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Argentinean dam is ‘pushing power prices down’

Five years after the deregulation of the electricity wholesale market, some Argentinean power generators are concerned that new capacity additions may depress electricity prices over the next three years.

One of the factors contributing to lower prices is the ongoing commissioning of new generating capacity at the 2760MW Yacyreta dam on the Parana River. The twenty vertical axis Kaplan turbines at Yacyreta are expected to produce an average of 17 000GWh of energy annually when fully commissioned.

The binational hydro project, located on the Argentina-Paraguay border, is scheduled to bring on line 1000MW of new capacity this year as its generating units are commissioned in stages.

In November 1996, Argentina lowered wholesale electricity prices by 24 per cent, to accommodate about 1200MW of extra capacity that came on line from Yacyreta in 1997. Residential tariffs and industrial rates were also reduced by five and seven percent respectively. To strengthen wholesale prices generating companies have aggressively sought export markets in energy-hungry Brazil.

Power exports to Brazil however, require new transmission lines as well as approval from the Argentinean energy agency Enre. The investment in inter-ties between Brazil and Argentina has progressed, though slowly, compared with the huge amounts that are being invested to increase capacity in Argentina.

Analysts anticipate that increased power supply may further decrease wholesale prices by about 15 per cent, until the year 2000, from the current US$24 per MWh. Some of the current agreements by the suppliers with utilities Edenor and Edesur that pay high tariffs are also expected to run out in 2000, adding further pressure on prices.