News

Argentine Government seeks bids for 3,000 MW new/revamped thermal facilities

The Argentine Government announced on July 27, 2023, by Resolution No. 621/2023 of the Secretary of Energy (“Resolution 621”), a bid seeking 3,000 MW of new/revamped thermal power facilities. Preferred bidders will enter into long-term US Dollar-denominated Power Purchase Agreements (“PPA”) with CAMMESA (the wholesale electricity manager, for its Spanish initials, Compañía Administradora del Mercado Mayorista Eléctrico S.A.).

The PPA provides for a fixed capacity/availability payment capped at US$ 18,000/MW-month and a variable inflow based on dispatch of the facility.

Offers may be for any type of thermal power generation or cogeneration, and the projects may include associated transmission and/or fuel infrastructure works. Power facilities shall be new or have less than 15,000 fired hours.

Below are the key takeaways of Resolution 621 and the request for proposals:

1. Projects included

1. Line 1 “Thermal Generation for reliability and supply of the SADI” (“Line 1”): includes: (a) 1.0. Repowering – repowering existing combined cycles; (b) 1.1. Improvement of the supply reliability in critical areas; (c) 1.2. Improvement of efficiency and regional reserve; and (d) 1.3. Improvement of reliability of the wholesale electricity market. Line 1 seeks offers aggregating 3000 MW with a minimum goal of 2250 MW.
2. Line 2 “Thermal Generation to replace, modernize and improve efficiency of the Tierra del Fuego power system” (“Line 2”): Line 2 seeks offers aggregating 70 MW with a minimum goal of 30 MW.

2. Authorized bidders

Bids may be submitted (individually or collectively) by legal entities incorporated in Argentina or abroad. SPVs (sole purpose vehicles), trusts and collective associations are also permitted.

3. Main aspects of the PPA

Selected bidders will enter into a PPA (in the form attached thereto), that, among other aspects, foresees:

• Target date for COD: The target date to achieve Commercial Operation Date (“COD”) is: (a) Line 1.0, 1/1/2025; (b) Line 1.1 and Line 2, 10/1/2025; and (c) Line 1.2 and 1.3, 4/1/2026.
• Long-Stop COD: The long-stop date for COD is: (a) Line 1.0, 06/30/2027; (b) Line 1.1 and 2, 03/31/2028; and (c) Line 1.2 and 1.3, 09/30/2028.
• PPA Term Commencement Date: The PPA shall commence upon the later to occur among (a) the COD effective date or (b) six (6) months prior to the target date for COD.
• PPA Expiration Date: The PPA expiration dates are as follows: (a) for Line 1.0, 12/31/2034; (b) for Lines 1.1 and 2, 9/30/2040; and (c) for Lines 1.2 and 1.3, 3/31/2041.
• Tenor of the PPA: The tenor of the PPA is as follows: (a) for Line 1.0, 10 years, and (b) for the other lines, 15 years.
• Partial COD: Partial COD is allowed, with a reduced remuneration scheme until COD is obtained for the total committed capacity.

4. Deadlines to be considered

Questions are permitted until August 29, 2023, whereas bids shall be submitted no later than August 31, 2023. Award of bids is targeted for October 10, 2023, and the PPAs shall be entered starting on October 15, 2023.

For additional information, please contact Nicolás Eliaschev, Javier Constanzó, Daiana Perrone, María Eugenia Muñoz, Pablo Arrascaeta, Florencia Martínez, Luciana Tapia Rattaro and/or Rocío Valdez.

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Relevant aspects of the National Energy Transition Plan to 2030 and the Guidelines and Scenarios for the Energy Transition Plan to 2050 of Argentina

Argentina has issued the National Energy Transition Plan to 2030 (“NETP 2030”) and the Guidelines and Scenarios for the Energy Transition Plan to 2050 (“GSET 2050”). Such documents were made public by Resolution No. 517/2023 and Resolution No. 518/2023 of the Secretary of Energy. These plans aim to change the country’s energy matrix towards cleaner and more sustainable sources, thereby reducing greenhouse gas emissions responsible for global warming.

