APPENDIX I - CESUR AUCTION RULES

Transcription

1 APPENDIX I - CESUR AUCTION RULES BILATERAL ELECTRIC POWER PROCUREMENT WITH PHYSICAL DELIVERY ON THE PART OF DISTRIBUTION COMPANIES FOR SUPPLY IN THE IBERIAN PENINSULA AT REGULATED PRICES EIGHTH CESUR AUCTION. MARCH 2009 Non binding unofficial translation of CESUR AUCTION RULES 1

2 This translation has been carried out with the sole and exclusive purpose of enabling the CESUR AUCTION RULES text to be read in English. The text will in no case and to no effect be considered a binding text for the Auction Administrator. In the event of any discrepancies between this text and the Spanish version, the content of the Spanish version prevails. Non binding unofficial translation of CESUR AUCTION RULES 2

3 TABLE OF CONTENTS 1. Purpose of the Auction 2. Product on Auction 2.1. Quantity to be Auctioned 2.2. Price of the Product 2.3. Period of Use of the Product Auctioned 2.4. Form of Use of the Product Awarded 3. Entities Participating in the Auction 3.1. Consumers of the Product to be Auctioned 3.2. Auction Participants Capacity to be a Participant Participation in the Auction through a Representative Rights of Participants Obligations of Participants 3.3. Auction Supervisor 4. Auction Administrator 4.1. Obligations of the Auction Administrator 4.2. Rights of the Auction Administrator 5. Requirements for Participating in the Auction 5.1. Intervening Parties 5.2. Requirements for the Parties Participating in the Auction Procedures 5.3. Pre-qualification Process 5.4. Qualification Process 6. Auction Date 7. Auction Procedures 7.1. General Considerations 7.2. Starting Phase and Bidding Phase of the Auction 7.3. Closing of Rounds and Calculation Phase 8. Option to use Default Bids and the Default Bid Updating Procedure in Case of Emergency Non binding unofficial translation of CESUR AUCTION RULES 3

4 9. Confirmation and Communication of the Auction Results 10. Breakdown of the Quantity of Product Acquired through a Representative 11. Communications with the Entity Organizing the Auction Communications with Participants Communications with the Entity Supervising the Auction 12. Force Majeure Definition of Force Majeure Exoneration from Liabilities Notification and Mitigation of Force Majeure APPENDICES TO THE RULES APPENDIX I APPENDIX II APPENDIX III APPENDIX IV APPENDIX V Calendar of the Auction and Product to be Auctioned Definition of Terms Pre-qualification Guide Qualification Guide Information on Distribution Companies Non binding unofficial translation of CESUR AUCTION RULES 4

5 1. Purpose of the Auction The ITC/400/2007 Order of February 26 th regulating the bilateral contracts signed by distribution companies to supply the Iberian Peninsula at regulated prices establishes that the power to be supplied by each seller shall be determined through a procedure of descending clock auction. OMEL was designated by the National Energy Commission (CNE) in accordance with the procedures set forth in the legislation governing Public Administration Contracts to implement the auction, in compliance with Article 6 of the ITC/400/2007 Order of February 26 th. The present document establishes the CESUR Auction Rules. 2. Product on Auction The Auction shall place the product set forth in Appendix I CALENDAR OF THE AUCTION AND PRODUCT TO BE AUCTIONED of the present rules at the disposal of the Participants Quantity to be Auctioned The Quantity of total product to be Auctioned is set forth in Appendix I CALENDAR OF THE AUCTION AND PRODUCT TO BE AUCTIONED of the present rules. The quantity to be auctioned is expressed in product Blocks, the characteristics of which are indicated in the same Appendix I Price of the Product The price of the Product shall be determined on the basis of the Auction results, expressed in euro/mwh with two decimal places for the period indicated in Appendix I CALENDAR OF THE AUCTION AND PRODUCT TO BE AUCTIONED of the present rules. The price of each product shall apply to all the MWh of the said product covered by the contract and shall be single and uniform for all the hours of its delivery period. The prices of the two products may be different. The price for one Block from the Quarterly Base Load Product shall be single and uniform for all the hours of all the days of its Delivery Period. The price for one Block from the Quarterly Peak Load Product shall be single and uniform for all the hours of its Delivery Period and may be equal to or different from the price of the Quarterly Base Load Product Period of Use of the Product to be Auctioned The period of use of the product to be auctioned is indicated in Appendix I CALENDAR OF THE AUCTION AND PRODUCT TO BE AUCTIONED of the present rules Form of Use of the Product Awarded A Participant who has won a product in the bidding must follow the procedures indicated in the pertinent regulation. Non binding unofficial translation of CESUR AUCTION RULES 5

