The Court indicated that the requirements for requesting tariff fixation to the Ministry of Energy were not met.

TDLC agrees with Metrogas and rejects Maipú municipality’s petition to regulate tariffs

(Diario Financiero) The Municipality of Maipú, the National Economic Prosecutor’s Office (FNE) and consumer associations suffered a hard setback yesterday, after the ministers of the Court for the Defense of Free Competition (TDLC) rejected the request to the Ministry of Energy to proceed with the tariff fixation against the gas distributor by networks, Metrogas.

In a 25-page opinion, the TDLC justified its decision by stating that, given the legal loopholes in the current regulatory body regarding piped gas distribution, it was not possible to legally determine the capital cost rate or the parameters of the profitability check carried out by the National Energy Commission (CNE), so the court was not in a position to exercise its power and instruct the government to initiate a pricing process against the distributor.

“It is not possible to verify compliance with the requirements established by law to request, to the Ministry of Energy, the setting of tariffs for the supply of gas and related services to all consumers in Metrogas’ concession area,” the opinion states.

With this, the court questioned the scope of the check commissioned by the government to the consulting firms Valgesta and Mercados Energéticos, which determined that for the years 2012 and 2013 Metrogas obtained a profitability of 11.4% and 16.9%, respectively, above the legal limit of 11% established in the regulations.

“It is not possible to legally determine the annual cost of capital rate applicable to the company Metrogas S.A. Nor is it possible to legally determine, under the terms of Article 33° of the Gas Services Law, the economic profitability of such company for the years 2012 and 2013″, he said.

Based on these arguments, and with the help of a group of experts, including economists Alexander Galetovic and Jorge Quiroz and electricity consultant Hugh Rudnick, Metrogas argued from the beginning that the existence of legal loopholes prevented the application of a tariff regulation process. On this point, the Ministry of Energy also agreed at the time, which in its presentation to the court requested that the consultation be dismissed, since the authority would opt for the legislative route to resolve these loopholes.

Hernán Calderón, president of the consumer association Conadecus, said he was surprised by the decision and indicated that they will continue to take action before the Supreme Court. “We are surprised that the TDLC does not want to review anything in the gas industry. No tariffs, no vertical integration,” he said.

Government will give urgency to the gas bill

The government will finally give urgency to the processing of the bill that modifies the current legislation that regulates the gas distribution business by networks, where the main actor at national level is Metrogas, a subsidiary of the CGE group. Yesterday, New Majority deputies Gabriel Silber and Daniel Farcas, together with representatives of Conadecus and the mayor of Maipú, Christian Vittori, met with the Minister of Energy, Máximo Pacheco, to obtain the commitment of the Executive on this issue.

Farcas said that they will also seek to address greater restrictions on the ownership of distributors and their relationship with companies that provide substitute fuels for natural gas, such as liquefied petroleum gas, and to advance in the horizontal and vertical disintegration of the industry. Silber added that he expected the bill to become law by the end of the first half of this year.