Chile: Acen denies that energy traders raise costs and slow down decarbonization

This is an automated translation of the original Acen release issued in Spanish.

December 15, 2022

In the context of the webinar hosted by CIGRE Chile, the theme of which was "Distribution: The new NTCO and pending regulation," the executive secretary of ACEN, Eduardo Andrade, refuted claims that commercialization slows down and destroys decarbonization and that it would increase costs. In this regard, he commented that “the entry of the marketer has implied a decrease in the costs in the tariff that has reached values of 30%, which implies decreases in the cost of energy of 50%. Despite agreeing that it is a new player in the industry, what it has done is introduce competition in the market for the supply of electrical energy that apparently some do not like.”

In relation to the assertion that commercialization slows down decarbonization, he referred to the presentation that was made in the panel by Dasla Pando in collaboration with the Energy Center of the Faculty of Physical and Mathematical Sciences of the University of Chile, and where it is demonstrated "the importance of the participation of demand in how energy is consumed and that in order for demand to have some kind of control, it is necessary to empower the final consumer."

He added that today when there is a significant amount of consumption that does not have any type of power, the distributor is interested in the final consumer only paying the bill and nothing else, it is important in how that power is transmitted to the final user. "Free customers who have, according to the regulation, the ability to negotiate, when they have more than 501 kilowatts of connected power, are already managing their demand and what many of these free customers do is request renewable energy."

In this context, Andrade pointed out that instead of the marketer being an agent that slows down decarbonization “it is doing the opposite. It is speeding up decarbonization because it is managing to transfer demand, which perhaps was hidden when those customers were within the distribution networks, for renewable energy that would not have been exposed before. The same can happen with those regulated clients that tomorrow could be free clients.”

If finally the Government, according to the ACEN representative, listens to the need to lower the power limit to be a free customer, there will be more companies that will be able to manage their energy and will seek energy efficiency and sources of renewable energies because one of the advantages of commercialization is that it provides flexibility. “Regulated users, not only residential users, but also the 130,000 medium and small companies that could be free customers tomorrow, could manage their demand. Today these signals are not delivered to a large part of the users of electrical energy to be able to replicate many of the behaviors that large companies do in terms of efficiency. There are small and medium-sized companies that could also do it, but do not have the price signals to do it.”

According to Andrade, what the marketer is doing is attracting competition in the sector, reducing costs in the sector and providing end users with a greater number of services because they have incentives. He exemplified that, if an SME has monthly consumption of 6 or 5 million pesos, as a free customer it could reduce its bill by 20%, approximately 1,200,000 pesos, a situation that could allow it to hire a couple of people. However, SMEs, below 500 kW “simply don't have the possibility of choosing their supplier. We don't know why there is no progress in this possibility that the law currently allows.”

Likewise, he stressed that it is necessary to modernize the distribution law, which is already 40 years old and is years behind schedule, and given that it is known that it will be a law with complex discussion because it affects all users of electrical energy indirectly, it is necessary to start the debate as soon as possible "in the same way as the liberalization of the energy supply because we have to do it slowly so as not to cause disturbances in the electricity market."

His conclusion is that, if each end user is to be an active participant in the demand, the connected power should be lowered by 100 kilos each year to be a free customer, which would imply at least 5 years for consumers to Residential homes had the ability to choose their supply. "Therefore, we have to start as soon as possible to be able to achieve those objectives that are very hand in hand with the Government's objectives regarding a fair energy transition, if we want it to be fair for everyone, not just for a few, we must have freedom to choose.”