6 3. Entities Participating in the Auction 3.1. Consumers of the Product to be Auctioned The product purchasers shall be Qualified Distribution Companies who have pledged adhesion to the pertinent Model Supply Contract and filled up the basic information about the distributor as per APPENDIX V. The rights and obligations of product purchasers are those set forth in the pertinent ITC/400/2007 Order, along with those established in the Model Supply Contract Auction Participants Capacity to be a Participant The Participating Sellers of the product shall be the electric power producers whether under the ordinary or special regime, the resellers, the external agents, the consumers directly acting in the market, as well as their respective representatives who have passed the pre-qualification and qualification processes attached in Appendices III and IV of the present Rules, and who comply with the conditions established at any given time by the pertinent Resolution of the General Secretariat of Energy. The rights and obligations of product sellers are those set forth in the pertinent ITC/400/2007 Order, along with those established in the Model Supply Contract Participation in the Auction through a Representative Selling entities may participate in the auction either directly or through a representative, subject to the scope and limitations set forth in the present Resolution and in the applicable regulations. The participating sellers may participate in the auction either directly or through a Representative, whereby these two options mutually exclude each other Rights of Participants Participants shall have the following rights: 1. To participate in the Auction, presenting Bids in the successive Auction rounds, in keeping with the present Auction Rules. 2. To be duly informed by OMEL regarding all the questions related to operation and to the Auction Rules. Non binding unofficial translation of CESUR AUCTION RULES 6

7 3. To be declared Winners in the event in case theirs is the winning Bid during the last Auction Round. 4. To receive reports about the auction results from OMEL, with sufficient information about the Product awarded and other necessary data. 5. To have access to all the information and documentation in relation to the Auction, and specifically, to their participation therein. 6. To exercise all the specific rights reflected in the Model Supply Contract, in the present Resolution, and in the ITC/400/2007 Order Obligations of Participants The following shall be the obligations binding upon Participants: 1. To respect the procedures of the Auction, in particular, the obligation to Bid as set forth in the present Auction Rules. The Participant declares that it fully knows and accepts the content of the present Rules, and is likewise aware of the applicable regulations in particular, and the Resolutions dictated for the purpose by the General Secretariat of Energy of the Ministry of Industry, Tourism and Trade. 2. To accept the results of the Auction. The Participants acknowledge that the Auction Rules do not grant them any right to interrupt, conclude, delay or repeat the Auction. 3. In the event that they act through a representative, this latter must proceed to break down the quantity of product won by each of the parties he represents. 4. To maintain the confidentiality of that information that they may have received from OMEL through their participation in the Auction. 5. To avail of the computer equipment and means of information necessary to be able to participate securely in the Auction, as is specified in the User Manual provided by OMEL. It is incumbent upon Participants to ensure the correct operation of the equipment with which they are going to access the auction, the correct installation of the software and devices necessary, and the correct operation of the communication infrastructure linking them with OMEL. 6. To comply with all the specific obligations reflected in the Model Supply Contract, in the present Resolution, and the ITC/400/2007 Order. Non binding unofficial translation of CESUR AUCTION RULES 7

8 3.3. Auction Supervisor The National Energy Commission (CNE), through the representatives that it designates for the purpose, shall see to it that auction procedures are conducted objectively and transparently, without discrimination. 4. Auction Administrator The management of the Auction was entrusted to the OPERADOR DEL MERCADO IBÉRICO DE ENERGÍA, POLO ESPAÑOL. S.A. ( OMEL ), as an independent entity ( Auction Administrator ), whereby it is responsible for organizing the Auction Obligations of the Auction Administrator Apart from those functions arising from the applicable regulations, the following are the functions of the Auction Administrator: 1. To verify the conditions for participating in the auction under the terms established in the Pre-qualification and Qualification Guides ( Appendices III and IV ). 2. To verify and see to it that the Distribution Companies have expressed their adhesion to the pertinent Model Supply Contract, as well as filled out the basic information on the distributor as per APPENDIX V. 3. To receive the bids from the participants in the Product Auction. 4. To see to it that the Bidding adjusts to the procedure set forth in the Auction Rules. 5. To notify the representatives designated by the National Energy Commission (CNE) and the SGE, as applicable, of any non-fulfilment of the Auction Rules on the part of Participants. 6. To determine the results of the Auction. 7. To publish the total aggregate quantity of Product awarded, along with the Price at which it was awarded. 8. To directly communicate to the representatives designated by the National Energy Commission (CNE) and the SGE the information that these may request from it, necessary for them to exercise their functions in relation to the Auction. 9. To guarantee the secrecy of the confidential information on the Participants to which it may have access. 10. To uphold at all times the confidentiality due in carrying out the Auction. 11. To issue instructions for the appropriate exercise of its functions, communicating their content to the Participants and the representatives designated by the National Energy Commission (CNE) and the SGE. Non binding unofficial translation of CESUR AUCTION RULES 8

