Petro responds to criticism from Brookfield for possible intervention in the electricity market

Through your X account, President Gustavo Petro responded to the letter sent by Brookfield, largest shareholder of Isagén, in which the multinational forcefully rejects the Government’s intention to intervene in the national electricity market.

(Read more: ‘Unjustified’: Brookfield, on the proposal to intervene in the energy market)

In his message, the president pointed out that the Canadian company was brought to Colombia as “only proponent in the sale of Isagén.” He also stated that “Vargas Lleras and Guillermo Cárdenas knew how to avoid EEB and EPM’s proposals for a leonine sale to Brookfield of one of Colombia’s greatest assets: water.”

The head of state indicated that from this point Electricity rates have skyrocketed due to stock market speculationsame as there would be “exploded” based on the old tariff formula of the Energy and Gas Regulation Commission (Creg) and that would be linked to the costs of “the most inefficient generators.”

“I invited the generating companies that benefit from speculation to adapt to the new tariff formula issued by the Creg. The new formula links the tariffs to the costs of the generators and, therefore, prevents speculation and reduces the tariffs” expressed Petro, who also pointed out that these companies “they didn’t want to” respond to that call.

He explained, then, that given this scenario he decided to implement a complementary formula to the new formula, which consists of “reduce exposure to the stock market, which is a complementary method to contracts between generators and marketers.”

“The decree that I issued then, reducing the exposure in the energy sales market, which is where speculation is carried out by the large generators, effectively and substantially reduces energy rates for users throughout the country and preserves profitability of all the generators, but referring to their costs”, mentioned.

(More news: Attorney General’s Office requests a clear plan in the intervention of the energy company Air-e)

(Read more: ’80 megawatts of energy have to come in this year’: Erco Energy)

The president highlighted that, in this way, the space for speculation is reduced, while at the same time complying with what is ordered by the Constitution that the rates express the true costs of the service. Furthermore, he stressed that ending this phenomenon It is essential for the development of the economy and the escape from poverty.

“I know that now they will go to the Council of State, I expect from the Council of State the understanding attitude towards the poor people of Colombia and to close the path of abusive speculation”he added.

Likewise, President Petro included in his message what he expects from energy users “defend what is fair and mobilize massively to defend a fair market, without speculation as ordered by the Constitution.”

(Read more: Minenergía’s accusations against public service companies for ‘expropriating’)

The Brookfield Letter

In a letter addressed to the Minister of Commerce, Industry and Tourism, Luis Carlos Reyes, the owner of Isagén expressed her concern about a possible government intervention in the electricity market. The proposal was described by Brookfield as “unjustified”, since it would result in non-compliance with some international treaties signed by Colombia.

According to the company, the initiative “disregards the pillar of economic freedom in the provision of electric energy generation service in Colombia, which is embodied in the principles of free competition, free contracting and free development of activities.”

In the same way, he emphasized that the draft decree linked to this proposal “violates the guarantee of economic freedom of energy generating agents to carry out their functions and define their transactions in the wholesale energy market (MEM).”

(More news: China builds nuclear power plants while the rest of the world stagnates)

PORTFOLIO