Public statement from electricity associations on the new electricity subsidy bill

This is a machine translation of the original release, issued in Spanish.

PRESS RELEASE from Acera, Generadoras of Chile, Acesol and GPM
September 2, 2024

In relation to the Bill for the new electricity subsidy presented on August 26 of this year by the Government, the Association of Generators of Chile, the Chilean Association of Renewable Energies and Storage (ACERA AG), the Chilean Association of Solar Energy (ACESOL AG) and the Association of Small and Medium Generators (GPM AG), we declare the following:

● We share the concern about finding support mechanisms for the most vulnerable families in our country to cope with the rise in electricity rates, but we believe that these should be consistent with other public subsidy policies and with a stable and long-term vision for the correct development of the electricity industry, particularly in the current scenario of energy transition and carbon neutrality commitments acquired by Chile.

● The freezing of energy prices was a political decision of the State due to the extraordinary circumstances that arose in 2019. Between 2019 and 2024, a period in which the value of other basic goods also rose, three laws were passed that stabilized only electricity rates, which were not requested by the generation industry nor consulted with the people.

● Five years after the first intervention in energy prices, three stabilization laws passed and only four months after the last law establishing the subsidy for the most vulnerable families, on August 26 the Government presented a new bill that seeks to modify the conditions of said subsidy.

● The proposal presented suffers from serious deficiencies and substantially harms, at least, the following basic principles on which every productive sector that contributes to the growth of the economy and the generation of jobs in the country is developed:

● Legal Predictability : continuously and unexpectedly altering the regulatory conditions on which the generation industry has developed and collaborated with the Chilean State policy on energy transition and decarbonization.

● Legitimate Trust in Political Authority : defining new public burdens without justifying their measures or explaining the effects on people and companies: consumption, price levels, inflation and investment conditions.

● Proportional Distribution of Public Burdens : establishing tax burdens in an ad-hoc manner for specific economic sectors, without considering any financing that comes from an exercise of efficient and focused financial management by the Government.

· The Electric Generation industry has been a permanent ally of Chile in the energy transition and decarbonization, which is reflected in: contribution of more than USD 30 billion in direct investment in regions; diversification of the energy matrix; increase in the number of electricity producers to more than 700; increase in the penetration of renewable energy, with values above 65%, a progressive reduction in carbon emissions from the electricity sector. All this has led Chile to be permanently recognized in various rankings and forums worldwide.

● We trust that the discussion will allow us to find the necessary, viable and expeditious responses to focus on the delivery of a benefit from public funds and, at the same time, respect the regulatory signals so that all the actors in the energy sector can make progress in the challenges that are key for the sector, such as the conditions of supply, storage and electrical transmission, which are crucial for injecting energy at competitive prices into the system.