CNE to implement bi-nodal SIC pricing scheme

Chile's national energy commission (CNE) plans to implement two different node prices in the country's SIC central grid in April to boost investment in generation in the southern part of the country, Chilean distributor Saesa CEO Jorge Brahm told reporters Friday (Mar.26). The CNE informed companies about the change in its preliminary report for the next biannual price revision scheduled for next month. Companies can comment on the report until March 30. The CNE plans to divide the SIC into a central-northern zone and a southern zone. Each area will have its own node price, which is the price generators charge distributors for power. The reason for the change is to encourage the installation of emergency turbines in the south of Chile to meet growing demand there, Brahm said. The price will be different in each area depending on available capacity and demand. Supply exceeds demand in the central part of Chile near Santiago but the situation in the south is the reverse, so the CNE has proposed higher price increases there than for the central regions. Prices in the south could rise 5-10%, which would make the area more attractive to investors, Brahm said. A 10% hike would result in a 1.6% price increase for end-users. Prices will probably only rise 0-5% in the central area. Emergency generators are needed in southern Chile because demand is rising faster than supply and power cuts are becoming more frequent. The area suffered five power cuts in February due to the lack of transport capacity on the Charrúa-Temuco line that supplies the area between the cities of Los Angeles in Region VIII and Temuco in Region IX. Power cuts are expected to become more common as demand rises in the summer of 2004-2005, Brahm said. Apart from installing emergency turbines, another short-term solution is to increase the capacity of the existing Charrúa-Temuco line 40MW during summer temperatures of over 30C by raising the height of the line above the ground. A longer-term solution is to construct a second Charrúa-Temuco line to take some of the burden off the existing line, but this will not start operations until the first half of 2007, Brahm said.