3.4. Contract market

The contract market is a financial-type market with contracts freely agreed between the parties. The contract market has the following characteristics:

• Generators can enter into contracts with distribution companies and free customers.
• The contracts with distribution companies can be established for the supply of regulated customers or for free customers.
• Contracts are confidential; details about supply point and quantities must be reported to the Coordinator for their administration. However, the CNE and the Ministry in their monitoring role can request information of these contracts.
• In the contract market a supply and a purchase obligation is established at a predetermined price. Normally, measurements are performed on an hourly basis.
• Contracts are financial, i.e. generators always buy in the spot market to sell at the contract market, whether dispatched or not. The financial contract provides price stability to purchasers and sellers, in accordance with their expectations of the evolution of marginal costs.
• Sales contracts to distribution companies for regulated customers must consider the price resulting from public tenders regulated and directed by the CNE.
• The sale of power is made at a price resulting from the study of node price calculated semi-annually by the CNE in the months of April and October.