Chile passes landmark electricity tariff bill

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Wednesday, June 1, 2016

Chile's congress gave final approval to a bill designed to reduce the disparity in electricity rates paid by end-users in different zones of the country.

Drafted by the energy ministry under President Michelle Bachelet's 2014-18 energy agenda, the new law will result in lower monthly power bills for 2.7mn homes, a ministry statement said.

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"We're talking about around 11mn Chileans who will see an effective benefit, families that today are punished for living in zones with a lower population density than [capital] Santiago," said energy minister Máximo Pacheco.

Homes that benefit from the measure will see an average monthly bill decrease of 14%, or 4,278 pesos (US$6.19), the ministry said.

The discounted rate for these consumers will be subsidized by users – mainly in Santiago – whose consumption exceeds 200kWh/month, and who have historically paid higher rates.

Under the legislation, the highest residential power rate may not exceed the average national rate by more than 10%.

The bill includes an additional discount for residents of the towns that produce the majority of Chile's electricity.

These cities include Mejillones, Tocopilla, Huasco, Quillota, Puchuncaví, Colbún, Quilaco and Alto Biobío.

While the new billing structure is not expected to directly affect generators' bottom lines, the ministry has cited it as an important step toward restoring confidence between the energy industry and Chilean society at large.

Local conflicts have led to numerous generation and transmission project delays in recent years.