Peru’s top power distributors report double digit growth in free client sales

Free market electricity sales were the category that grew the fastest in the first quarter at Peru’s principal distributors: Enel Distribución and Luz del Sur, which serve capital Lima’s metropolitan region.

Enel reported a 13.4% increase to 502GWh in deliveries to free clients and Luz a 24% jump to 44.4GWh, according to financials from the companies.

Although free clients led sales growth across the utilities’ customer base, the segment represented 22.5% and 1.57% of total sales for Enel and Luz, respectively.

Latest information from energy and mining investment regulator Osinergmin shows there were 1,774 free users last October countrywide, compared with 1,554 a year earlier and 1,312 in October 2019.

In October, the mining sector was the principal free market user, accounting for 52.9% of consumption, and power generators represented 87.7% of free market sales.

In the case of generator Engie Energía Perú, free clients represented 50.6% of 1Q22 revenue and distributors the balance.

The uptick in the number of free clients in Peru has stemmed from a dip in unregulated prices on account of excess power generation capacity attributed to lower than forecast demand.

Difference between free market price and regulated price in Lima (Source: Osinergmin)

Recent bills introduced in congress to ease free market restrictions for micro, small and mid-sized companies continue under review at the committee level.

THE MARKET

The future of Peru’s free market was addressed during a panel on the possible opening of the sector to electricity traders at Prensa Grupo’s Perú Energía Sur online event.

Osinergmin power generation and transmission manager Severo Buenalaya said such an option is viable due to existing competition, but he cautioned that traders – an agent between a distributor and a generator – would require guarantees to mitigate financial distress.

Javier Muro, CEO of group Distriluz, stressed the need to have in place sustainable prices so as not to negatively impact investment.

“Evidently there are risks that must be managed properly…in the sense that traders must have a backup contract that allows them to serve their free customers under any circumstance. What could not occur is that these traders only play in the spot market,” according to Irwin Frisancho, commercial manager at Kallpa Generación.