Below is a summary of the key takeaways of the NETP 2030 AND GSET 2050.

1. NETP 2030

1.1. Scenario and variables considered

The NETP 2030 is based on the following main assumptions:

1. Growth of gross domestic product (GDP) of 2% per year.
2. Electricity demand growth of 1.5% on a yearly basis, and natural gas demand growth of around 1.1%.
3. Fuel demand growth of 2.3% on a yearly basis.
4. Growth in natural gas production for local consumption between 2.4% and 3%, and in oil production between 3.4% and 6%.
5. Reduction in the share of thermal generation from 59% to 35% (however, it contemplates 3,000 MW of the future tender soon to be called).

1.2. Quantitative targets

The NETP 2030 proposes the following quantitative targets:

1. Not to exceed the total aggregate net emissions of 349 million tCO2.
2. Reduction through energy efficiency and responsible energy use of at least 8% of energy demand.
3. Share of more than 50% of renewables in electricity generation (currently, this percentage is around 14%, therefore this would require approximately 7.5 GW of new installed capacity).
4. Electric car penetration of 2% of the vehicle fleet.
5. Target of 1,000 MW of renewable distributed generation (currently, there is slightly more than 20 MW of distributed generation capacity installed, on the applicable legislation and additional considerations, see our report here).
6. Expansion of the high voltage electricity transmission grid by 5,000 km of new lines (see our reports on the National Grid Expansion Plan here and on the recent call for expressions of interest for transmission works, here).

1.3. Qualitative targets

The NETP 2030 also proposes the following qualitative targets:

1. Enabling conditions for the local development of the clean energy technology value chain, including new non-conventional and emerging technologies.
2. Creation of new local and sustainable jobs related to the sector.
3. Reduction of energy poverty as the needs associated with this concept are established.
4. Facilitation of a sustainable energy transition.

1.4. Investments required

To meet the goals outlined in the NETP 2030, the document estimates that significant investment by the private and/or public sector will be required, totaling approximately 86,642 MM US$. It is estimated that around 23,362 MM US$ will be for new electric power; 3,817 MM US$ for transmission and 10,272 MM US$ in electric distribution; 10,000 MM US$ in LNG; 27,777 MM US$ in energy efficiency; 911 MM US$ for distributed generation, and 503 MM US$ in low emission H2.

We understand that given the magnitude of capital needed to comply with the NETP 2030 guidelines, the participation of the private sector and multilateral entities will be essential, alongside appropriate sectorial and macroeconomic base conditions.

1.5. Actions to meet the NETP 2030 objectives

The following actions are envisioned to comply with the targets set forth in the NETP 2030:

1. Updating Laws 26,190 and 27,191: The need to update these laws is under study, in line with the technological developments of renewable sources. As this regime ends in 2025, an eventual reform should consider the necessary amendments in terms of fiscal and tax benefits during the additional term.
2. Distributed Generation Law: The possibility of revising the regulatory decree of the law, to allow a higher participation and adhesion by the provinces.
3. New regulatory frameworks: Such as the energy efficiency, promotion of low-carbon H2 (for additional information on H2 and the bill, see here), LNG, and e-mobility bills.

Among other actions, the PTE 2030 assumes the continuity of RenovAr auctions and the development of MATER, as well as other specific programs.

2. GSET 2050 - scenarios and key figures

The GSET 2050 considers three scenarios, referred as baseline, optimistic and ambitious. The three scenarios share a similar evolution until 2030, after which they diverge. Of these three scenarios, we highlight the following:

2.1. New installed capacity

Under the base scenario, 54 GW of new installed capacity is considered; 58 GW under the optimistic scenario; and 69 GW in the ambitious scenario. Of these overall values, a large share of renewables stands out: 34 GW in the baseline scenario; 38 GW in the optimistic scenario; and 45 GW in the ambitious scenario.

