capacity payment was collected. SE Resolution No. 31/20 maintained
the same formula than the previous regime, but in case the utilization factor is lower than 30%, 60% of the power capacity payment
is collected. Finally,
SEE Resolution No. 19/17 established an additional remuneration of 2,000 US$/MW-month aiming to encourage availability commitments
in the grid’s higher demand periods, that was abolished by SRRYME Resolution No. 1/19. However, the SE Resolution No. 31/20
established an additional remuneration for the hours of maximum thermal requirement of the month (hmrt), which corresponds to
the 50 hours with the largest dispatch of thermal generation of each month divided into two blocks of 25 hours each, applying
the following prices to the average generated power:
Period First
25 hours ($
/ MW-hmrt) Second
25 hours ($
/ MW-hmrt)
Summer
– Winter 45,000 22,500
Fall
- Spring 7,500 - 2.1.2.1.2
Hydroelectric Generators Resolutions
SEE No. 19/17 and SRRYME No. 1/19 set a base remuneration and an additional remuneration for power capacity. Power
capacity availability was determined independently of the reservoir level, the contributions made, or the expenses incurred. Furthermore,
in the case of pumping hydroelectric power plants, the operation as turbine and pump at all hours within the period was considered
to calculate availability. The
base and the additional remunerations included the following scales and prices:
Technology
/ Scale Base (US$
/ MW-month) Additional (US$
/ MW-month)
Medium
HI Capacity > 120 ≤ 300 MW 3,000 1,000
Small
HI Capacity > 50 ≤ 120 MW 4,500 1,000
Medium
Pumped HI Capacity > 120 ≤ 300 MW 2,000 500
Renewable
HI Capacity ≤ 50 MW 8,000 1,000 Under
SEE Res. No. 19/17, the payment for power capacity was determined by the actual power capacity plus that under programmed and/or
agreed maintenance, whereas under SRRYME Res, No. 1/19, hours of unavailability due to programmed and/or agreed maintenance were
not computed for the calculation of the power capacity remuneration. However, in order to contemplate the incidence of programmed
maintenance works in power plants, from May 2019, pursuant to SME Note No. 46631495/19, the application of a 1.05 factor over
the power capacity payment was established. In
case of hydroelectric power plants that were responsible for control structures on river courses and did not have an associated
power plant, a 1.20 factor was applied to the plant at the headwaters. The
allocation and collection of 50% of the additional remuneration was conditional upon the generator taking out insurance, to CAMMESA’s
satisfaction, to cover for major incidents on critical equipment, as well as upon the progressive updating of the plant’s
control systems pursuant to an investment plan to be submitted in accordance with criteria defined by the SEE. The
following are the power by technology and scale values set under SE Resolution No. 31/20:
Technology
/ Scale SE
No. 31/20 (AR$
/ MW-month)
Medium
HI Capacity > 120 ≤ 300 MW 132,000
Small
HI Capacity > 50 ≤ 120 MW 181,500
Medium
Pumped HI Capacity > 120 ≤ 300 MW 132,000
Renewable
HI Capacity ≤ 50 MW 297,000
Period First
25 hours ($
/ MW-hmrt) Second
25 hours ($
/ MW-hmrt)
Summer
– Winter 39,000 19,500
Fall
- Spring 6,500 - Furthermore,
SE Resolution 31/20 maintains the application of a 1.05 factor over the power capacity to compensate the incidence of programmed
maintenance works and the 1.20 factor for units maintaining control structures on river courses and not having an associated power
plant is maintained. 2.1.2.1.3
Wind generators SEE
Resolution No. 19/17 established a remuneration associated with the availability of the installed equipment at a base price of
7.5 US$/MW and an additional price of 17.5 US$/MW, which was abrogated by SRRYME Resolution No. 1/19. 2.1.2.2
Remuneration for Generated and Operated Energy Resolutions
SEE No. 19/17 and SRRYME No. 1/19 set a remuneration for generated energy with prices ranging from 5 to 10 US$/MWh and from 4
US$/MWh to 7 US$/MWh, respectively, depending on the technology and type of fuel used. The
remuneration for operated energy applicable to the integration of hourly power capacities for the period was valued at 2.0 US$/MWh
and 1.4 US$/MWh for any type of fuel under Resolutions SEE No. 19/17 and SRRYME Resolution No. 1/19, respectively. SE
Resolution No. 31/20 establishes a remuneration for Generated Energy with prices ranging between 240 and 420 $/MWh, depending
on the type of fuel and a remuneration for Operated Energy, with an 84 $/MWh price for any type of fuel. It
should be noted that, in the event that the generation unit is dispatched outside the optimal dispatch, remuneration for generated
energy will be set at 60% of the net installed power capacity, regardless of the energy delivered by the generation unit. In
the case of hydroelectric power plants, prices for generated and operated energy under Resolutions SEE No. 19/17 and SRRYME No.
