The exclusive concession for electricity transmission was awarded to us by the Portuguese State on June 15, 2007 and has a duration of 50 years. The concession granted to us includes the planning, the construction, the operation and the maintenance of the RNT. It also includes research and development relating to electricity transmission and the technical global management of the system to ensure the coordination of the electricity distribution and electricity transmission infrastructures, thereby protecting the continuity and security of supply and ensuring the integrated and efficient operation of the national electricity system.
As the concessionaire for the national transmission network, REN-Rede Elétrica is obliged to ensure the continuous supply of electricity, to meet quality standards and to meet safety criteria set forth by DGEG. For this purpose, DGEG approved a Quality of Service Regulation that seeks to enhance the quality of service with a system of penalties assessed against electricity companies that fall below DGEG's benchmarks. We strive to maintain and improve our quality of service through appropriate planning for safety and to ensure continuous supply, adequate investment in the renovation of older power lines and substations, suitable maintenance policies and strategies and efficient use of technical and human resources in the operation and maintenance of the RNT. See "Electricity Sector Regulation - Regulatory Codes".
The national transmission network in Portugal
The RNT covers the length of mainland Portugal and is interconnected with the Spanish electricity network (Red Eléctrica de España ("REE")) at nine points, including four 400 kV interconnections, three 220 kV interconnections, one 130 kV connection and one 60 kV connection. The actual capacity of the interconnections depends on a variety of factors related to the operation of the network. We had an average interconnection capacity for commercial purposes during the first quarter of 2007 of 1,333 MW. We are currently studying the addition of two further interconnections, which would be installed around 2013.
At March 31, 2008 the RNT consisted of 1,588 kilometers of 400 kV power lines, 3,177 kilometers of 220 kV power lines and 2,661 kilometers of 150 kV power lines or a total of 7,426 kilometers of lines and a total capacity of transformation of 22,872 MVA.
The very high voltage grid is based on 400 kV lines running in a north-south direction near the coast, from the Sines power plant in the south to the Alto Lindoso plant in the north by the interconnection to Spain. This is supplemented by 220 kV lines, principally between Lisbon and Porto, and diagonally from Coimbra to Miranda do Douro, and along Douro river, and in the middle of the country. In addition, 400 kV lines run east-west from Sines to the interconnection with Spain near Balboa (interconnection Alqueva - Balboa) and from Rio Maior to the interconnection with Spain near Cedillo (interconnection Pego - Cedillo). A series of 150 kV lines, the first historical level (beginning of the 50ies) provide further coverage to the very high voltage grid.
At March 31, 2008, the RNT connected 40 power stations and 51 substations. Of the power stations, 59% were hydro power stations, 17% were thermal power stations and 24% were special regime power stations. Of the substations, 51 operating were transformer substations and 12 were switching substations. These substations connect the different parts of the RNT and provide the entry and exit points at which the power stations, subtransmitters, distributors and large users are connected to the RNT.
The major components of the RNT have an average estimated useful life of between 35 to 40 years from the date of initial construction, with the exception of the power lines, which have an average estimated useful life of about 50 years from the date of initial construction. The RNT was first built during the 1950s, but has been subject to regular repairs and renovations, including the renovation of all of our oldest transmission lines. However, most of such lines have been replaced.
Quality of service of the national transmission network
The quality of service provided by REN Rede Eléctrica in its capacity as operator of the RNT, which is based on the security and continuity of the supply of electric power, has reached a high level. According to the five general continuity of service indicators established by the Quality of Service Regulation (QSR) for the Portuguese electricity transmission network, REN achieved the second or third best values ever.
The RNT's equivalent interrupting time has been on a decreasing trend and was only 0.74 seconds in 2007, the third best equivalent interrupting time since the existence of the RNT. REN's low equivalent interrupting time places it as a leading European electricity transmission company in terms of continuity of electric power supply.
Upgrading and expansion of the transmission network
We are continually investing in upgrading and extending the grid coverage and improving the quality of the transmission network. We look to upgrade and/or expand the transmission grid in response to demand and supply dynamics. The following are the main drivers for our current upgrading and expansions plans.
- Increase capacity in line with growing electricity consumption. We believe that long-term growth in electricity consumption in Portugal driven by GDP growth and an alignment with, by European consumption standards and special projects such as the Porto-Lisbon-Madrid high speed train and the new international airport in Lisbon will require increases in our electricity transmission capacity, driving growth in our regulated asset base.
- Facilitate connections to larger power plants and SRGs. Increasing demand for electricity in Portugal, together with the deregulation of electricity generation, lead to the construction of additional large power plants as well as a growing number of special regime generators using renewable power. Capacity generated from installed special regime generators is expected to increase from 2,500 MW to 5,700 MW in 2013.
- Increase interconnections with Spain. We are currently planning to install two further interconnections with Spain, which we expect will be operational between 2010 and 2013, and which are expected to increase the interconnection capacity from 1,100 - 1,300 MW to 3,000 MW . We also are considering installing an additional two interconnections.