MR. DIRECTOR

President Piñera signed a bill to stabilize electricity prices. Responds to citizens’ demands due to price increases in basic services, particularly those of the most vulnerable families. Under a “New Social Agenda”, it is obviously necessary to reduce the risks associated with fluctuations.

The recent increase is mainly due to the exchange rate, in addition to a previous increase in the prices of contracts between generators and distributors, which will decrease in the future as a result of the recent tenders. With this project, generators will not receive now the increase of the last 9.2% readjustment; neither will they receive future increases until the end of 2020. According to the press, the generators would lose US$ 900 million, without affecting the income of the distributors. The balances not collected by the generators will be paid starting in 2021, without accruing interest, until January 2026. The stabilization mechanism will imply that the energy tariff will remain stable or with smaller decreases from 2021 due to the entry of new contracts at low prices, paying the accumulated balances between 2019 and 2020.

Although this measure introduces uncertainties for generators and may have aspects that could be improved, there are considerations that limit the effect to new renewable investments, since it is established that the mechanism only affects contracts that start supply prior to 2021.

However, this is not the time for pettiness, the citizenry has expressed itself loudly. In recent extremely technical regulatory discussions, we have failed to put the consumer at the center of the debate. It is time for companies, government, academia and experts to generously seek the solution and move this project forward.

Hugh Rudnick