1/19 were 3.5 and 1.4 US$/MWh, respectively, regardless of the scale. Under SE Resolution No. 31/20, they are remunerated at 210
$/MWh and 84 $/MWh, respectively. The remuneration for operated energy must correspond to the optimal dispatch of the system,
however, the resolution does not indicate what the consequence would be otherwise. In
the case of hydroelectric pumping plants, both the energy generated and the one consumed for pumping are considered. In addition,
if it functions as a synchronous compensator, 60 $/MVAr will be recognized for the megavolt exchanged with the network when required
and 84 $/MWh for the energy operated. As
regards energy generated from unconventional sources, SRRYME Resolution No. 1/19 established a single remuneration value of US$ 28/MWh,
irrespective of the source used. SE Resolution No. 31/20 sets a value of 1,680 $/MWh. Energy generated prior to the commissioning
by the Organismo Encargado del Despacho will be remunerated at 50% of the above-mentioned remuneration. 2.1.2.3
Additional Remuneration for Efficiency and for Low-Use Thermal Generators SEE
Resolution No. 19/17 provided for an efficiency incentive that consisted of the recognition of an additional remuneration equivalent
to the remuneration for the generated energy by the percentage difference between the actual consumption and the reference consumption
determined for each unit and fuel type, as well as an additional remuneration for low-use thermal generators and having frequent
startups based on the monthly generated energy for a price of 2.6 US$/MWh multiplied by the usage/startup factor, which were abrogated
under the scheme set under SRRYME Resolution No. 1/19. 2.1.2.4
Suspension of contracts within the MAT The
suspension of contracts within the MAT (excluding those derived from a differential remuneration scheme) provided for by SE Resolution
No. 95/13 remains in effect. 2.1.3
Sales contracts with large users within the MAT 2.1.3.1
Energy Plus With
the purpose of encouraging new generation works, in 2006 the SE approved Resolution No. 1,281/06 established a specific regime
which would remunerate newly installed generation sold to a certain category of Large Users at higher prices. The
Energy Plus service consists of the offer of additional generation availability by generators, co-generators and self-generators
which, as of the date of publication of SE Resolution No. 1,281/06, were not WEM agents or did not have facilities or an interconnection
with the WEM; Considering that:
- These plants should
have fuel supply and transportation facilities;
- The energy used
by GU300 in excess of the Base Demand (energy consumption for 2005 year) qualifies for Energy Plus agreements within the MAT
at a price negotiated between the parties; and
- For new GU300 entering
the system, their Base Demand will equal zero. If
a generator cannot meet the power demand by an Energy Plus customer, it should purchase that power in the market at the operated
marginal cost, or, alternatively, support the committed demand in case of unavailability through agreements with other Energía
Plus generators. Currently,
the Company has Power Availability agreements in force with other generators whereby, in case of unavailability, it may purchase
or sell power to support the contracts mutually. Furthermore,
the SE, through Note No. 567/07, as amended, established that GU300 not purchasing their surplus demand in the MAT should pay
the Average Incremental Charge of Surplus Demand. As from the month of June 2018, pursuant to SE Note No. 28663845/18, the
CMIDE became the greater of $1,200/MWh or the temporary dispatch surcharge. Due
to the drop in surplus demand as a consequence of the decrease in the economic activity, some GU300 decide not to enter into Energy
Plus contracts (with higher prices), and generators have to sell their energy at the spot market with lower profitability margins. Additionally,
the Energy Plus contracts market continues being affected by the migration of demand towards renewable energy contracts in the
MAT ER. Under
this regime, the Company —through its power plants Güemes, EcoEnergía and Genelba— sells its energy and
power capacity for a maximum amount of 283 MW. The values of Energy Plus contracts are mostly denominated in U.S. dollars. 2.1.3.2
Renewable Energy Term Market (“MAT ER” Regime) Pursuant
to Resolution No. 281/17, the MEyM regulated the MAT ER Regime with the purpose of setting the conditions for large users within
