Once again, the threat of electric rationing is hovering over our country and the current electricity prices are the highest recorded in our history. This is not an encouraging scenario, which raises the question of the fact that the supply of electricity has so little dynamism and because we are under a heavy burden of having to pay electricity prices that surpass not only those of our South American neighbors but also those of many developed countries Whose emission standards are much more demanding. It is true that part of this is explained by the increase in international fuel prices and the composition of the generation matrix. However, more than explanations Chile needs solutions and fast. In effect, the price of electricity is key to the economy such as the interest rate, the exchange rate and wages. So it is that a study of a June 2010 Creole think tank that evaluated the impact of energy price changes on the growth rate concluded that sustained increases in prices around 100%, such as those we have Experienced, could subtract the long-term growth rate from approximately 2.7% to 4.0% per year. Consequently, reducing electricity costs is an urgent national need and this demands the removal of bulls’ backs to expedite the approval of new generation projects and expand transmission capacity. It will also be necessary to incorporate the environmental variable explicitly into prices and to separate the technical operation from the economic operation of the electric systems through energy exchanges, as it happens in a large number of developed countries, replacing the current centralized marginalist system . In addition, incentives for the generation of non-conventional renewable energy (ERNC) should be improved through the transaction of injection rights and not only of surplus balances. All of the above aim to promote, facilitate and sincere the supply of electricity. The same must be done to make the electric market for final consumers more competitive.
In Chile, most companies have only an alternative supply and tariff. Once again our national reality contrasts with that of other countries where there are multiple options, even in the regulated price segment. On the other hand, although in the last years the gap between the price of knot and the spot has been attenuated, the current system of stabilized and uniform prices is isolated from fluctuations in the supply and demand of electricity. Some years ago, a study by a prestigious local university estimated the long-term welfare loss for the system derived from the additional installed capacity needed to support a non-flexible pricing system by 30%. There must be a decisive advance in the generation of greater competition between suppliers and available supply options. It is about transforming captive relationships into competitive and for that to happen the final consumers must be able to organize to tender their supply contracts and trade not only blocks of energy consumption but also blocks of saving of consumption credible in the same way as the generation In the CDECs. Another key variable is information. Consumption information in its various time variants (annual, monthly, daily and schedule) and aggregation (groups and sub-stations) must be available in a simple and expeditious manner. The supplier companies have it to use both in their billing and collection processes as well as regulatory compliance. Finally, greater variety and flexibility brings with it the need for mechanisms to cover fluctuations in electricity prices such as those used for financial risks such as forwards, futures, swaps, etc. Thus variable-price supply contracts could be covered. We have the institutional and technological resources for the smooth functioning of a transaction market supported by continuous auction systems that ensure that the resulting prices are the product of a competitive, equitable and transparent process. Other countries that have already done this route have been able to reduce their prices, successfully drawn periods of tightness and contributed to develop more rational and responsible consumer behavior. It is up to our authorities to do their part and remove any real or apparent regulatory or para-normative barriers that make this process difficult.
Juan-Pablo Bórquez Yunge
Lawyer and Economist