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Annex 2.2 Spot market power transfers

In the wholesale market [1], according to contractual supply commitments, transfers of energy and power are made between generating companies. The energy is valued at the marginal cost of production, while the power is valued at the node price of the power.

To determine the price of peak power, the unit cost of installation of dual gas turbines is used, since this technology generally supplies the tip of the system. At this power price is known as power node price and is determined semi-annually by the CNE. Depending on the characteristics of its primary energy source, its forced failure rate, programmed outputs, and its joint contribution to the system, each power unit is given a power called adequacy power[2] with which its power input is determined (sale of power). This type of mechanism is known in the international literature as “payment for administrative capacity”, since it is not the market that determines it, but it is an administrative body that evaluates and determines prices and quantities. In the case of Chile, the agencies are the CNE and the Coordinator of the system, respectively. Likewise, each generating company, according to its supply contracts and the behavior of these consumptions in conditions of peak demand, is responsible for purchasing power in the system.

The surplus or loss of power position of a generation company will depend on the supply contracts that it has. As an example, a company that does not have supply contracts will always be in surplus in power transfers, since it has no declared obligations and these will not be deducted from its balance sheet.