Regulated clients ask TDLC to have the freedom to choose to be a free client

Machine translation of the original release issued in Spanish.

PRESS RELEASE from Acen
July 2024

This July 17, the arguments of the different entities that presented their positions to the Court for the Defense of Free Competition ( TDLC ) were carried out regarding the request made by the Ministry of Energy for this Court to rule on the reduction of the connected power, today established at 500 kW, to opt for the free market. It is estimated that the universe of end users between 300 and 500 kW would be between 3,000 and 10,000 clients representing an approximate energy of 1.6 TWh, who would benefit from a favorable report that modifies the limit.

The intervention of lawyer Rodrigo Castillo, who represented the Chilean Trade Association of Energy Marketers (ACEN), began with a reflection regarding how market circumstances have varied from 2004 to 2024. 20 years ago, article 147 of the General Law of Electrical Services, the subject of debate in this Court, had as its objective the protection of those clients who were considered that, due to their size, they did not have the necessary conditions to interact or negotiate directly with the generating companies. However, the scenario has changed and “it is one thing to think about protecting clients and another thing to have captive clients. All clients ask to have freedom of choice and the only ones who oppose it are those who hold them captive.”

According to Castillo, “the market conditions of 2004 are nothing like those of 2024. For those that are between 500 and 600 kW we find that there are 37 different suppliers. On the other hand, in the last regulated public supply tenders there were only five bidders and only one company was awarded all the blocks. That is to say, today, the market for small free clients is much more competitive than the market for regulated clients.”

He also highlighted that being a free client is not an obligation but an option and that historically the transfer from regulated to free clients has been gradual over time. In this regard, the director of ACEN, Vannia Toro, highlighted that the speed of change that the universe of eligible clients had from 2015 to date was annually around “25% of the demand that could migrate took the option to migrate. , reaching 75% in just 4 years.”

Another issue that some allegations highlighted is the effect that this reduction in power from 300 to 500 kW to access the free market could have on regulated contracts. According to Castillo, this is not the time to discuss this effect since it would be more of a public policy issue. However, Toro added that if it is assumed that the migration speed was equivalent to what occurred for the segment between 500 and 5,000 kW, "the impact would be less than 1% on the current regulated contracts."

Among the conclusions, Castillo indicated that the lowering of the limit acts as a driver of competition and that it is demonstrated when it is observed that “all clients request to have this right, however, those who request that it not be granted to them are precisely those who allege that there are asymmetric conditions and possibilities for abuse.”

Along the same lines, there were allegations from representatives of regulated clients who, knowing the current reality of the market, also emphasized the paradox shown by those who say they want to protect the rights of regulated clients but who oppose the request for the reduction. of the limit supported by those same clients who seek to have the possibility of choosing.

Finally, the lawyer highlighted that ACEN considers that “the care measures that the Prosecutor's Office has proposed in terms of information and education for clients are timely and we agree with them.”