According to the GSET 2050, investments would total 101,536 MM US$ under the base scenario; 107,016 MM US$ under the optimistic scenario; and 113,679 MM US$ under the ambitious scenario.

Likewise, investments in distributed generation of around 2,273 MM US$ are considered in all scenarios.

The high share of electricity from renewable sources in the matrix stands out: 80% in the base scenario; 84% in the optimistic scenario; and 87% in the ambitious scenario.

2.2. Transmission grid expansions

Regarding transmission network expansions, an investment of around 7,594 MM US$ is considered in the base scenario; 8,829 MM US$ in the optimistic scenario; and US$ 10,688 in the ambitious scenario. To date, the GSET 2050 does not establish quantitative targets in terms of new transportation capacity.

2.3. LNG

Regarding LNG, although the GSET 50 does not establish quantitative targets, it assumes investments of around 22,500 MM US$, 30,000 MM US$ and 40,000 MM US$ in each respective scenario.

2.4. H2

Finally, investments in low-emission H2 are considered in extremely significant amounts, namely 9,574 MM US$, 21,440 MM US$ and 31,545 MM US$ in each scenario.

For additional information, please contact Nicolás Eliaschev, Javier Constanzó, and/or Rocío Valdez.

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Call for Expressions of Interest to Manage and Finance Extensions of Transmission Facilities

The Secretary of Energy has launched a call for expressions of interest to manage and finance (in whole or in part, with other interested parties, or with the National Government) extension works of the high-voltage transmission facilities (“EOIT”).

On July 6, 2023, Resolution No. 562/2023 issued by the Secretary of Energy (“Resolution 562”) was published in the Official Gazette. This regulation has initiated the EOIT and sets forth the main rules to be complied by interested parties in submitting non-binding proposals before the Secretary of Energy.

The call seeks proposals to ramp-up investments in the power generation and transmission sectors. The call is aimed to (among others) high-consuming power industries (e.g., mining projects), that may be interested in expanding the existing transmission facilities.

Resolution 562 expressly states that there has been a continuous growth in the power generation sector, yet such increase has not been matched by the necessary transmission works.

Reference is also made to the mining projects located in the north of the Province of San Juan (copper and gold, among others) and in the northwestern provinces (lithium) -many of them in areas that as of the date hereof are off-grid. According to Resolution 562, such projects could improve their feasibility and accelerate FID status if they were able to offtake electricity from the grid.

1. Key aspects of the EOIT

Under the EOIT, interested parties are invited to submit expressions of interest related to:

1. the expansion of transmission capacity that would allow new power supply to be supplied to high-demand areas, in which the Government may provide funding up to 50% of the investment; or
2. the supply of energy to mining projects that are currently off-grid, in which the funding is to be entirely provided by private investors or assumed by the sponsor.

2. EOIT requirements

EOITs must comply with certain requirements, such as, inter alia: provide details of the company or group of companies submitting the EOIT, describe the works to be undertaken, and the financing structure envisioned.

With respect to works that involve the expansion of the transmission grid, the submitting party will have a right of priority of dispatch over such facility, pursuant to the terms of Resolution 360/2023 (for additional information on this regulation, please click here).

EOITs shall be submitted no later than October 4^th, 2023.

For additional information, please contact Nicolás Eliaschev, Javier Constanzó, and/or Rocío Valdez.

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Approval of the final text of the Contract for the Transportation of Natural Gas – President Néstor Kirchner Gas Pipeline

On June 26, 2023, Resolution No. 532/2023 of the National Energy Secretariat ("Resolution 532") was published in the Official Gazette, approving the final text of the Contract for the Transportation of Natural Gas through the President Néstor Kirchner Gas Pipeline (the "Contract" and "GPNK", respectively) between Energía Argentina S.A. (ENARSA or the "Transporter") and the Wholesale Electricity Market Administrator Company (CAMMESA or the "Shipper").

