ARGENTINA Law and Practice Contributed by: Héctor Pozo Gowland, Esteban de Vedia, Carlos Ernesto Miná and Francisco Pozo Gowland, Pozo Gowland Abogados
ducing the “Guidelines for the Normalization of the Wholesale Electricity Market and Its Pro- gressive Adaptation” (the “Guidelines”). These Guidelines outline the strategic regulatory and economic framework that will govern the pro- gressive reform of Argentina’s Wholesale Elec- tricity Market ( Mercado Eléctrico Mayorista, or MEM). Overall Objective The Secretariat of Energy aims to re-establish economic and regulatory discipline in the MEM, addressing long-standing imbalances caused by price distortions, subsidies, and delayed invest- ments. The reform is designed to ensure long-term sus- tainability, fiscal efficiency, and enhanced reli- ability of the electricity grid. Adapted Marginal Spot Factor (FSA) • A central instrument in the reform is the intro- duction of an “Adapted Marginal Spot Factor” ( Factor de Spot Marginal Adaptado , or FSA), which will allow prices to progressively reflect marginal generation costs. • The FSA will initially apply to large users (known as GUMAs, GUMEs, and GUDIs), with the potential to expand to other segments in later phases. • This mechanism seeks to improve cost sig- nalling, efficiency, and investment conditions in the MEM. Cost recovery and tariff reform • The Guidelines propose tariff adjustments aimed at recovering generation and transmis- sion costs in a gradual, socially responsible manner. • While full cost transfer is not immediate, the policy sets a path towards economic sustain- ability by reducing reliance on state subsidies.
• The reform includes pricing schemes that differentiate among user segments based on their consumption profile and capacity to pay. Investment promotion • Improving price signals and economic rationality is seen as essential to reviving investment flows in generation, particularly in thermal back-up capacity and renewable projects. • The Guidelines emphasise the need for a stable investment climate, underpinned by transparent rules and reliable remuneration mechanisms. Regulatory stability and institutional strengthening • The reform prioritises regulatory predictability and clear rule-making as core enablers of market confidence. • CAMMESA will continue to administer the market, but its planning and operational processes will be strengthened to improve decision-making and efficiency. • Co-ordination with ENRE and stakeholders will be enhanced. Renewable and distributed generation • The Guidelines support the integration of renewable energy and distributed generation, providing tailored price signals to reflect their grid value. • Complementary storage systems are also being promoted to facilitate the transition to a flexible and modern energy matrix. Consumer impact and protection mechanisms • Large users will experience a gradual transi- tion towards marginal-cost pricing, while households and small commercial users will
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