Issue 65 • May 2012

POCP: The Missing Piece in Price Formation

OPINION

In this section we show that, through detailed probabilistic simulations of system operation and of the trading mechanisms of the CCEE, by not including the POCP security procedure in the short-term price of energy, the great majority of the economic signals of the sectorial model are significantly distorted. The text illustrates how this distortion affects the incentives to free consumers™ contracting, the effectiveness of captive consumers™ demand to the supply situation, the system service charges, and even reserve energy.

REGULATIONS

Themes of this issue: (i) definition of the cost of CCC for 2012; (ii) the comings and goings of the Replacement Amount; (iii) apportionment of the energy from Angra 1 and 2 plants (again); (iv) parameter ﬁkzﬂ of White Tariff; and (v) postponement of new energy auctions.

ENVIRONMENTAL

This section analyzes different methodologies for evaluation of the environmental impact of hydroelectric plants, with application in several projects built or planned in the Amazon region of Brazil and of Andean countries.

SUPPLY

This section presents an overview of energy supply in Brazil, through the structural balances of supply and of peak developed by PSR. We analyze such factors as delays in new power plants, transmission constraints and uncertainties in future generation.

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Electronically published since 2006, the PSR Energy Report is a monthly newsletter developed by PSR, whose main objective is to present a comprehensive and current analysis of regulatory, legal issues, water resources and environment and supply of the electricity sector in Brazil.