New Regulatory Scheme to Guarantee Power Reliability Colombia, an investment oportunity Santo Domingo, March 14-15, 2007

Content 2.How to participate 3.Rights and Obligations 4.Schedule 1.An investment oportunity in the Colombian power market

Delivery of energy in scarcity conditions Building and operation of power assets Constant payment ($/GWh) of Firm Energy Commitment period: up to 20 years Firm Energy Auction to allocate FEO What is the oportunity?

Colombian Power Market data (2006) Generation 36 Transmission 11 Distribution 32 Retailing MW installed (64% hydro 33% thermal) Peak demand: 8762 MW (Growth: 1.42%) Energy demand: GWh (Growth: 4.07%) Firm energy (declared by suppliers): 60,6 TWh-year Ten years of operation Generators and retailers Centralized transactions

Transactions in the wholesale energy market (2006) $ % $ % $ % $ % $ mlls

How to participate? 1.To Inscribe a project of power generation in Colombia Requirements for the Inscription Feasibility studies Financial and management scheme Approval of Environmental Alternatives Diagnosis Information about land acquisition options Request of conection to the transport network Fuel acquisition scheme Designs in execution Request of environmental licence Information about power generation projects in Colombia upme.gov.co

How to participate? 3.To build and operate the generation asset 2.To bid in the Firm Energy Auction P2P2 P3P3 Round 5 Round 4 P4P4 P5P = P 6 Round 3 Round 2 P1P1 Round 1 excess supply = P 6’ Aggregated supply Clearing price = CXC D D US$/MWh 26.8 = P 0 MWh Starting price

Energy to be auctioned and commitment period GWh Demand Transition Period Energy to be auctioned years Commitment up to 20 years

Construction period longer than 3 years GWh years Commitment up to 20 years < 50% growth Take price of auction of year 0 67 Auction

GWh years Commitment up to 20 years < 60% growth Take price of auction of year 1 67 Auction Construction period longer than 3 years

GWh years Commitment up to 20 years < 80% growth Take price of auction of year 2 67 Auction Construction period longer than 3 years

GWh years 67 Auction Construction period longer than 3 years

GWh years Bid for the rest of firm energy Commitment up to 20 years 67 Auction Construction period longer than 3 years

Generator: Obligations and Rights 1.To have a generation assed to back the FEO 2.To have the fuel to generate 3.Deliver the energy when Spot > Scarcity prices as dispatch required it ObligationsRights 1.To receive the Reliability Charge, even if the FEO is not required, during the commitment period. 2.FEO protected by Colombian Laws and Regulation Spot price FEO is required

Demand: Obligations and Rights ObligationsRights To pay the reliability charge during the commitment period, even if the FEO is not required. To buy the energy up to the Scarcity Price when Spot Price>Scarcity Price

Reconfiguration Auctions Security Rings Secondary Market Demand Response Last resource generator

Schedule March 2007 –Information of Combined Cicles and Repower Projects. April 2007 –Demand forecast –Definition about the date of first Firm Energy Auction.

More information Energy and Gas Regulatory Commission