the WEM and WEM distributing agents’ large users covered by Section 9 of Law No. 27,191 to meet their demand supply obligation
from renewable sources through the individual purchase within the MAT ER from renewable sources or self-generation from renewable
sources. Furthermore,
it regulates the conditions applicable to projects for the generation, self-generation and co-generation of electric power from
renewable sources, and creates the el Registro Nacional de Proyectos de Generación de Energía Eléctrica de Fuente
Renovable for the registration of these projects. Projects
destined to the supply of electric power from renewable sources under the MAT ER Regime may not be covered by other remuneration
mechanisms, such as the agreements under the Renovar rounds. Surplus energy will be sold in the spot market. Finally,
contracts executed under the MAT ER Regime will be administered and managed in accordance with the WEM procedures. The contractual
terms —life, allocation priorities, prices and other conditions, notwithstanding the maximum price set forth in Section
9 of Law No. 27,191— may be freely agreed between the parties, although the committed electricity volumes will be limited
by the electric power from renewable sources produced by the generator or supplied by other generators or suppliers with which
it has purchase agreements in place. Within
the framework of this provision, the Company, through its PEPE II and III wind farms, sells energy for a maximum amount of 106
MW and, additionally, has started selling third-party generators’ renewable energy for an approximate volume of 2 MW. 2.1.4
Supply Agreements with CAMMESA 2.1.4.1
SE Resolution No. 220/07 (“Agreement Res.220”) Aiming
to encourage new investments to increase the generation offer, the SE passed Resolution No. 220/07, which empowers CAMMESA to
enter into Agreement with WEM Generating Agents for the energy produced with new equipment. These will be long-term agreements
and the price payable by CAMMESA should compensate the investments made by the agent at a rate of return to be accepted by the
SE. Under
this regulation, the Company, through its power plants Piquirenda, Loma de La Lata and Barragán, has executed Agreement Res.220
to sell energy and power capacity for a total amount of 856 MW. It
is worth mentioning that the 10-year term for Piquirenda and Loma de la Lata contracts (210 MW) expires in July and November 2021,
respectively. Besides, Barragán has an expansion project underway to add 280 MW under this scheme, which commissioning is
estimated for the first quarter of 2022. For
further information on the project to the CC at CTB, see Note 16.1.3. 2.1.4.2
SEE Resolution No. 21/16 As
a result of the state of emergency in the national electricity sector, the SEE issued Resolution No. 21/16 calling for parties
interested in offering new thermal power generation capacity with the commitment to making it available through the WEM for the
2016/2017 summer; 2017 winter, and 2017/2018 summer periods. For
the awarded projects, wholesale power purchase agreements were entered into with CAMMESA for a term of 10 years, with a remuneration
made up of the available power capacity price plus the variable non-fuel cost for the delivered energy and the fuel cost (if offered),
less penalties and fuel surpluses. Surplus power capacity is sold in the spot market. Pursuant
to this resolution, the Company, through its Loma de la Lata, Ingeniero White and Pilar thermal power plants, has effective agreements
with CAMMESA for the sale of energy and power capacity for a total 305 MW. 2.1.4.3
SEE Resolution No. 287/17 On
May 10, 2017 the SEE issued Resolution No. 287/17 launching a call for tenders for co-generation projects and the closing to CC
over existing equipment. The projects should have low specific consumption (lower than 1,680 kcal/kWh with natural gas and 1,820
kcal/kWh with alternative liquid fuels), and the new capacity should not exceed the existing electric power transmission capacity;
otherwise, the cost of the necessary extensions will be borne by the bidder. For
the awarded projects, wholesale power purchase agreements were entered into for a term of 15 years, with a remuneration made up
of the available power capacity price plus the variable non-fuel cost for the delivered energy and the fuel cost (if offered),
less penalties and fuel surpluses. Surplus power capacity is sold in the spot market. Pursuant
to this regulation, the Company, through its Genelba thermal power plant, has entered into an agreement with CAMMESA for the sale