9 12. To proceed to the Pre-qualification and Qualification of the parties interested in participating in each Auction, as set forth in greater detail in the Prequalification and Qualification Guides ( Appendices III and IV ). 13. To inform the Participants those have emerged as Winners in the Auction about the quantity of Product awarded therein and the Price thereof. 14. To keep the Participant Database updated. 15. To conduct training sessions, and system and procedures testing sessions. 16. To draw up reports on each action regarding the suitability of the process and the degree of compliance of the Auction Rules. The said reports must be sent to the representatives designated by the National Energy Commission (CNE) and the SGE within the timelines legally established for the purpose. 17. To report on recommendations to the representatives designated by the National Energy Commission (CNE) regarding the improvement of the auctions as regards competition, transparency and non-discrimination based on the opinions of the participants Rights of the Auction Administrator 1. To receive the information necessary from the Participants for the exercise of its obligations. 2. To carry out all the actions necessary in the event of a breach of compliance with the present Rules. 5. Requirements for Participating in the Auction It is a purpose of the present rule to establish the requirements that the potential participants must satisfy, as well as the acts that have to be executed in order to participate in the auction procedures Intervening Parties For the purposes of the Auction Procedures, distinctions are made between the following parties on the basis of the Qualification Procedure phase in which the interested party is found: Entity interested in the Auction: these shall be the electric power producers, whether under the ordinary or special regime, the resellers, the external agents and the consumers directly acting in the market Pre-qualified Participant: a Party Interested in fulfilling all the requirements for pre-qualification set forth in the PRE-QUALIFICATION GUIDE ( Appendix III ) Qualified Participant: a Pre-qualified Participant who complies with all the requirements for qualification set forth in the QUALIFICATION GUIDE ( Appendix IV ) Winner: a Qualified Participant who has participated in the Auction and obtained the contract for the product auctioned. Non binding unofficial translation of CESUR AUCTION RULES 9

10 5.2. Requirements for the Parties Participating in the Auction Procedures All of the following requirements must be fulfilled in order to participate in the Auctions: Be a legal person Be a producer of electric power, whether under the ordinary or special regime, a reseller, an external agent or a consumer directly acting in the market, as well as the respective representatives of these who have passed the process of pre-qualification and qualification Be a market agent and have registered the pertinent Generic Programming Unit (UPG) in Red Eléctrica de España (REE) Be a market agent and have registered the pertinent Generic Offer Unit (UOFG) in OMEL Fulfil the process of pre-qualification and qualification set forth in Appendices III and IV of the present Rules Fulfil the conditions established at any given time by the pertinent Resolution of the General Secretariat of Energy and the ITC/400/2007 Order Pre-qualification Process The Party Interested in the Auction that aspires to be pre-qualified for the Auction Procedures must fill up the documentation set forth as per the Pre-qualification Guide ( Appendix III), within the timelines established for the purpose. Once pre-qualified, the Participant will be able to access the confidential information to qualify for the auction and may proceed to qualification process. The confidential information to which the pre-qualified participants will have access shall be the following preliminary documents: - Draft of the CESUR Auction Rules that contain the following Appendices: APPENDIX I Calendar of the Auction and Product to be Auctioned APPENDIX II APPENDIX III APPENDIX IV Definition of Terms Pre-qualification Guide Qualification Guide APPENDIX V - Model Supply Contract Information on Distribution Companies The Auction Administrator place the list of pre-qualified participants as per the date indicated in APPENDIX I in the bidding system at the disposal of the pre-qualified participants. The said information shall be kept updated at all times. On the basis of that list, pre-qualified participants acting as representatives must give information regarding their agreements with other pre-qualified participants in their application for qualification. Non binding unofficial translation of CESUR AUCTION RULES 10

11 Any participant who has been a pre-qualified participant for the previous auction he will be considered pre-qualified for the present auction, without the obligation to fill up the auction administrator any other information set forth in the Pre-qualification Guide, unless any item of information has changed Qualification Process Participants who are Pre-qualified in the Auction and who seek to participate in the procedures of Bidding must fill up the documentation set forth in the Qualification Guide ( Appendix IV ). Once the procedure established in the Qualification Guide has been completed, they shall be considered as Qualified Participants. Should the number of qualified entities be considered insufficient, or should there be arguments that indicate insufficient competitive pressure, OMEL, as the entity responsible for the execution of the auction, shall declare the auction as suspended after informing the representatives of the National Energy Commission. In the case of pre-qualified participants who desire to participate in the auction and have an agreement of participation with other pre-qualified participants, it shall fall upon the participant designated as representative to undergo the qualification process in behalf of these. In order to push through with its qualification, the representative must fill up the documentation set forth in the Qualification Guide ( Appendix IV ). 6. Auction Date The Date of the Auction, once approved by the SGE resolution, shall be communicated to the interested parties and published on the OMEL public auction website at least five (5) working days before the same is held. The SGE, upon the justified petition of OMEL, and following notification sent to the representatives designated by the National Energy Commission (CNE), may postpone the Auction at any time before the Auction Date. In such case, OMEL shall notify the Bidders of the new Auction Date at least five (5) Working Days in advance. All or part of the process, procedures or calendar of the Auction may be concluded or modified by resolution of the SGE, due to important technical and operative reasons. For the purposes of calculating timelines, the Working Day on which the notification is received or, should this day not be a Working Day, the first Working Day following the date that the notification is received, shall be considered as the date of notification. Notifications received starting from 12:00 CET shall be considered as having been received on the following Working Day. The Auction Calendar is set forth in Appendix I Calendar of the Auction and Product to be Auctioned of the present rules. 7. Auction Procedures 7.1. General Considerations The capitalized terms included in the present Rules are defined in Appendix II, Definition of Terms For the purposes of the present Rules, a Bidder shall be understood as a Qualified Participant, just as is defined in the present rules. Non binding unofficial translation of CESUR AUCTION RULES 11

