Endesa and Iberdrola Hold First Virtual Power Plant Auction
June 14 2007 - 2:05PM
Business Wire
Endesa (NYSE:ELE) and Iberdrola today held Spain�s first virtual
power plant auctions (VPP) in which 1.45 TWh of power was awarded.
This first auction represents a landmark in the commitment of both
companies to the development of the Spanish energy market and the
promotion of forward contracting. More than 15 agents took part in
today�s auction, 11 of which were foreign (70% of the total),
underlining the success of the initiative and the level of
confidence in the assurances offered by Endesa and Iberdrola.
Moreover, a larger number of companies are expected to take part in
subsequent auctions. These companies have already made their
interest known but were unable to register for the first auction
due to the tightness of the deadlines. The agents taking part in
today�s VPP auctions had a choice of two different products.
Firstly, the companies auctioned 600 MWq (equivalent quarterly
capacity) of base-load VPPs at a strike price of Euro 17 per MWh,
which can be used 24 hours a day and seven days per week. Secondly,
the companies auctioned 250 MWq of peak-load capacity at a strike
price of Euro 52 per MWh, which can be used from 8:00am to 12:00pm
from Monday to Friday, excluding public holidays. The auction went
smoothly, with bidding for base load capacity closing after seven
rounds with 550 MWq awarded (91.7% of the volume offered). Bidding
for peak-load capacity closed after the second round with 246 MWq
awarded (98.4% of the volume offered). The agents paid a premium of
Euro 20,000 per MW of base-load per month for three months, Euro
20,115 per MW of base-load per month for six months and Euro 21,883
per MW of base-load per month. These prices are in line with those
on the OTC market and the OMIP closing price. Peak-load capacity
closed at Euro 2,310 per MW per month for one quarter, Euro 2,087
per MW per month two quarters and Euro 2,867 per MW per month for
four quarters. Virtual capacity auctions (VPPs) are a mechanism
which has been successfully used in other European markets to boost
the liquidity of the forward market. This project represented a
challenge for Endesa and Iberdrola, which organised Spain�s first
VPP auction in record time, despite the complexity of the
undertaking. Following the publication of Royal Decree 1634/2006,
Iberdrola and Endesa implemented all the necessary mechanisms to
successfully develop the auction by developing the necessary legal
framework, attracting the interest of possible participants and
ensuring that all participants had equal and transparent access to
information. To this end the companies created a website
(www.endesa-iberdrola-vpp) and organised the Participant Conference
on 25 April. Throughout the process, the project enjoyed the
support and collaboration of two leading players in the sector: IBM
and Deloitte. IBM was responsible for the organisation of the
auction, demonstrating its proven experience in the organisation of
this type of auction. Deloitte managed the auction, ensuring that
it complied with the rules and prevailing legislation at all times.
* This document may contain certain forward-looking statements
regarding anticipated financial and operating results and
statistics that are subject to risks and uncertainties as well as
to material risks, changes and other factors which may be difficult
to predict, including, without limitation, those factors described
in the Documento de Registro de Acciones of Endesa filed within the
Comisi�n Nacional del Mercado de Valores and in the Form 20-F of
Endesa filed within the Securities and Exchange Commission, both
for the fiscal year ended December 31, 2004. For all of these
forward-looking statements, we claim the protection of the safe
harbour for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995.
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