Ministry of Energy releases technical report for regulatory improvement in the natural gas market

PRESS RELEASE from the Chilean Ministry of Energy
May 22, 2023

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

• The Ministry of Energy released the report prepared by the Committee of Experts for a Regulatory Improvement in the Natural Gas Market, as part of the actions committed by the Executive to advance in the development of reforms in this matter, after the publication of a study by the National Economic Prosecutor's Office (FNE) that determined that natural gas consumers have paid a premium.

During this day, Minister Diego Pardow received, from the committee representatives, the report that provides a common diagnosis, shared by the different sectors, and based on solid technical evidence.

"I greatly appreciate the work of these three men and two women, all of whom very generously devoted themselves to studying this market in recent months and produced a report that is very important and that will be a key input in the upcoming regulatory agenda," the minister stated.

The Committee of Experts that developed this study was formed in November of last year, thus fulfilling a commitment made between the Ministry of Energy and parliamentarians from the Mining and Energy Commission of the Senate after the entry of the short bill of natural gas in June 2022.

The Secretary of State explained that this document arises from the need to have studies that are a powerful input for the debate and development of public policies. "I invite the community, consumer associations, the union, the industrial world to analyze this report and now a period of conversation is open to analyze the reactions to plan the future regulatory agenda on the basis of that," he added.

Five professionals with vast experience in the economic and regulatory area participated in the Committee, who valued the work carried out in the last seven months.

The economist and academic expert in industrial organization and free competition, Ana María Montoya, affirmed that this is a very substantive report, "because it effectively reviews what the industrial organization is as a whole, what are the incentives that are generated, for example, in terms of vertical integration for the provision of different segments of the chain. We believe that it is a report that provides both an academic and an industrial organization contribution to generate a relevant discussion in the long term, in such a way as to generate greater competition and openness in these markets”.

The economist and economic adviser to the cabinet of former President Sebastián Piñera, Soledad Hormazábal also highlighted the work carried out in the Committee. “This is a report that is an important step to better understand this market, open it up and improve competitive conditions in its different links. In this sense, it will be a contribution to advance in better public policies for the benefit of consumers”, he asserted.

For his part, the economist and former minister of the Tribunal de Defensa de la Libre Competencia, Eduardo Saavedra, indicated that the information collected is extensive “with different points of view about how competitive the natural gas industry is at different levels , not only at the end customer level but also in the different segments of the industry. The diagnosis is that there is little level of competition and the good news is that competition can be greatly improved at different levels”.

The economist and former Minister of Transportation and Telecommunications in the second government of former President Michelle Bachelet, Andrés Gómez Lobos, explained that the report provides agreed proposals that facilitate competition. "For example, all the members of the committee consider that it is positive that this infrastructure can be used by third parties and thus create more competition in this market," he added.

Along the same lines, the lawyer and former executive director of the Association of Electric Companies, Rodrigo Castillo, appreciated the work of this instance, which allowed for a detailed analysis regarding the conditions of the current regulation and the modifications "to basically generate two effects of public policy that we have thought important as a committee. The first is to hopefully expand the natural gas networks that today only cover 7% of the territory and, secondly, to generate the greatest amount of competition with the benefits that this brings to end customers. ”, he added.

For more details of the report, check here: https://bit.ly/3MOZwLJ