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Electricity Market
Sector structure
Upstream The sector is partially privatised.

Domestic production represent the 94% of demand in 2005, whilst imports from to Guatemala and Honduras account for remaining part. Interconnections with Guatemala and Honduras allow trade of energy.

The generation segment consists of 6 firms that participate in the wholesale market and 8 smaller generators that participate in the retail market.

The main player is the state-owned Comisìon Ejecutiva Hidroeléctrica de Rio Lempa (CEL) that operates all HPPs facilities, accounting for the 35% of the production in 2005.

Other important competitors are La Geo that owns the Geothermal plants (20,6% of production); Duke energy International El salvador, a subsidy of the The US-based Duke Energy, and Nejapa Power Company, a wholly subsidy of El Paso Corporation and the El Salvador-based which own TPPs (with the domestic autoproducers CESSA and CASSA all together control the remaining 36,4%).

A wholesale electricity market has been established and administrated by the Unidad de Transactiones (UT) the market operator (MO), a public company jointly owned by transmissors, big distributors, big consumers and big generators.

It is composed by the market of contracts, accounting for the 60,98% of the market, which relies on long-term freerly bilateral negotiations and the spot market (Mercado Regulador del Sistema - MRS) accounting for the remaining 39%.

Both vertical and horizontal integration is allowed.
Networks Transmission is publicly owned whilst distribution is fully privatised.

The state-owned Empresa Transmisora de El Salvador SA de CV (ESTESAL) owns and operate the transmission grid.

Several licensed DSOs but the market is highly concentrated.

AES El Salvador Group, majority-owned by the US- based AES Corporation, through its subsidies (CAESS SA; AES-CLESA S. en C., EEO SA and DEUSEM SA) supplies the 88,8% of the demand in 2005, whilst DELSUR SA, majority-owned by a subsidy of the Chilean EMEL and the US-based PP&L, supplies the remaining 21,2%.

The General Superintendency for Electricity and Telecomunication, the electricity and telecommunication regulator (so called “Superintendencia General de Electricidad y Telecomunicaciones-SIGET”) regulates the distribution and transmission tariffs using a methodology which relies upon the cost structure of an efficient firm.
Downstream The sector is fully privatised.

Supply is competitive: several suppliers (often integrated with generation or distribution) are active in the market and some independent suppliers began enter the market recently.

End-users price are regulated by the electricity regulation and approved by the SIGET if the supplier is also the licensed distributor, whilst in the case of suppliers different from local distributors prices are freely negotiated.

Market is fully opened since 2003.
Gas Market
Sector structure No gas sector
Current issues An ambitious interconnection project across Central America, (SIEPAC project) is expected to begin providing services in 2007. A subset of SIEPAC (known as Mercado Eléctrico Regional- MER) began operating on an experimental basis in September of 2002.

Vertical Unbundling under discussion.
National Legislation Reglamento de la Ley General de Electricidad con reformas incorporadas, 07/05/2004
Ley de Electricidad con reformas incorporadas 08/04/2003
Reglamento aplicable a las actividades de comercialización 24/10/2000
Sources IERN staff on publicly available information.