of energy and power capacity for a total 400 MW (see Note 16.1.2). 2.1.4.4
Renovar Programs In
order to meet the objectives, set by Law No. 26,190 and Law No. 27,191 promoting the use of renewable sources of energy, the MEyM
called for open rounds for the hiring of electric power from renewable sources (RenovAr Programs, Rounds 1, 1.5 and 2) within
the WEM. These calls aimed to assign power capacity contracts from different technologies (wind energy, solar energy, biomass,
biogas and small hydraulic developments with a power capacity of up to 50 MW). For
the awarded projects, renewable electric power supply agreements were executed for the sale of an annual committed electric power
block for a term of 20 years. Additionally,
several measures have been established to promote the construction of projects for the generation of energy from renewable sources,
including tax benefits (advance VAT reimbursement, accelerated depreciation of the income tax, import duty exemptions, etc.) and
the creation of a fund for the development of renewable energies destined, among other objectives, to the granting of loans and
capital contributions for the financing of such projects. Under
this regulation, the Company, through Greenwind, has a supply agreement in place with CAMMESA for a total 100 MW. 2.1.5
Fuel supply for thermal power plants On
November 6, 2018, SGE Resolution No. 70/18 was published in the BO, which empowered generating, co-generating and self-generating
agents within the WEM to acquire the fuels required for own generation; this resolution superseded SE Resolution No. 95/13, which
provided that fuel supply for electric power generation would be centralized in CAMMESA (with the exception of generation under
the Energy Plus regime). Under the scheme set forth by SGE Resolution No. 70/18, the cost of generation with own fuels was valued
according to the mechanism for the recognition of the Variable Production Costs recognized by CAMMESA. During its term of validity,
CAMMESA remained in charge of the commercial management and the dispatch of fuels for generators that do not or cannot make use
of this option. In
the seasonal programming conducted on November 12, 2018, the Company opted to make use of the self-supply option, and allocated
a significant part of its natural gas production as an input for the dispatch of its thermal units. On
December 27, 2019, the Ministry of Productive Development passed Resolution No. 12/19, abrogating, effective as from December
30, 2019, SGE Resolution No. 70/18, and re-establishing the validity of section 8 and section 4 of SE Resolutions No. 95/13 and
529/14, respectively, thus restoring the centralized scheme in CAMMESA for the supply of fuels for generation purposes (except
for generators under the Energy Plus scheme and with Wholesale Power Purchase Agreements under Resolution No. 287/17). In
December 2020, on account of the implementation of the GasAr Plan (see Note 2.3.2.1.2), SE Resolution No. 354/20 was passed,
which established a new dispatch order for generation units based on the fuel supplied for their operation under a centralized
dispatch scheme. SE
Resolution No. 354/20 established the gas volumes CAMMESA should prioritize in the electricity dispatch. In this sense, firm volumes
to be used by CAMMESA were defined, including: i) volumes corresponding to contracts entered into by CAMMESA with producers acceding
to the GasAr Plan; ii) volumes corresponding to contracts executed by adherent producers with generators acceding to the centralized
dispatch (these volumes will be discounted by the adherent producers from the applicable quota for which they should enter into
contracts with CAMMESA under the GasAr Plan) and; iii) volumes to meet the Take or Pay (“TOP”) obligations under the
supply agreement entered into between IEASA and Yacimientos Petrolíferos Fiscales Bolivianos (“YPFB”). Besides,
an electricity dispatch priority scheme was set based on the allocation of the natural gas quota taking into consideration the
take or pay obligations. To this effect, the following priorities were set (within each priority level, the order of agents is
set based on the generator’s production cost):
(i) Dispatch Priority
1: Generators, Self-generators and/or Co-generators supplied with a natural gas quota under a TOP Bolivia condition assigned
by IEASA. If a generator with a fuel stocking obligation optionally acquires from IEASA natural gas from Bolivia, this volume
will be included in this quota.
