CNE began the debate on the distribution reform, the final version of which will be ready in 2017.
Government considers lowering profitability of electric utilities by three points
(La Tercera) Cutting the rate of return of electricity distributors, as was done in the gas network business, is one of the main changes to be introduced to the electricity legislation by the government.
This, within the framework of the submission of the bill that modifies electricity distribution in the country, which is in the process of being made public. A few weeks ago, the CNE commented on some of the proposals that will be incorporated in this regulatory modification, in the framework of the seminar “The future of electricity distribution” at the Catholic University before experts in the area.
Thus, the CNE kicked off a process of broad debate to discuss its content with both the industry itself and the academic world. In this way, it repeats what has been done in other legal discussions, following the line of work of the now former minister Máximo Pacheco.
One of the central focuses of the CNE’s proposal is to change the companies’ rate of return, which currently stands at 10%. The CNE’s idea is to bring it to 7%, bearing in mind that the 10% was decided in another context, very different from the current one.
“Changes are anticipated in the capital cost rate used to regulate tariffs, which should be adjusted to the risk of the business, recognizing that the original 10% established in the law responded to other circumstances,” commented the consulting firm Systep in its latest monthly report.
Rate setting
Another relevant element is the change to a new tariff setting mechanism, moving to a VAD study with the possibility of presenting discrepancies to the Panel of Experts, similar to what happens in transmission, Systep also commented.
The CNE declined to comment on the content of the seminar. “As we have publicly stated, this is a process that will last until December 2017, and we are now in the phase of making a shared diagnosis of the problems and challenges, so we are not yet at the stage of discussing specific changes,” they said from that entity.
Even so, people who have participated in the instances of socialization opened by the CNE explained that another focus is to take advantage of the technological changes that are being introduced in this industry around the world, as is the case of smart meters, which allow online monitoring of electricity consumption to gain in efficiency.
