New Rules for Constitution and Execution of Guarantees in the Wholesale Electricity Market (“MME”)
In order to reflect the amendments to Wholesale Electricity Market Regulation, Item 8.1 in connection with the constitution and execution of MME guarantee being included by the Supreme Executive Order No. 005-2018-EM, the Order OSINERGMIN No. 092-2019-OS/CD (“Order”) has been published on June 1, 2019 on the Official Gazette “El Peruano”.
Main aspects of the Order amending the Technical Procedure of the Economic Operation Committee on the National Interconnected System (COES) No. 46 “Guarantees and Trust Constitution for the Wholesale Electricity Market” (“PR-46”) are presented below as follows:
1. Order, Section 1: Amends PR-46, Item 4 and Item 8.1.6
– PR-46, Item 4: It includes the definition “Default on Payment in the MME”, corresponding to total or partial non-payment of any obligation established in the reports of monthly assessment by a Participant to one or more Members, unless non-payment would be ordered by a pertinent authority. In this way, any default event on a monthly basis—either by a Participant to another Participant in the MME or COES Member not participating in the MME but being affected—will be covered.
– PR-46, Item 8.1.6: Dates indicated to address information about Power to Be Remove and Projected Coincident Demand (8.1.1), Submitting Remarks on COES Guarantees Report (8.1.3), and Accrediting the Risk Qualification in Force (8.1.5) to COES correspond to the month prior to the start of participation in the MME.
2. Order, Section 2: Various items of PR-46 are amended, as follows:
– PR-46, Item 3 (Scope): It is specified that the PR-46 scope includes Distributors, Main Users and Participants (Generators), if applicable.
– PR-46, Item 5.2.1 and Item 5.2.5: Regarding constitution of guarantees in the MME by Distributors and Main Users, it is established that they may be exempted from this obligation if they have a risk qualification of A (AAA, AA o A). Such exemption will be null and void if an “exempted participant” defaults on its payment obligation in a certain month; and, in this case, the corresponding guarantee for its participation in the MME shall be presented. It may be exempted again after a 36-month period.
– On the other hand, Generators are excluded from presenting risk qualification reports or, otherwise, constituting guarantees, unless they default on their payment in the MME for two (2) months, consecutive or alternate. In these cases, same rules set forth will be complied with by Distributors and Main Users.
– PR-46, Item 8.1.1 to Item 8.1.5: Term and/or dates stipulated to submit the information used for guarantees constitution or evidencing the risk qualification that must be observed by either Participants or COES are amended.
– PR-46, Item 11.1 and Item 11.1.2: It is established that the obligation of the affected Member—through its General Manager or any attorney-in-fact empowered to request collection— up to 18:00 hours of the first business day of the next month upon assessment having been submitted and using the forms being approved by COES, to communicate to COES any default on payments in the MME and these will be published on COES website. In such communication, the execution of the guarantee for the due amount shall be expressly requested provided that the default is associated with a participant having constituted guarantees.
– The affected Member is responsible for the accuracy of the information being communicated, releasing COES under this terms from any complaint for collection and execution of corresponding guarantees.
3. Order, Section 2: Term provided by the Temporary Single Provision of the PR-46 was eliminated.
For further details, please contact Verónica Sattler (vsattler@estudiorodrigo.com), Alejandro Manayalle (amanayalle@estudiorodrigo.com) and/or Eduardo Ramos (eramos@estudiorodrigo.com).