For background, it should be noted that, on one hand, Emergency Decree No. 76/2022 empowered ENARSA (with the approval of the Ministry of Economy) to freely negotiate contracts regarding transportation capacity with producers and/or shippers for the construction or expansion, in whole or in part, of the GPNK. Notably, the contracted transportation capacity will not be subject to the natural gas transportation rates approved by the National Gas Regulatory Entity (ENARGAS, for its Spanish acronym, Ente Nacional Regulador del Gas), which will apply to the uncommitted transportation capacity.

On the other hand, for background to the Contract, Resolution No. 828/2023 of the Ministry of Economy had approved its execution with the ultimate goal of replacing liquid fuels used in the generation of electricity and other industries, as well as facilitating the eventual export of natural gas.

Main provisions of the Contract:

1. Purpose: The Shipper agrees to deliver or have delivered natural gas to the Transporter for transportation, and the Transporter agrees to receive, transport, and deliver natural gas to the Shipper or on behalf of the Shipper to whomever the Shipper designates, in quantities of cubic meters equivalent to 9,300 kcal/m³ between the point(s) of receipt at the entrance of the GPNK near Tratayén, Province of Neuquén, and the point(s) of delivery that will enable the entry of natural gas into the gas pipeline called "NEUBA II" in the TGS system, in the locality of Salliqueló, Province of Buenos Aires, in a first stage, and subsequently to the locality of San Jerónimo, Province of Santa Fe.
2. Character of Supply: The transportation service will not be subject to reductions and will be firm and uninterrupted. It may only be reduced and/or interrupted in exceptional operational and/or natural gas supply situations.
3. Term: The Contract will come into effect on June 20, 2023, and will remain in force and effect until June 20, 2058. The Contract will be renewed for successive periods of 1 year until either the Transporter or the Shipper expresses its intention to terminate it.
4. Contracted Daily Quantity (CDQ): Up to 25,000,000 m³/day, distributed as provided in Article 6 of the Contract.
5. Right of Priority: CAMMESA will have the right of priority for contracting with ENARSA for any new capacity suitable for operation, for partial quantities and up to the total additional capacities that the GPNK Project (as defined in the Contract) will contribute, in which ENARSA obtains rights to transport natural gas.
6. Price: (i) during the first 15 years, equal to $1.023 USD/m³ per month of daily capacity, and (ii) starting from year 16, equal to $0.023 USD/m³.
7. Assignment: The Shipper, with the prior authorization of the Transporter and the Regulatory Authority, may fully and/or partially assign the rights arising from this Agreement to the Generator(s) Agent(s) of the Wholesale Electricity Market (WEM) that it deems appropriate.
8. Jurisdiction: The Contract shall be governed by and construed and interpreted in accordance with the laws of the Argentine Republic. Disputes may be referred to the Secretary of Energy at the administrative level, and judicially the Federal Civil and Commercial Courts of the Argentine Republic with jurisdiction in the Autonomous City of Buenos Aires is established.

For additional information, please contact Nicolás Eliaschev, Javier Constanzó, and/or Rocío Valdez.

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Electricity Transmission: Expansion of Existing Capacity. New Network Works and Associated Infrastructure

On June 12, 2023, Resolution No. 507/2023 of the National Energy Secretary (‘Resolution 507’) was published in the Official Gazette. Resolution 507 approved the following plans: (i) the Extra-High Voltage Electric Power Transmission System Expansion Plan (500 kV); (ii) the Existing Extra-High Voltage Electric Power Transmission Stations Revamping Plan (500 kV); (iii) the Existing High and Medium Voltage Transformer Stations Revamping Plan (132 kV); and (iv) the High and Mid Voltage Electric Power Transmission System Expansion Plan.

These plans aim to address the curtailment of some corridors of the transmission system and their respective transformer facilities, without the possibility of connecting potential renewable areas with the major demand nodes.

