This was one of the points highlighted by Vivianne Blanlot, director of companies, during the discussion organized by the Chilean Association of Energy Marketers regarding the electricity portability proposed to modernize the sector.

Source: Electricidad Magazine – November 30, 2020

The role of the marketer in the distribution market was one of the main aspects discussed in the online discussion “¿Te Portas? A debate on the commercialization of electricity in Chile”, organized by the Chilean Association of Energy Marketers (ACEN)The positive impact it would have on the modernization of the segment was agreed upon.

The conference was attended by Vivianne Blanlot, director of companies; Eduardo Andrade, president of ACEN; Aura Rearte, from the Subdepartment of Standards and Regulation of the Electricity Department of the National Energy Commission; Alejandro Lucio, former executive director of the Renewable Energies Association of the SER of Colombia; and Pablo Lecaros, Markets and Regulation Area Manager of Systep.

Modernization

Blanlot commented that the marketer is a key element to modernize and optimize the way in which energy is consumed: “I am convinced that the introduction of the marketer is an element of modernization of the demand structure and of the way in which users relate to their consumption and acquire this good.

“Today these elements are not offered to consumers because they are basically under the networks and marketing of the distributors. I am convinced that it is not possible that the distributors really have incentives to do the same job. That means that the marketer is an entity that can alter the cost-quality relationship for the customer. In such a way that, in very general terms, the customer can effectively choose the level of quality because he can opt for certain mechanisms offered by the distributor that allow him, without increasing the cost, to increase the level of quality he receives or he can reduce his cost by consuming in other ways”, said the executive.

Pablo Lecaros, mentioned that the marketer gives a more personalized treatment, more dedicated to the customer according to their needs and opens the possibility of some efficiency services such as motors or batteries, among others, to improve the quality of supply beyond what the distributor can do.

Eduardo Andrade pointed out that trading companies have the flexibility to capture the lowest costs at any given moment and pass them on to their customers. “If there had been no competition in the market for free customers, the distribution companies would be offering the same regulated tariffs as always and the price drop we are seeing today, which can reach 20 or 25%, would not have occurred. Competition will allow prices to be as low as possible at any given moment, given the structural conditions that exist in the market at that time”, he pointed out.

Separation

Regarding the separation between the distributor and the marketer, Alejandro Lucio commented on the Colombian case, stating that “disintegrating as an entry option would be the ideal world. We have been discussing this in Colombia for 25 years. It is impossible to undo this integration between marketing and distribution. We are working on disintegrating at the retail level.

In Blanlot’s opinion, “it is necessary to disintegrate structurally in a complete way, not in a legal way. A figure of a pure marketer must be created that is not integrated in any way with the networks, neither distribution nor transmission. Of course, this means savings because otherwise, it will be necessary to build a regulatory and supervisory apparatus. These are too many risk flanks when we know perfectly well that in the end we are going to arrive at a pure and powerful marketer because that is what we are going to need in the future”.

According to Lecaros, there are mixed examples on this issue at the international level: “There is the case of Colombia, which is currently integrated. In the United Kingdom there is a separation between distribution and commercialization licenses, although there are some distributors that still maintain commercialization. In Spain, although there is a legal separation in terms of an exclusive distribution business, the fact that the same holding company can have subsidiaries in all segments is allowed”.

In this context, Systep’s proposal states that the marketer linked to the holding company that owns the distribution company “cannot participate in that same concession area, but it could do so in the rest of the country. The other alternative is to allow this integration to exist through subsidiaries, but in this case and for the sake of giving greater confidence to the system as a whole, it is more necessary to create an independent body that concentrates the information of each of the clients so that all the marketers have the same level of access to the information to offer their different tariffs and contact the users. The aim is precisely to give greater confidence in the operation of the system and prevent the authority from being co-opted by third party interest groups or that the distribution mechanism may give preference through the quality of supply or other measures to favor the marketer of the same business group”, said Lecaros..

According to ACEN’s president, structural separation is a necessary cornerstone for this bill to achieve its objective. The study points out that the OECD recommends, in those markets where possible, to opt for complete structural separation.

“Today we see actions of the distribution companies that aim to hinder competition in the electricity supply market and we have not seen any action from the Coordinator. All this points to the fact that the end user will be harmed if structural unbundling is not chosen. The study points out that the incumbent companies in the electricity market serve related customers first or delay the connection of unrelated customers, among others. For ACEN, everything points to structural unbundling as the optimal solution. We have to get it right now because otherwise what will happen is that in 5 or 10 years we will have to legislate again to try to achieve structural unbundling”, he stressed.

Transition

Vivianne Blanlot pointed out that the transition to advance in this figure should focus on doing so in blocks, “as regulated consumption decreases”.

“We need the necessary time for these quality marketing companies to be formed. I believe that a great modernization of the electricity market goes hand in hand with the creation of the marketer and the gradual reduction of the limit of regulated consumers. I am in favor of a very liberalized system that we have to arrive at relatively gradually, not slowly, but just taking into account certain conditions of our market”. In this respect, Aura Rearte said that “we want residential users to have quick access to this right that we are generating with the law and the way we see this is by zone. It seems to us that this zone system is the best with respect to those contracts that are already in force”.

According to Andrade, the liberalization by zones does not produce a market that could be of interest to the commercialization companies and !not because they do not want to, but because economically there will not be room for the companies to establish themselves. What will happen in the event of this type of opening is that the related distributor will continue distributing because there is no one to switch to”.

He added: “Moving forward in a transition by lowering the power level is the most democratic mechanism, it affects distribution contracts to a lesser degree, it allows us to create a strong, real competition in the supply market, and it can be done today without any legal change, and that is important. The great additional advantage is that it allows us to reach, if not directly the residential user, which we already know is little changed at the beginning, then the small company, the stores, the malls, etc. Small and medium-sized companies, which are one of the great engines of the economy, will indirectly satisfy the needs of end users and residential users. Anyone who says that in the short term this will be able to reach residential users on a massive scale is not effective”.

Finally, with respect to the under-demand in the electricity purchase and sale contracts signed between the generation and distribution companies, Andrade indicated that this energy “that is not being consumed should be allowed to be sold to the commercialization companies that are looking for those energy contracts with competitive prices to be able to pass them on to the clients. That is one of the benefits of commercialization, the flexibility of being able to look for those contracts. Therefore, this low-priced renewable energy is welcome because it will have a space in the marketers’ contracts. As the marketers grow, they will demand more of this energy”.