The authority would be committed to introducing modifications in the methodology for calculating the companies’ rate of return and would include an instance for resolving disputes.

Gas industry faces key week: Government to reveal regulatory changes

The gas network industry, where the main players are Metrogas, GasSur and Gas Valpo, will face a key week as the government plans to reveal the guidelines of its regulatory work.

This Tuesday and Wednesday, the Minister of Energy, Máximo Pacheco, and the Executive Secretary of the National Energy Commission (CNE), Andrés Romero, will lead the seminar “Alternatives for the future of gas market regulation”.

This activity will be the first time that the World Bank consultants, who are advising the government in this process, will publicly participate as “facilitators”, as Pacheco described them at the time.

According to the Secretary of State, the government has made progress in this area and this will be the occasion where some of the conclusions reached will be presented.

“At this moment we are at the beginning of the discussion process, because it seems important to us that one million households and commercial customers, who today have network gas have a process that improves their conditions of purchase of that gas,” he said.

Pacheco pointed out that the government has listened to all the actors in the sector and that the authority’s idea is to improve the current legislation, especially on issues such as the definition of the mechanism for an eventual tariff setting.

Rate of return

To this would be added the calculation of the rate of return of these companies, which by law cannot exceed 11%, taking into account investments and rate of return.

“It is our obligation to do so and we are going to fulfill it. We are working intensively on that. The issue of profitability is the discussion we are going to have when we communicate our findings,” Pacheco said.

The calculation of this last item would have the companies worried, since their argument for rejecting the idea of regulation is that they have never exceeded the levels set by law.

In October, the government plans to deliver a study on the industry’s profitability, commissioned to the consulting firms Valgesta and Mercado Eléctrico. Sources indicate that the government would change the accounting factors it considers in the annual profitability check.

Finally, the gas industry would close the week with a last meeting, which was organized by the CNE and would be organized for this Friday 26th.

Executives of all the companies that sell gas through concessioned networks will be invited to the private meeting.

At the meeting, the authority would reveal more specific details of the bill. It was reported that among the novelties would be the incorporation of an instance to resolve discrepancies, which would imply extending to gas the role and competencies of the Panel of Electrical Experts.

Concern

Recently, at a private seminar held at the headquarters of Libertad y Desarrollo (LyD), attended by executives from the sector, the progress of the study that the Natural Gas Association (AGN) commissioned to economists Alexander Galetovic and Ricardo Sanhueza, on the need to regulate the gas market, was presented.

The conclusion was clear: it is not necessary. The arguments point to the non-existence of a monopoly in the distribution of gas through networks, the increase in the cost of distribution associated with this type of regulation and the substitution effect of natural gas with respect to other options such as LPG.

Authority will repeat discussion model

In the discussion tomorrow and Wednesday on the future regulation of the gas network market, the government will repeat the model used to address changes in electricity transmission, through open and public working tables where all stakeholders will participate. The three roundtables will be led by Chilean academics, lawyers and government advisors and will address three topics: open access to gas distribution networks; horizontal and vertical integration of the industry; and the validity of the current market model. Among the main speakers will be David Reinstein, Senior Oil and Gas Specialist at the World Bank, and experts from Colombia, Spain, Australia, Canada, USA, and the United Kingdom, all countries with extensive experience in the gas sector.