Furthermore, Resolution 507 requires the Federal Council of Electric Power (CFEE, for its Spanish acronym, Consejo Federal de la Energía Eléctrica), the Committee for the Administration of the Federal Electric Power Transmission Trust Fund (CAF, for its Spanish acronym, Comité de Administración del Fondo Fiduciario para el Transporte Eléctrico Federal), the Wholesale Electricity Market Administrator Company (CAMMESA, for its Spanish acronym, Compañía Administradora del Mercado Mayorista Eléctrico S.A.), the Special Unit for Electric Power Transmission System (UESTEE, for its Spanish acronym, Unidad Especial Sistema de Transmisión de Energía Eléctrica), the Works Commission Resolution No. 1/03, and the Committee for the Administration of the Electric Power Supply Transmission Works Trust (FOTAE, for its Spanish acronym, Fideicomiso de Obras de Transporte para el Abastecimiento Eléctrico) to collaborate with the Energy Secretary in order to carry out the infrastructure projects involved in this resolution.

Resolution 507 does not establish the mechanisms by which these plans will be implemented, which will be subject to complementary regulations.

The following details the network and associated infrastructure covered by each plan:

I. Extra-High Voltage Electric Power Transmission System Expansion Plan

This plan is included in Annex I of Resolution 507, transcribed below:

II. Existing Extra-High Voltage Electric Power Transmission Stations Revamping Plan

This plan is included in Annex II of Resolution 507, transcribed below:

III. Existing High and Medium Voltage Transformer Stations Revamping Plan

This plan is included in Annex III of Resolution 507, specifying the works to be carried out in TRANSBA, TRANSNEA, TRANSNOA, TRANSPA, DISTROCUYO, EPESF, ENERSA, EMSA, SECHEEP, and DPEC.

IV. High and Medium Voltage Electric Power Transmission System Expansion Plan

This plan is included in Annex IV of Resolution 507, specifying the works to be carried out in TRANSNOA, TRANSBA, DISTROCUYO, TRANSNEA, TRANSCOMAHUE, and TRANSPA.

For additional information, please contact Nicolás Eliaschev, Javier Constanzó, and/or Rocío Valdez.

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Secretary of Energy introduces significant news in the Corporate Renewable PPA Market – Expansion of Transmission Facilities

The Secretary of Energy has issued Resolution 360/2023 (“Resolution 360”) that introduces significant changes in the regulations of the Corporate Renewable PPA Market (“MATER”, for its Spanish acronym, Mercado a Término de Energías Renovables).

Certain large power consumers (i.e., mining, refineries, and other industries) may also have an interest in Resolution 360 whereby such regulation enables the request for dispatch priority in connection with future transmission expansions that may be undertaken by players in the power demand area.

As of the regulations introduced, dispatch priority may now be requested by renewable generators, large users (or a combination thereof).

Resolution 360 seeks (among other goals) to: (a) promote completion of renewable projects under construction, (b) address curtailment matters (by allowing a revamped mechanism of dispatch priority award), and (c) enable financing/funding from the private sector.

We understand that Resolution 360 is a positive step that will help continuing developing the MATER, in turn allowing off-takers to source their consumption needs from the grid through corporate PPA. Some of the matters addressed by Resolution 360 were discussed in the seminar held by our firm with Aires Renewables – a summary of this seminary may be accessed here.

Main changes included in Resolution 360 are:

1.Association between renewable projects associated and large users with an incremental power demand

Under Resolution 360, new renewable projects are allowed to submit before the ISO (CAMMESA) a request for dispatch priority with respect to joint incremental power demand projects equal to or greater than 10 MW.

Such request must be submitted by the renewable generator jointly with the off taker for which the request is being filed.

2. Transmission expansions associated to MATER projects

Renewable generation projects acting under the MATER may undertake transmission expansion works. Such projects will have dispatch priority.