12 OMEL shall place the User Manual for participation in the auction, which shall include indications for Bidding, at the disposal of all the Bidders During the process of qualification, OMEL shall provide all Persons Authorized to send Bids (Bidders) with a digital certificate to access the auction Website. It is a necessary condition for an Authorized Person to electronically sign the declaration of initial use of the Website in order to be able to send Bids during the Auction OMEL shall hold the Auction in a series of Rounds with descending prices under the supervision of the National Energy Commission (CNE) representatives The content of the Bids presented by the individual Bidders in the framework of the Auction shall be confidential and shall be treated as such In accordance with a procedure pre-established by Resolution of the SGE, the manager may reduce the Target Load on Auction in the course of the bidding. The representatives of the National Energy Commission (CNE) shall supervise the application of the rule for reducing the Target Load on Auction established by the SGE If, in the period between bidding rounds, the reduction of the Target Load on Auction is required, the Manager shall call a time out during the Calculation Phase and inform about the reduction of the Load through the message application of the bidding system Starting Phase and Bidding Phase of the Auction During the first Round, OMEL shall establish a Last Going Price for each Product in accordance with the method previously approved by Resolution of the SGE communicated to OMEL. These prices shall be previously communicated to the qualified participants before 17:00 CET of the day prior to the Auction Date. Depending on the indicative offers send by participants, also will be communicated by the Auction Administrator the Supply Excess quantity at the Maximum Starting Price Before the beginning of each Round R, OMEL shall determine and communicate to each Bidder the following data for each product in relation to Round R, according to the method previously approved by Resolution of the SGE upon the proposal of the Manager: The Maximum Starting Price for the Round (PSR) in euro/mwh, which shall coincide in all the rounds with the Last Going Price of the previous Round, except for the first round, which shall be the Maximum Starting Price that figures in APPENDIX IV Qualification Guide, and in those Rounds whose Last Going Price has not varied with respect to the previous Round, which shall hence be the Maximum Starting Price of the previous round The Last Going Price of the Round, in euro/mwh, which shall be less than or equal to the previous price. This price shall be obtained according to the method previously approved by Resolution of the SGE communicated to OMEL; The Bidding Period for the Round in course, which shall coincide with all the products of the auction In the event that incidents arise that alter the normal course of any of the Non binding unofficial translation of CESUR AUCTION RULES 12

13 mechanisms making up the bidding process, OMEL shall be authorized to change the schedules of the different rounds projected in the auction, always subject to prior notice to the participants through the message application of the bidding system In each Round, the Bidder shall establish the Quantities that it is disposed to offer at the Last Going Price as a Bid for each product, and, should it not want to bid all the Quantity at Last Going Price, the quantities offered at the Starting Prices (up to 5 different prices) that it may consider appropriate, as well as the Quantities that it wants to Switch to the other product The Starting Prices for blocks for withdrawal must be less than or equal to the Maximum Starting Price of the Round for each Product and greater than the Last Going Price of the Round for each Product The Bidding Prices shall be fixed in euro/mwh with two decimal places, different for each product The Quantity offered for each product shall be expressed in Product Blocks without decimals The bidding information system shall show Quantity of product and Prices without a thousands separator In the event that a Bidder does not present a Bid in a Round, or all the Bids sent have been invalidated, the system will make a Bid in his behalf: In the case of the first Round, a starting offer will be made for each product at the Maximum Starting Price for the Round, for the quantity for which a participant has qualified with respect to each product A starting offer will be made for each product at the current Maximum Starting Price for the Round, for the Quantity offered in the previous Round at the Last Going Price of that Round In the specific case of a Round in which the Last Going Price for a Product has not varied with respect to the previous Round, the system shall maintain the Blocks Retained from the Bidder during the said previous Round as a Bid for that Product The Bidder may reallocate the blocks of one product to another by Switching, provided that the Last Going Price of the Product from which the Switch is made has decreased with respect to the previous round, and even when the product to which it is switching has not been reduced with respect to the previous round, subject to the following limitations: It shall not be possible to request to switch blocks from both products in the same Bidding Round In a Round, it is possible for the Participant to avail of a Free Quantity of blocks coming from blocks that are being switched from a product that has been Retained, as per the rules of the calculation phase for the retention of switched blocks, whereby, as the result of a switch in offered Quantity from the other product, these are no longer retained. The participant may totally or partially allocate these Blocks to any of the Products within its Bid. The rest of the Free Quantity that is not allocated shall be considered as conclusively withdrawn. Non binding unofficial translation of CESUR AUCTION RULES 13

