Acen, Generators and Acenor analyze lowering of the capacity limit

PRESS RELEASE from Acen
May 10, 2023

(Machine translation of the original release, issued in Spanish)

Currently, there is a universe of 150 generators and traders, 71 of which make withdrawals. Therefore, there is competition in the supply offer that could be taken advantage of by small and medium-sized companies that still cannot participate in the free market. So far, there have been two instances emanating from both the Senate and the Chamber of Deputies and Deputies, respectively, that promote reviewing the limit to be considered a free client. "If we lower the limit, we are giving an alternative to customers who are around 100 and 500 kW, mainly SMEs," said Camila Alvarado, Emoac 's Head of Management and Market, in the context of the webinar "What is missing for that you can choose your electricity supply?” organized by ACEN.

According to data from Emoac, there are around 6.5 million regulated customers in the system and only 3% correspond to non-residential customers that are in the range between 100 and 500 kW, that is, around 130,000 end users. This universe represents 30.8 terawatts/hour/year of energy and only 18% corresponds to users between 150 and 500 kW.

History shows that in 2016 only 5% of customers over 500 kW migrated, beginning a transition that lasted 4 years at an average rate of 25% per year. For this reason, the impact of the migration from regulated to free customers causes concern in some players in the sector, especially due to the effect it would have on the energy purchase and sale contracts signed between the distribution and generation companies. However, according to Alvarado, in an extreme scenario where the 1-year term is given for this migration, "the real effect would be 4.1% in the reduction of the contracts that exist between generators and distributors, which is not a such a significant percentage with respect to the benefit that an SME could have that has been greatly affected from 2020 to date”.

On the other hand, in a more conservative scenario of a reduction of 100 kW per year, in the year with the greatest impact, “this effect would only be 0.8%. It is not something that impacts the generators that participate in the regulated tenders”, indicated Alvarado.

But, how do other unions in the sector also invited to participate in the conversation view this probable migration? Camilo Charme, General Manager of Generators, pointed out that “the important thing is that the policies are coherent so that the progress in a line does not affect some advances already achieved or the challenges of other public policies. Regarding contracts with regulated customers, we would have to see what the effects would be. If a parallel policy begins to modify the base study conditions, obviously we are going to have transition measures that allow us to maintain certain bases of the initial calculations of those contracts that have already been awarded, therefore, they gave vested rights to their holders”.

For his part, Javier Bustos, Executive Director of Acenor, stressed that “for there to be competition, there must be less asymmetries of information. Today there are 2,500 free customers that represent 60% of the electricity consumption of the system. All our associates are looking for are renewable supply contracts. Therefore, those who are driving investment in some way today are not only these regulated contracts, but also free contracts”.

Meanwhile, Charme commented that Chilean regulated contracts “are taking shape like a pool with different waves. We have been able to see in the experience of other latitudes that it was also an umbrella, a containment barrier against the shock of circumstantial prices”.

According to Bustos, the client should migrate more easily but always with the safeguard that this does not affect certain contracts or certain public policies that are part of the Chilean institutionality. “There is no contradiction between free and regulated client, as what one wins, the other loses. In reality, all clients are subject to similar regulation and here are opportunities where sometimes the prices of free clients could be above regulated clients and sometimes the other way around”.

From the point of view of Generadoras de Chile, Charme stressed that "any change in public policy must be as consistent as possible with public policies that have been successful, such as those that have allowed the entry of competition, not only in quantity, but rather in quality in Chile in the generation sector”.

Lastly, Bustos pointed out that "the possibility that some clients may choose, regulated and free clients, is among the things that could help under certain enabling conditions, under a certain change in logic that is not necessarily the one that has been prevailing for the last 30 years”.