On Thursday, January 26, President Gustavo Petro announced that will take over in what has to do with the regulation of residential public services in the country.
(See: Petro said it will assume control of regulation of public services).
“This president has decided not to delegate his duties to the public service regulation commissions, at least for a while. So, I am going to assume control, the general administration policies of Colombia, directly and personally, based on what the Law itself says: first, the general interest and that of the user”, maintained the president.
This decision was made based on the Article 370 of the National Constitution, which establishes that it corresponds to the President to establish the general policies of administration and control of efficiency of residential public services and to exercise, through the Superintendence of Public Services, the control, inspection and surveillance of the entities that provide them.
After Petro’s announcement, several were the opinions that were generated in different sectors.
(See: Electricity sector, on edge by Petro’s announcement to assume regulation).
One of them was the economist, historian and research professor María del Pilar López Uribe, who commented on Twitter: “Assuming the functions of a commission opens the door of price control with criteria drawn from the sleeve and without technical support. The consequences will be scarcity and reduction of the service offer. Users will end up paying the cost over time. bad idea“.
On the same social network, the Colombian president responded to López Uribe: “Explain to me the technical support so that hydroelectric generators with full reservoirs put 900 pesos per kilowatt/hour, when it was normally 200 pesos. Or why did the Atlantic Coast rates grow by up to 40%?“
Explain to me the technical support so that hydroelectric generators with full reservoirs put at $900 pesos per kilowatt hour, when it was normally 200?
Or why the rates on the Atlantic Coast grew by up to 40%? https://t.co/jip8XvBb0P
— Gustavo Petro (@petrogustavo) January 27, 2023
And when questioned, the academic of the University of the Andes, answered: “I’ll be happy to explain, President. This is how we avoid misinformation“.
The first thing that López Uribe clarified was that power regulation In colombia it was organized after the blackouts of the 1990s.
(See: Petro published income statement: these are his assets and assets).
And I add: “The energy market works like a market: bidders (hydraulic, thermal) and buyers. However, the price that bidders offer is primarily determined by the future, not the present. In other words, even if the reservoirs are full, if negative supply shocks are expected tomorrow, prices today could be high.“.
With the context clear, the economist continued and explained that the case of Colombia, currently, is that droughts are being anticipated “(El Niño phenomenon) and there are already delays in projects, so water must be saved today“.
And he added that, in any case, “Bidders are obliged to always offer so that they are not removed from the market“, so, in this case, “they prefer to offer little at high prices“.
(See: In December, energy prices rose again).
López Uribe also referred to thermal plants, which, he stated, could compete and offer better prices.
Nevertheless, “Your opportunity cost is sky-high right now. All the coal and gas we produce is exported due to high world demand and prices. In addition, the installed capacity is at its limit, huge investments are required to ensure supply in the future. And uncertainty about the rules of the game does not attract new investment: if they open auctions, it is likely that few or no one will apply.“.
The expert concluded by saying that, “In the end, even if the reservoirs are full today, the noise that there is about tomorrow’s supply and the uncertainty to ensure new investments that improve the capacity we have today makes it preferable to offer little today at very high prices“.
(See: Minister of Mines opens and closes the door to new oil exploration).
I’ll be happy to explain, President. This is how we avoid misinformation.
I open ?
1. Clarify that energy regulation was organized after the blackouts of the 1990s.
2. The energy market works like a market: bidders (hydraulic, thermal) and buyers.
Without… 1/n https://t.co/g5LUjm5I5L— Maria del Pilar López Uribe (@marialopezuribe) January 27, 2023
BRIEFCASE
