It stands for “Last Resort Energy contract” (Contrato de Energía para el Suministro de Último Recurso in Spanish). It is a certain type of auction, held in the electricity sector in pricing in the case of the tariff of last resort. This type of auction provides market liquidity in the long-term and price stability
In Spain the frequency of this type of auction is every 3 months. The auction works by decreasing the price so that initially the auction opens with a high opening price and goes progressively downward until the quantity supplied and the quantity demanded get balanced.
The resulting final price of this cesur auction type can be broken down into equal two parts:
- The Last Resort Tariff (LRT)
- The regulated cost
Finally note that in the case of Spain, there are only five companies that can provide LRT