Chile's power auction bill passes final hurdle

Chile's lower house passed a bill overhauling the power auction system and the proposed legislation has been sent to President Michelle Bachelet to be signed into law.

The move seeks to reduce electricity prices in the regulated market by boosting competition and technology through a more flexible design for short and long-term auctions and risk control measures, according to a lower house release.

With the change, terms and conditions of the auctions will be drafted by the country's national energy commission (CNE) instead of power distributors.

Among the new conditions, the bill establishes a five-year window between the auction and the beginning of the contract, in which the distributors will have more flexibility to extend or cancel a contract in case of delays from developers.

The maximum power supply limit for regulated clients is also being raised from 2MW to 5MW, allowing clients better access to prices and conditions.

The bill was approved by 102 votes in favor and none against, with three abstentions.

Bachelet's energy agenda is targeting 25% lower residential electricity prices over the next decade.

According to energy minister Máximo Pacheco, in 2014 the country halted the fall in power sector investments. He cited as evidence the country's latest power supply call in which NCRE firm SunEdison was awarded a contract to supply 570GWh/y in two blocks, reaching prices of US$85 and US$89/MWh.