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

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

3. 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?

4. Colombian Power Market data (2006) Generation 36 Transmission 11 Distribution 32 Retailing 67 13.280 MW installed (64% hydro 33% thermal) Peak demand: 8762 MW (Growth: 1.42%) Energy demand: 50.815 GWh (Growth: 4.07%) Firm energy (declared by suppliers): 60,6 TWh-year Ten years of operation Generators and retailers Centralized transactions

5. Transactions in the wholesale energy market (2006) $ 537.76 18.44% $ 549.00 18.83% $ 175.78 6.03% $ 1 653.61 56.71% $ 2 916.16 mlls

6. 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 www.upme.gov.co

7. 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 P5P5 13.4 = P 6 Round 3 Round 2 P1P1 Round 1 excess supply 13.00 = P 6’ Aggregated supply Clearing price = CXC D D US$/MWh 26.8 = P 0 MWh Starting price

8. Energy to be auctioned and commitment period 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016........ 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 GWh Demand Transition Period Energy to be auctioned years Commitment up to 20 years

9. Construction period longer than 3 years 0123 4 5 GWh years Commitment up to 20 years < 50% growth Take price of auction of year 0 67 Auction

10. 0123 45 6 GWh years Commitment up to 20 years < 60% growth Take price of auction of year 1 67 Auction Construction period longer than 3 years

11. 0123 45 6 GWh years Commitment up to 20 years < 80% growth Take price of auction of year 2 67 Auction Construction period longer than 3 years

12. 0123 45 6 GWh years 67 Auction Construction period longer than 3 years

13. 0123 45 6 GWh years Bid for the rest of firm energy Commitment up to 20 years 67 Auction Construction period longer than 3 years

14. 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

15. 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

16. Reconfiguration Auctions Security Rings Secondary Market Demand Response Last resource generator

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

18. More information Energy and Gas Regulatory Commission www.creg.gov.co creg@creg.gov.co