14 In the same Round, will not be permitted switching simultaneously from one product with free assigned blocks in the same Round If a bidder has switched Blocks Retained in one product, the bidder can bid a part or full amount of those blocks at Last Going Price In those Products whose Last Going Price has not changed with respect to the previous Round, the Blocks Retained from the Exit Bids made during the Bidding for the previous Round shall be maintained. In this case, it will be possible to modify the Bid as regards the said Products only by switching Blocks from the other Product whose Last Going Price has been reduced since the previous Round, or from the Free Quantity No participant may simultaneously present more than one Bid, either directly, or indirectly through a Representative The Offerable Quantity of a Participant cannot increase with respect to the previous Round. At the beginning of the auction, this quantity is the sum of the quantities qualified for the products The auction information system shall validate the Bids received. In order for a Bid to be valid, it must comply with the requirements set forth below: The Bid must be received during the Bidding Period of the pertinent Round Each Product Quantity included in a Bid must be expressed in terms of positive whole numbers and can not be greater than the Quantity Demanded for such Product The Quantities for each product offered during the first Round shall be equal to the quantities declared by the Participant in the Qualification Process For each Product, the sum of the quantities offered at Exit Prices plus the quantities offered as Switches to the other product, plus the quantity offered at the Last Going Price for the Round, must coincide with the Quantity Offered during the Round prior to the Last Going Price of the Round, plus the free quantity allocated to that product, plus the switches made from the other product to this product The Bids must comply with the provisions contained in the foregoing Rules When, in a Round, a Bidder has presented more than one Bid, only the last valid Bid received shall be considered. The Rest of the Bids made previously shall be considered annulled The system shall automatically notify the Bidders who have presented an invalid bid of the reasons why this has been rejected. Subject to the condition that the Bidder is able to demonstrate to OMEL s satisfaction that the Bid considered as invalid was not so during the 5-minute period for complaints following the close of the reception of bids for the Round, OMEL may authorize the Bidder to present his Bid once more. For this purpose, the bidding period for the Round will be reopened for all participants, subject to prior notification sent to these through the message application of the bidding system Closing of Rounds and Calculation Phase At each Round, after the end of the Period of Bid Presentation, and Non binding unofficial translation of CESUR AUCTION RULES 14

15 account taken of all the valid Bids, OMEL shall calculate the Aggregate Offer for each Product at the Last Going Price for the Round as the sum of the quantities offered at the Last Going Price for the Round plus the quantities switched to this Product The Supply Excess for each Product will be determined as the greater value between zero and the Aggregate Offer for the Product, less the Demanded Product Quantity For each product with an Excess Supply of zero, steps will be taken to retain the offered blocks necessary to cover the Demanded Product Quantity (Retained Blocks). First of all, the Demanded Quantity shall be covered using the blocks offered at the Last Going Price and the blocks switched from other products; afterwards, the blocks for withdrawal listed at exit prices shall be retained, selecting these in the order of increasing prices; and lastly, if necessary to reach the demanded quantity, the blocks for switching from this product shall be retained. The rule of distribution shall be applied in the event of having to select between blocks from more than one Participant complying with the same conditions in order to exactly cover the Demanded Product Quantity In the event that the Excess Supply of a product is more than zero, the withdrawal and switching of the blocks indicated in the Bids shall be allowed, whereby no Blocks shall be Retained for that product In the event that Total Excess Supply is more than zero, steps shall be taken to execute a subsequent Round. The prices for the new Round shall be calculated in the following way: A new Last Going Price shall be calculated for those products with an Excess Supply of more than zero, which shall be less than the price of the previous Round, using the Rule of Price Calculation approved by Resolution of the SGE The same Last Going Price shall be maintained for those products with an Excess Supply equal to zero. In the event that the Excess Supply of each product is equal to zero and a new Free Quantity has appeared at the close of the Round, steps shall be taken to execute a subsequent Round In the event that Total Excess Supply is equal to zero, the Auction shall be declared closed. The Final Price for each Product and the Product Quantities allocated shall be determined as follows: In the event that the Aggregate Offer for the Product at Last Going Price is equal to the Demanded Product Quantity, the Last Price for the Product shall be the Last Going Price for the Round. The Quantity allocated to each Bidder shall be the quantity of blocks in their Bids at Last Going Price In the event that the Aggregate Offer for the Product at Last Going Price is less than the Total Demanded Quantity in the Auction, the Last Price for the Product shall be the Price of the last Block that would have to be Retained to cover the Demanded Product Quantity. The Quantity allocated to each Bidder shall be the quantity of blocks in their Bids at Last Going Price, plus the blocks retained Rule of Distribution: Initially, a distribution of the quantity to be distributed (QR) is made Non binding unofficial translation of CESUR AUCTION RULES 15