(ii) Dispatch Priority
2: Generators, Self-generators and/or Co-generators supplied by CAMMESA with a natural gas quota from the centralized list
of volumes up to the TOP of each contract.
(iii) Dispatch Priority
3: Generators, Self-generators and/or Co-generators supplied by CAMMESA with a natural gas quota from the centralized list
of volumes for the Daily Maximum Amount (DMA) less those corresponding to the TOP of each contract.
(iv) Dispatch Priority
4: Generators, Self-generators and/or Co-generators supplied by CAMMESA with natural gas or LNG coming from other firm commitments
undertaken by CAMMESA.
(v) Dispatch Priority
5: Generators, Self-generators and/or Co-generators supplied with a gas quota from the unassigned, spot natural gas contracts
from any source, acquired by CAMMESA and/or the Generator, according to the supply source. In the case of a generator with
own fuel, the maximum amount to be acknowledged will be the corresponding reference prices. As
regards the costs associated with the supply of these fuels, it was established that the electricity demand will bear, among others,
the regulated transportation costs, the cost of natural gas and the applicable take or pay obligations. Generating
agents that kept the possibility to purchase their fuel supply (agents under the Energy Plus Program or with Wholesale Purchase
Agreements under Resolution No. 287/17) could opt in or out of CAMMESA’s unified dispatch. Acceding to the unified dispatch
involves the operating assignment of the contracted firm gas and transportation volumes. Based on their option, the priority order
was modified as described above. In
the specific case of generators with wholesale power purchase agreements under SEE Resolution No. 287/17, it was provided that
they would have the option of canceling the self-supply obligation and the resulting recognition of its associated costs, having
to maintain the respective transportation capacity for its management in the centralized dispatch. The
Company assigned the firm gas and transportation volumes committed to the supply of Genelba Plus’ CC and Energy Plus contracts.
