CNPE Ruling n.3: The price and the haste

OPINION

CNPE Ruling No.3 determined that, up to August this year, procedures that represent firisk-aversionfl should be incorporated into the computer model for calculating operating policy (and price formation). In this editorial, we analyze three approaches that could meet this determination: (i) Risk- Aversion Surface [Superfície de Aversão a Risco](SAR); (ii) application of the fiConditional Value at Riskfl (CVaR) in a restriction of supply reliability (here called CVaR-deficit); and (iii) modification of the objective function of the operation so as to minimize a convex combination of the expected value and of the CVaR of operating cost (here called CVaR-cost).

REGULATIONS

This section discusses the following topics: (1) a new regulatory structure change via MP; (2) epilogue (maybe) of the seasonalization imbroglio; (3) treatment of non-extended concessions; (4) new CARs; (5) alteration of past PLD; (6) A0 auction; (7) new criterion for Aeolian plants physical guarantee; (8) & (9) guidelines for reserve and A-5 auctions; (10) transfer of funds to distribution utilities.

ENVIRONMENTAL

We bring a review of São Manoel hydro plant licensing process, blocked for three years due to difficulties of negotiating with Indian peoples on land adjacent to the plant.

SUPPLY

Besides the traditional analyses of supply with PSR's balances of demand and peak, this section gives an analysis of the current level of reservoirs (late wet season) compared to historical record.