16 among the blocks offered at the same price. The quantities allocated in this distribution are rounded down to the lesser whole value, eliminating the decimal remainders. Next, an assessment is made of the imbalance (D) produced as remainder between the quantity distributed (QR), less the sum of the individual quantities that are rounded down that are allocated to each offer. The value of the imbalance (D) indicates the number of offers that should increase their allocation by 1 product Block in order to correct the imbalance referred to. Lastly, the quantity of product accepted is increased by 1 product Block to a number D of offers that went into the distribution, selecting first of all those that eliminated a higher decimal remainder in the process of rounding down to the lower whole value. In the event that this value turns out to be equal in several bids, the bids of greater quantity shall be selected. In the event of repeated equality, the bids that were presented first shall be selected. If the equality persists, the bids shall be selected in the alphabetical order of the participant s code At the end of each Round, OMEL shall place the following information at the disposal of each Bidder: The Last Going Price for each Product for the following Round; Information on the range of the Total Excess Supply; The Quantity of blocks for Switching retained from the Bidder with respect to each Product The Quantity of blocks at Exit Price retained from the Bidder with respect to each Product The Bidder s Free Quantity The Target Load of the Auction When the Auction has closed in accordance with the circumstances described in these Rules, OMEL shall then inform each Bidder that the Auction has closed and shall declare that the current Round represents the Final Round When the Auction has closed, OMEL shall put the information regarding Quantity Allocated and Final Prices of the Auction Products at the disposal of each Winner. 8. Option to use Default Bids and the Default Bid Updating Procedure in Case of Emergency 8.1. The participants in the auction who so wish to may introduce default bids for the quarterly base load product, for the quarterly peak load product, or for both. In the event that the participant does not want to use the option to place default bids for a product, it should leave the field for price and quantity of blocks for that product blank The default bid for a product shall consist of a minimum price of up to two decimal places expressed in euros/mwh, and a maximum number of blocks expressed as a whole number. The participant requests that: In the event that a valid bid from the participant for that round exists, the Non binding unofficial translation of CESUR AUCTION RULES 16

17 default bid should not be used In the event that no valid bid made by that participant for that round exists, and the last going price of the new round is superior or equal to that of the default bid, the system insert a bid for that product in its behalf, at the last going price of the new round, for a quantity of blocks equal to the lower of the two values between the quantity of blocks that the participant had offered to sell at the last going price of the previous round and the quantity of blocks that it may have indicated in its default bid for that product. If the quantity of blocks expressed in the default bid for that product is lower than the quantity bid at the last going price of the previous round, the difference between both quantities shall be considered as an opening bid for that product at the last going price of the previous round Should there be no valid bid made by the participant for that round, and should the last going price of the new round be less than that of the default bid for a product, but should the last going price for the previous round be greater than the said default bid, the system should insert, in behalf of the participant, an opening bid for that product at the price of its default bid, for a quantity of blocks equal to the lower of the values between the quantity that the participant offered to sell at the last going price of the previous round and the quantity that it may have indicated in its default bid for that product. If the quantity of blocks expressed in the default bid for that product is inferior to the quantity bid at the last going price of the previous round, the difference between both quantities shall be considered as an opening bid for that product at the last going price of the previous round In the event that none of the foregoing conditions is complied with, the default bid shall not be used The default bid option does not contemplate any kind of transfer of blocks or use of free blocks Default bids shall respect the conditions set for all bids, particularly the following: If the last going price for the new round is equal to the last going price of the previous round, no default bids shall be inserted, since the quantities bid at the last going price for the previous round are valid and these bids are retained If by chance the quantity of a product auctioned is reduced and the default bid at the last going price of the round is superior to that amount, the default bid would be reduced until it meets the condition that no participant may bid for a product at a last going price for a round that is superior to that being bid for that product. In this case, the remainder of the product shall be considered as a starting bid at the last going price for the product for the previous round The values of the prices and quantities of blocks to be sold of the default bids on both products may be updated and consulted by the participant at any time The value that will be used for the possible default bid on a product shall be that value received in the OMEL bidding system before the closing of the reception of bids for the pertinent round Values for the default bids may be introduced into the OMEL bidding system by the participants at least 1 hour before the opening of the first bidding round of the auction Emergency Procedure for Updating Default Bid Prices Non binding unofficial translation of CESUR AUCTION RULES 17

