CNE widens rate cut after complaint

Chile's national energy commission (CNE) plans to cut node prices in the central grid (SIC) by an average of 1.6%, the company said in a statement Thursday. Node prices are the prices generators charge distributors for power. Cuts in the northern grid (SING) will be 4.4%, while in the Aysen and Magallanes isolated systems the cuts will be 9% and 7.6%, respectively. The SIC nodes cut is 0.2% more than the 1.4% that the CNE announced in October after its biannual rate review, which was supposed to go into effect at the end of October. However, the CNE delayed implementing the new rates by six weeks, due to a new rule stating they cannot be changed before review by Chile's comptroller (CGR). The CGR delayed approving the new nodes because local generator Cenelca complained that the CNE's decision was flawed as it included an interconnection with Argentina that will not start operations before 2006. Cenelca, which operates the Canutillar hydro plant, is a subsidiary of the Matte Group's Minera Valparaiso. The CGR agreed with Cenelca, and instructed the CNE to recalculate the rate without the interconnection project, which was not included in the CNE's preliminary project list. Under protest, the CNE agreed to abide by the decision to eliminate the interconnection project from its calculations and said the cuts will not be retroactive. The commission adjusts the node rate every October and April. The rate must be within 10% of the average rate generators charge non-regulated customers for power and accounts for some 40-50% of power bills. In making adjustments, the CNE takes into consideration the exchange rate between the dollar and the peso, 10-year demand projections, utilities' capital spending plans, reservoir levels and the prices of oil, coal and natural gas.