3. Partial curtailment mechanism

For existing transmission facilities with no full availability to assign dispatch priority (i.e., dispatch priority granted for less than the installed capacity of the renewable project), the ISO (CAMMESA) may assign partial dispatch priority.

In any case, under this alternative, generators will be able to deliver energy into the grid with a 92% probability (i.e., 8% curtailment chances).

4. Other modifications

(a) Legacy renewable projects are allowed to enter the MATER

Resolution 360 enables legacy renewable generators under GENREN to act within the MATER, subject to meeting certain criteria and paying an entry-fee.

(b) Amendments to Resolution 281 and complementary provisions

Resolution 360 introduced:

• For those projects with dispatch priority that have not complied with the committed date for COD with committed commercial operation date are banned from requesting dispatch priority for the following four (4) quarters following the committed date for COD.
• However, COD may be extended for 720 days if a late COD penalty is paid.
• Partial COD is allowed in which case dispatch priority will be pro rata. Late COD penalties will be calculated for the capacity that is not operational.

(c) Funding of a Transmission Fund

Finally, Resolution 360 determined that all receivables (e.g., fees, extension requests, relocation requests and access to the MATER requests) will be destined to a fund for transmission expansion works.

For additional information, please contact Nicolás Eliaschev, Javier Constanzó, Daiana Perrone and/or Rocío Valdez.

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The Secretary of Energy introduces new rules allowing early termination of PPAs and to help free up transmission capacity

On April 25, 2023, the Secretary of Energy issued Resolution No. 284/2023 (“Resolution 284” and the “SE”), which includes new rules allowing early termination of Power Purchase Agreements (“PPA”) entered under Resolution No. 202/2016 of the former Ministry of Energy and Mining that have not yet achieved  commercial operation date (“COD”), and RenovAr 2 and 3.

The purpose of Resolution 284 is to help free up power transmission capacity, in turn making it available to new projects and subject to request for dispatch priority.

Similarly, Resolution SE No. 1,260/2021 had already contemplated the right to amend the terms of PPAs under RenovAr 1, 1.5, 2 and 3, in addition to early-exit rights (for additional information on Resolution SE No. 1260/2021, please click here). However, Resolution 284 only allows early termination and is limited to PPAs under Resolution No. 202/2016 of the former Ministry of Energy and Mining and RenovAr 2 and 3.

Following the enactment of Resolution 284, Annex 3 of the Corporate Market Regime (MATER, for its Spanish acronym, Mercado a Término de Energías Renovables) that is updated and published periodically by Compañía Administradora del Mercado Mayorista Eléctrico Sociedad Anónima (CAMMESA), should be followed closely to see whether the capacity being released will be included in such annex and if dispatch priority requests will be allowed with respect to such new capacity.

Please see below a summary of Resolution 284.

1. Key takeaways of Resolution 284

1.1. Eligible projects for early termination

Projects with PPA under (a) Resolution 202/2016 of the former Ministry of Energy and Mining, that have not obtained COD, and (b) RenovAr 2 and 3, may choose to voluntarily terminate their PPA.

1.2. Requirements for early termination

Projects that may choose to voluntarily terminate their PPA must:

1. Make a one-off payment of US$ 35,000 per MW;
2. Waive to any right, action or administrative, judicial, extrajudicial or arbitration claim, either in local or foreign venue, against the National Government, the SE and/or CAMMESA;
3. Indemnify the National Government against, and hold the National Government harmless from, any action, administrative, judicial, extrajudicial, extrajudicial or arbitration claim, either in local or foreign venue, that may be asserted by its shareholders or controlling, controlled or affiliates; and
4. Waive to any tax benefits granted thereto.

1.3. Deadline for requesting early termination

All requests must be filed with CAMMESA within a term no longer than 30 calendar days as of April 25, 2023 (i.e., May 25, 2023). Since May 25 and 26, 2023 are holidays in Argentina, it is advisable to confirm with CAMMESA if requests will be received on the business day immediately thereafter (i.e., May 29, 2023).

