The price of electricity has been one of the main topics of conversation in recent months. This has led to radical decisions such as that the President Gustavo Petro seek to assume functions of the creg. For this, Natalia Gutiérrez, president of Acolgénsent a series of proposals that help to lower the rates.
(VGMovility seeks the massification of the electric bus business).
What are the proposals to reduce energy prices?
The proposals that have been studied by Acolgén seek to address the inflationary situation without this meaning compromising the provision of the service in the medium and long term. These are two proposals and two actions that seek to alleviate the pockets of users given the pressure on prices due to factors external to the electricity sector.
The first proposal consists of improving the tariff option that exists today.
What we have called Tariff Relief Bonds (BAT) consists of a long-term scheme, where the sustainability of the measure would not be in charge of the electricity market but rather supported by the financial sector. These tariff securitization measures have already been adopted before in countries such as Spain and Chile.
(Latin America, close to being a giant in renewable energy).
The second proposal has two phases. The first phase is to carry out an auction to contract regulated demand for 3 years, giving preference to the most exposed marketers on the stock market. The second phase seeks to put a temporary ceiling on the income of generators from sales on the stock market.
It is important to make it clear that this proposal would maintain the price signals on the stock market; however, by liquidating these sales on the stock market, generators’ income would be temporarily reduced, a reduction that would be used to generate relief for this component.
Among other actions we are working on a proposal to adjust the indexers.
What impacts would each have on prices?
The BATs that would make it possible to securitize the increases in the final unit cost for two years, generate stability in the rates paid by users, but without affecting the liquidity of the companies. The proposal for an auction process seeks to increase contracting levels, which allows users to be less exposed to increases in the stock price. Allocating part of the income that generators do not receive to relief in component G would be an additional reduction in this component that represents 35% of the unit cost. Then come impacts such as a change in the contract indexer that would allow users to be less exposed to short-term shocks that do affect the PPI more than the CPI.
How do you evaluate the announcements to control how hydropower is priced on the stock market?
Economic theory suggests that price control is not desirable, there is some consensus on this. So from the outset one would say that talking about controlling stock prices would not be the way to go; in fact, our proposal is to put a temporary cap on sales on the stock market, not on the stock price. From Acolgen we believe that market signals must prevail. Distorting the short-term signals in the stock market would prevent agents from optimally managing water resources and it is something that we could regret in the medium term when the El Niño phenomenon arrives, which increases its probabilities with each new report made by the National Office. of Oceanic and Atmospheric Administration (NOAA).
(The reliability of the gas supply is reinforced).
How has the generation component behaved in recent months?
Regarding the variations of the last months, the generation component has had a simple average increase of 7% between February 2023 and October 2022 in line with the increase in inflation, which for the same period was 6%. .
Do you see investors’ appetite to present themselves at the office auction presented by the Creg?
On the verge of an energy auction, which is necessary to cover the demand for the coming years, it is especially important to be clear about the plans of the National Government since, otherwise, uncertainty is generated for investments and reduced the room for maneuver to react to the energy deficits projected by the Mining and Energy Planning Unit (Upme). Here we have stated to the Government in different spaces that, announcements of modifications to Laws 142 and 143, which are the legal basis for the operation of the market, generate such a high level of uncertainty that they put at risk the decisions to invest in the sector.
(The three new members who would join the Ecopetrol board).
From Acolgen we have pointed out to the Creg the need to define some important aspects before May 24 for those solar and wind plants that are expected to participate strongly in the auction.
Could the possible intervention of the president affect that investment spirit?
Being clear about the conditions in which to invest in the country is a determining factor for these bets on Colombia to materialize. Additionally, we have emphasized that discussions in such a technical and highly regulated sector must be developed within the framework of the institutional framework.
Undoubtedly, a possible intervention would not be a good sign for energy generating companies, which have invested around $140 billion in Colombia since 1994. But I also want to tell you that this money has been put by the agents at their own risk, freeing up resources so that the Government will allocate them to other sectors that need subsidies and state investment.
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