Colombia tightens supervision of electricity spot market

Colombian energy industry regulator Creg has published new rules that it says will stamp out price distortions in the electricity spot market.

The resolution establishes parameters and mechanisms to evaluate sales offers presented by sector participants, Creg said in a statement. 

"There will now be a standardized and continuously applied procedure for energy trading ... that will identify and prevent potential market dominance to protect end users," the statement said. 

The changes will allow Creg to identify larger generators that control more than one power plant and monitor their prices, the agency said. Any irregularities will be reported to the superintendency of residential public services, it added. 

Grid operator and wholesale power market coordinator XM will be in charge of carrying out the new activities.

"With this measure, Creg seeks to ensure that energy market prices reflect a competitive environment ... promoting and protecting free competition," the entity said.

INVESTOR UNEASE

In June, President Gustavo Petro (pictured) signed a decree that paved the way for the new regulations amid wider efforts to curb inflation. 

The energy ministry said the move would guarantee electricity supply to all users and reduce their exposure to spot-price fluctuations.

Critics said the decree threatened to undermine confidence in the sector's regulatory framework. In addition, there are fears that arbitrary rate cuts would have financial implications for generators, potentially impacting their ability to carry out new investments, according to power generators association Acolgen.