2. Additional matters

The proceeds of the termination payments will be destined to the Fund for the Development of Renewable Energies (“FODER”, for its Spanish acronym, Fondo para el Desarrollo de las Energías Renovables).

Projects that are early terminated will also be required to terminate their FODER Joinder Agreement.

For additional information, please contact Nicolás Eliaschev, Javier Constanzó and/or Rocío Valdez.

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New complementary rules in connection with Distributed Generation in the Province of Buenos Aires

On April 5, 2023, Resolution No. 463/2023 of the Ministry of Infrastructure and Public Services of the Province of Buenos Aires ("Resolution 463") was published in the Official Gazette of the Province of Buenos Aires, supplementing Provincial Law No. 15,325 and Regulatory Decree No. 2371/2022 (for additional information about these rules, please visit the following link), which establishes the technical, legal, economic, contractual and rate conditions that are necessary to allow self-generation of renewable origin in the area under the competence and jurisdiction of the Province of Buenos Aires, by users-generators for their self-consumption, and the eventual injection of surpluses to the distribution grid.

1. Regulatory background

Law No. 27,424, passed by the National Congress on November 30, 2017, approved the federal regime for the promotion of distributed generation of renewable energy (for additional information on Law No. 27,424, please visit the following link). Section 40 of the law invites the provinces and the Autonomous City of Buenos Aires to adhere and, in turn, issue their regulations at a local level.

Within such framework, Law No. 15,325, passed by the Congress of the Province of Buenos Aires on April 21, 2022, adhered to Law No. 27,424. This law declared distributed generation of electric energy from the use of renewable energy sources, for self-consumption and the eventual injection of the surplus to the provincial electric distribution network, as of provincial interest. Additionally, this law adheres to the promotional, tax, fiscal and financing benefits established in Law No. 27,424.

On January 11, 2023, provincial Decree No. 2371/2022 was published, regulating Law No. 15,325. As from its enactment, the users-generators of the Province of Buenos Aires that were authorized to generate energy from renewable sources for self-consumption may register in the Registry of Users-Generators of Renewable Energy of the Province of Buenos Aires (the "RUGER", for its Spanish acronym, Registro de Usuarios-Generadores de Energía Renovable de la provincia de Buenos Aires) with the possibility of accessing the tax advantages related to exemptions in the Stamp Tax and in the Gross Income Tax. The decree designates the Ministry of Infrastructure and Public Services as enforcement authority, entrusted with regulating powers.

2. Relevant aspects of Resolution 463

Resolution 463 includes three annexes, which are described below.

Annex I establish the Connection Regulations for Residential Users-Generators (the "Regulations"). The purpose of the Regulations is to establish the technical, legal, economic, contractual and rate conditions necessary to allow self-generation of power from renewable sources in the provincial grid, in accordance with Provincial Law No. 11,769. In effect, the Regulation establish the procedure for the installation and connection of distributed generation equipment, the technical requirements for its installation, the technical feasibility study to be carried out by the distributor, the connection request to be requested by every user-generator, the rights and obligations of the user-generator and the distributor, and the measurement and billing system.

Annex II sets forth: (i) the pass-through mechanism, which allows passing through a representative value of the average purchase cost in the Wholesale Electricity Market, and the transportation costs; (ii) parameters in connection with the calculation of the rate; and (iii) the initial values of the variables included in the mathematical expressions for calculating the rate parameters.

Finally, Annex III establishes the procedure and requirements for registering in the RUGER. This will contain statistical information on user-generators connected to the distribution network of provincial and municipal distributors. The registry will allow user-generators to obtain the tax benefits established by Provincial Law No. 15,325, special credit lines established in the province, as well as any other benefit that may be foreseen in the future.

For additional information, please contact Nicolás Eliaschev, Javier Constanzó, and/or Rocío Valdez.

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