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Author (up) Reus, L.; Munoz, F.D.; Moreno, R. pdf  doi
  Title Retail consumers and risk in centralized energy auctions for indexed long-term contracts in Chile Type Journal Article
  Year 2018 Publication Energy Policy Abbreviated Journal Energy Policy  
  Volume 114 Issue Pages 566-577  
  Keywords Price risk; Energy auctions; Portfolio optimization  
  Abstract Centralized energy auctions for long-term contracts are commonly-used mechanisms to ensure supply adequacy, to promote competition, and to protect retail customers from price spikes in Latin America. In Chile, the law mandates that all distribution companies must hold long-term contracts – which are awarded on a competitive centralized auction – to cover 100% of the projected demand from three to fifteen years into the future. These contracts can be indexed to a series of financial parameters, including fossil fuel prices at reference locations. Drawing from portfolio theory, we use a simple example to illustrate the difficulties of selecting, through the current clearing mechanism that focuses on average costs and individual characteristics of the offers, a portfolio of long-term energy contracts that could simultaneously minimize the expected future cost of energy and limit the risk exposure of retail customers. In particular, we show that if the objective of the regulator is to limit the risk to regulated consumers, it could be optimal to include contracts that would not be selected based on individual characteristics of the offers and a least-cost auction objective, but that could significantly reduce the price variance of the overall portfolio due to diversification effects between indexing parameters.  
  Address [Reus, Lorenzo; Munoz, Francisco D.] Univ Adolfo Ibanez, Fac Ingn & Ciencias, Diagonal Las Torres 2640, Santiago, Chile, Email:  
  Corporate Author Thesis  
  Publisher Elsevier Sci Ltd Place of Publication Editor  
  Language English Summary Language Original Title  
  Series Editor Series Title Abbreviated Series Title  
  Series Volume Series Issue Edition  
  ISSN 0301-4215 ISBN Medium  
  Area Expedition Conference  
  Notes WOS:000424962800053 Approved no  
  Call Number UAI @ eduardo.moreno @ Serial 816  
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