In the case of the supply to Genelba Plus’ CC, the assignment will remain effective during the life of the GasAr Plan, and
it may be revoked by the generator with a minimum advance notice of 30 business days. Within this framework, the parties agreed
to enter into an addendum to the Wholesale Power Purchase Agreement to establish the modifications regarding this new supply scheme,
which execution is pending as of the issuance of these Consolidated Financial Statements. 2.1.6
Agreement for the Regularization and Settlement of Receivables with the WEM On
August 5, 2019 and under the call to Generators, the Company and certain subsidiaries executed with CAMMESA an Agreement for the
Regularization and Settlement of Receivables with the WEM (the “Agreement”), as instructed through SGE Note NO-2019-66843995-APN-SGE#MHA. Pursuant
to the Agreement, CAMMESA undertook to pay the outstanding Sales Liquidations with Maturity Date to be Defined (“LVFVD”)
after discounting the debts taken on with the WEM under the Financing Agreements, Loan Agreements and Receivables Assignment Agreements
executed by generators, and applying a 18% write-off on the balance. In this sense, the parties have agreed a total net settlement
amount for the outstanding LVFVDs taking into consideration the interest update as of July 31, 2019 and the effects of the mentioned
write-off, which amounts to $ 2,122.7 million, before tax withholdings for a total amount of $ 392.9 million. Finally, on August
7, 2019, the total agreed amount was collected. In
furtherance of the undertaken commitments, the Company and certain subsidiaries have waived all submitted claims and have irrevocably
dismissed their rights to file any kind of claim (whether administrative and/or judicial) against the Federal Government, the
SGE and/or CAMMESA regarding the outstanding LVFVDs. As
a result of the Agreement, the Company has recognized revenues in the amount of US$ 5.9 million and net financial profits for
US$ 71.1 million in the year ended December 31, 2019. 2.1.7
Loosening up of charges and interests in late payment of the economic transaction Resolutions
SRRYME No. 29/2019 and SE No. 148/20 provided for a relaxation in the application of penalty interest and charges in case of delays
in the payment of economic transactions within the WEM.
(i) Reduction of
surcharges:
(ii) Compensatory
and penalty interest
(iii) Compensations:
. 2.1.8
Generation projects As
a result of the COVID-19 pandemic (see Note 1.2), through Note NO-2020-37458730-APN-SE#MDP the SE instructed the temporary suspension
of terms for the execution of the contracts under the RenovAr Programs (Rounds 1, 1.5, 2 and 3), former SE Resolution No. 712/09,
former MEyM Resolution No. 202/16 and former SEE Resolution No. 287/17, as well as for projects within the framework of former
MEyM Resolution No. 281/17. The instruction applies to projects which had not been previously commissioned as from March 12, 2020
and until September 12, 2020, both dates inclusive. Consequently, the temporary suspension of notices of non-compliance with the
scheduled work progress dates was instructed, both regarding the increase in the contract performance bond and the imposition
of the stipulated penalties, as applicable, under all agreements entered into pursuant to such resolutions. Furthermore,
it ordered the temporary suspension of notices of breach upon failure to comply with the date scheduled for the commercial commissioning
of projects with a dispatch priority under the terms of former MEyM Resolution No. 281/17, and of the collection of the amounts
stipulated in the event of breach, in all cases keeping the timely granted dispatch priorities. 2.2
Transmission 2.2.1
Tariff situation The
Solidarity Law, which entered into effect on December 23, 2019, provided that electricity tariffs under federal jurisdiction would
remain unchanged, and contemplates the possibility to perform an extraordinary review of the current RTI for a maximum term of
up to 180 days. In
2020, the ENRE did not apply Transener’s semi-annual tariff update mechanism established in the RTI, the tariff scheme in
force being that resulting from the August 2019 update. In
this sense, on December 16, 2020, pursuant to Executive Order No. 1020/20, the Federal Government established the beginning of
the renegotiation of the current RTI for the electricity and natural gas transportation and distribution utility services, which
proceeding may not exceed a term of 2 years. Until the conclusion of each renegotiation, all Agreements corresponding to the respective
RTIs in effect will be suspended within the scopes determined in each case by the Regulatory Entities for reasons of public interest.
The transitory and final agreements will be entered into with the ENRE or ENARGAS, and the Ministry of Economy ad referendum
On
January 19, 2021, through Resolution No. 17/21, the ENRE launched the proceeding for the transitory adjustment of tariffs of the
transmission public utility aiming to establish a Transitional Tariff Regime until reaching a Final Renegotiation Agreement, and
summoning Transportation Companies. In this sense, a request for information to begin this process was received. As
of the issuance of these Consolidated Financial Statements, Transener has complied with this requirement, prioritizing the operating
costs and capital investments required to maintain service quality. On
March 3, 2021, pursuant to Re |