18 Along with the default bids (a price and a quantity of blocks to sell for each product), the participant must introduce a telephone number into the OMEL bidding system The participant may modify and look up the telephone number at any time, as it may do with the price values of default bids. The periods for the reception of bids will not be changed to favour the use of this option, so that the participant who has not been able to bid in one round and who wishes to use this option to modify default bidding values must call OMEL with enough time in advance to permit the insertion of the new values into the bidding system Should the participant have problems communicating with the OMEL bidding system remotely, it may resort to the following procedure: To call OMEL at the telephone numbers given for this purpose, indicating that it is requesting for the update of default bidding values OMEL will return the call solely to the telephone number currently reflected in the OMEL bidding system, which the participant will have had to introduce into the bidding system beforehand The telephone numbers introduced must be valid for dialing from a telephone in Spain; i.e., they must begin with 00XXXXXX, if the number belongs to a telephone outside Spain. In the telephone number, it shall only be possible to use numeric characters Conversations held by way of use of this option shall be held in Spanish and recorded In the telephone call made by OMEL to the participant, only the information that the participant would avail of if its computers were functioning correctly shall be facilitated. 9. Confirmation and Communication of the Auction Results 9.1. For purposes of supervision, OMEL shall inform the representatives designated by the National Energy Commission (CNE) of the auction results for each Participant The representatives of the National Energy Commission (CNE) shall confirm whether the procedure has been carried out objectively, competitively, and without discrimination, and shall validate the results before 24 hours have elapsed from the moment that the auction was closed, confirming that no noncompetitive behaviour and other flaws have been detected in the execution thereof Next, OMEL shall notify each participating entity of the result of the declaration of the representatives of the National Energy Commission (CNE) and the quantity of product awarded OMEL shall publish the aggregate results of the auction on its public website: Number of Winners Closing Price Total Quantity of Product allocated 9.5. It shall maintain the data on the execution of the auction confidential. Non binding unofficial translation of CESUR AUCTION RULES 18

19 9.6. Once the representatives of the National Energy Commission (CNE) has confirmed that the process was carried out objectively, competitively and without discrimination, and the results have been validated, OMEL shall communicate its results to the Ministry of Industry, Tourism and Trade (MITYC), the National Energy Commission, and the participants and distributors their corresponding results, including the name of the winners, the quantity awarded and the supply price OMEL shall communicate the results of the auction to Participants through the electronic mechanisms that it has established. In the event of an error of fact in the information communicated, Participants may ask for rectification within the 24 hours following the closing of the auction. 10. Breakdown of the Quantity of Product Won through a Representative Representatives acting on behalf of various sellers must inform the Auction Administrator of the quantity of product allocated to each of the parties they represent through the bidding system. This notification must take place before 16 hours have elapsed, counted from the conclusion of the auction. Once the participant acting as representative has carried out the disaggregation, this party must confirm this with the auction s administrator. The administrator will then proceed to close the period of disaggregations as soon as they have all of the confirmations from the participants acting as representative or the deadline to communicate this has expired. The sum of the product quantities allocated to each party represented shall be equal to the quantity awarded to the representative in the auction. Should the representative not disaggregate the assigned amount of product within the disaggregation period, it shall be understood that the qualified participant acting as representative is the buyer of the entire quantity won by said participant in the auction. Once the quantity of product has been broken down by the representatives, OMEL shall communicate the results, including the names of the sellers who have won, the quantity awarded, and the supply price, to the Ministry of Industry, Tourism and Trade (MITYC), the National Energy Commission, the participants acting through a representative and to the representative itself, the purchasing distributors, and the system operator. 11. Communications with the Entity Organizing the Auction Communications with Participants - Communications from OMEL to the bidders shall be sent over the media and formats determined by OMEL, to the persons and addresses that the participants have declared in their applications for the purpose during the prequalification process, which are reflected in the Database. In the event that the usual media are not available, OMEL shall indicate alternative media as soon as possible. - All communications sent during the Auction must be drawn up in Spanish. The communications made through the bidding system shall remain stored therein. Telephone communications shall be recorded. - OMEL shall place the User Manual for participation in the auction at the Non binding unofficial translation of CESUR AUCTION RULES 19

