NERA Economic Consulting Announces Results from CESUR Energy Auction in Spain

MADRID, Spain, June 29 /PRNewswire/ --

NERA Economic Consulting, a leading global adviser on market design and
auctions to government agencies and electricity service providers, has
completed the first in a series of auctions of bilateral energy contracts for
regulated supply in Spain (CESUR Auctions).

The auction, held on 19 June 2007, was carried out under the legal
framework of Orden Ministerial ITC/400/2007, which regulates bilateral
contracts between electricity distributors for the supply of energy to
regulated customers. NERA was commissioned by Comision Nacional de Energia
(CNE), the Spanish energy regulator, to design and manage the CESUR Auctions.
The CNE supervised the auction and has validated its competitive results.

The first auction was held in successive descending price rounds, a
format generally used for the purchase of large volumes of energy. Total
volume bought during the auction was 6,500 MW, to be supplied in base load to
distribution companies that serve captive customers in Spain and Portugal
over the next three months (for a total of 14,352 GWh).

The auction began with a starting price of 70Euros/MWh, with 25 domestic
and international sellers participating in the bidding. The auction closed
after 25 bidding rounds, with the product awarded to 21 sellers at a price of
46.27Euros/MWh.

Base load contracts resulting from the auction have been assigned to the
main distribution companies in Spain and Portugal according to the
pre-established percentages in the Resolucion, dated 19 April 2007, of the
Secretaria General de Energia (Endesa 35%, Iberdrola 35%, EDP 12%, Fenosa
11%, Hidrocantabrico 4%, and Viesgo 3%). These contracts will cover 30-40% of
the energy for captive customers supplied by the distribution companies in
Spain during the period July-September 2007.

The resulting auction price for the energy will be part of the allowed
energy costs of the distribution companies, which results in clear benefits
for the Spanish electricity system. Through forward energy contract cover,
the exposure of distribution companies in Spain, who normally purchase energy
in the volatile spot market is reduced. Also, by providing a transparent
price signal for energy procurement, the energy component in regulated
tariffs can be set using market comparisons. This will foster competition in
the retail energy market and will eliminate the disparity between energy
costs and regulated tariffs that generates deficits for distribution
companies.

Future CESUR auctions administered by NERA will be held in September and
December 2007, and in March 2008.

To obtain further information about the CESUR Auctions, please visit:
www.subasta-cesur.eu.

About NERA

NERA Economic Consulting is an international firm of economists who
understand how markets work. Our more than 45 years of experience creating
strategies, studies, reports, expert testimony, and policy recommendations
reflects our specialization in industrial and financial economics. Our global
team of over 600 professionals operates in over 20 offices across North and
South America, Europe, Asia, and Australia.

NERA Economic Consulting (www.nera.com), founded in 1961 as National
Economic Research Associates, is a unit of the Oliver Wyman Group, an MMC
company.

Media Contact
    Benjamin Seggerson
    Media Specialist
    +1-202-466-9232
    ben.seggerson@nera.com


    Web site: http://www.nera.com
              http://www.subasta-cesur.eu