20 disposal of all the Bidders. The said Information shall be available at least five (5) working days before the Auction Date (or, in relation to any Participant admitted as Bidder, less than five (5) working days before the Auction Date, immediately after the Bidder s admission). - The communications between Bidders and OMEL must take place over electronic media, in keeping with the User Manual as regards message content, format and form of communication. For this purpose, Bidders must avail of the computer equipment and communication media necessary to be able to participate securely in the auction, as is specified in the said User Manual. - All communications that participants must address to OMEL in its capacity as Auction Administrator shall be made to: OPERADOR DEL MERCADO IBÉRICO DE ENERGÍA, POLO ESPAÑOL, S. A. (OMEL) Attention: CESUR Auctions C/ Alfonso XI, 6, 4ª planta [4 th floor] Madrid (Spain) Telephone Fax: subastascesur@omel.es Public website: Auction website: Communications with the Entity Supervising the Auction OMEL and the representatives of the National Energy Commission (CNE) shall hold the meetings that they consider pertinent in order to clarify or improve any terms with reference to the execution of their activities in the auction. OMEL, as the entity managing the auction: - Shall inform the representatives of the National Energy Commission (CNE) of any breach and incidence of the Auction Rules on the part of the participants. - Shall communicate the instructions that it has issued for the exercise of its functions. - Shall place the content of the Bids presented at the auction at the disposal of the representatives of the National Energy Commission (CNE). - Shall inform on all the communications made to possible participants, prequalified participants, and qualified participants. - Shall give notice of any modification to the Auction Rules. - Shall communicate to the National Energy Commission (CNE) representatives the information that these request it, necessary for the exercise of their functions. - Shall issue a certificate to the National Energy Commission (CNE) once the pre-qualification, qualification, and auction timelines have ended, attaching a questionnaire required by the representatives of the National Energy Commission (CNE) for the certification. Said information shall be sent to the representatives of the National Energy Commission (CNE) by persons authorized to represent OMEL. - Once the qualification timeline has ended, OMEL shall inform the representatives of the National Energy Commission (CNE) regarding any incidents that may have arisen in the qualification process and regarding the Non binding unofficial translation of CESUR AUCTION RULES 20

21 qualified participants, indicating the maximum product quantity that each qualified participant will bid, the persons authorized to bid, and the indicative offers for each participant. 12. Force Majeure Definition of Force Majeure For the purposes of these rules, those cases provided for by Article 1105 of the Spanish Civil Code shall be considered reasons of force majeure. By way of example, a failure in the OMEL systems arising from any unforeseeable event or if the event is foreseeable it is unavoidable, shall be considered a case of Force Majeure. OMEL only assumes liability in the event of failure in the process of registration and / or reception of bids, in cases of bad faith or serious negligence. Its liability is likewise limited to cases of bad faith or serious negligence in the following cases: - Unavailability of the auction website - Any alteration in the course of the technical process In the event of serious negligence, the liability of OMEL shall be limited to an indemnification for direct damages Exoneration from Liabilities Should one of the parties be affected by a reason of Force Majeure that impedes it from complying fully or partially with the obligations set forth in the present Framework Contract, and the prerequisites contemplated in the Rule of Notification and Mitigation of Force Majeure are present, it shall be understood as released from complying with the said obligation. In the present case, no indemnification whatsoever is applicable for damages deriving from the non-fulfilment of the obligations affected by Force Majeure Notification and Mitigation of Force Majeure In order to consider that a reason of Force Majeure justifies the non-fulfillment of obligations, the party affected by the said reason must communicate this in writing to the other party and the representatives designated by the National Energy Commission (CNE) as soon as it becomes aware that such an event has taken place. The said communication shall include, in addition, a (non-binding) forecast regarding the duration and extent of the said reason of Force Majeure. Likewise, the party affected by the reason of Force Majeure commits itself, in good faith, and exerting all reasonable effort, to carry out those actions and adopt those measures that may be necessary to palliate or prevent the effects of the Force Majeure, and shall maintain the other parties informed of any variation in the forecast regarding the extent and duration of the reason of Force Majeure. Non binding unofficial translation of CESUR AUCTION RULES 21

22 APPENDIX I AUCTION CALENDAR AND PRODUCT TO BE AUCTIONED 1. Auction Calendar Close of deadline for the delivery of Prequalification and Qualification documents. Date of update of Load Cap for Qualification and Indicative Offers Date of update of Load Cap for Qualification and Indicative Offers 05/03/2009 at 13:00 09/03/2009 at 13:00 23/03/2009 at 13:00 Date of Auction 26/03/ Product to be Offered at the Auction: Two products shall be offered for bidding at the auction: the Quarterly Base Load Product and the Quarterly Peak Load Product. - Base Load Product for three months (Producto Base Trimestral ), which consists of the supplying of a quantity of constant power for every hour of the second quarter of Peak Load Product for three months (Producto Punta Trimestral), which consists of the supplying of a quantity of constant power for every hour of the 12 peak hours of each day, between 8:00 and 20:00 CET, of every calendar day except Saturdays, Sundays and National Holidays during the second quarter of Product Type Starting Date of Supply Ending Date of Supply Quarterly Base Load Product 1/04/ /06/2009 Quarterly Peak Load Product 1/04/ /06/ Target Auction Volume In accordance with the Resolution of the General Secretariat of Energy (SGE), the Target Auction Volume shall be between 100 blocks and 500 blocks. Hence, the Target Auction Volume shall be equal or superior to the lower limit. The SGE shall fix the Target Auction Volume, along with the division of the Target Auction Volume between the Quarterly Base Load Product and the Quarterly Peak Load Product before the auction. The SGE shall inform the Administrator, who in turn shall inform the participating Sellers regarding these initial values. The sum of the Non binding unofficial translation of CESUR AUCTION RULES 22