Electricity sector in Chile
Numerous projects are being built,[14] although other similar plants have been delayed due to opposition from locals and uncertainty about gas supply.
[11] The Energy Superintendence (SEC) is responsible for supervising compliance with laws, regulations and technical standards for generation, production, storage, transportation and distribution of liquid fuels, gas and electricity.
[21] In turn, the Minister of Energy formally imposes the regulated tariffs and retains control over the issuing of rationing decrees during periods of drought when there is a shortage of hydro-electric generation capacity.
[11] Further responsibilities in the electricity sector are also held by the Superintendence of Secure Values (SVS), which is in charge of taxation, as well as directly by the regions and municipalities.
[13] There are 26 companies that participate in generation, although three main economic clusters control the sector: Enel group, AES Andes and Tractebel (Colbún).
[13] In January 2006, new legislation was passed to apply the benefits included in Short Laws I & II (see Recent Developments section below for details) to renewable energy production.
The new regulation provided for exemptions in transmission charges for new renewable energy sources (i.e. geothermal, wind, solar, biomass, tidal, small hydropower and cogeneration) below 20 MW of capacity.
Periodical droughts have, however, caused supply shortfalls and blackouts, which led the government to increase diversification in the country's energy mix in the 1990s, mainly through the addition of natural-gas-fired power plants.
In addition, in 2007 Endesa started operating the 32 MW Palmucho plant, which is to work in conjunction with Ralco's facility.
[6] Because southern Chile receives prevailing westerlies of the roaring forties and furious fifties, it has some of the most promising wind power potential in the world.
In 2006, after a surveying campaign, a consortium formed by the National Petroleum Company (ENAP) and Enel requested a concession to develop geothermal resources in the El Tatio region in the North.
[6] Chile represents the world's longest running comprehensive electricity reform in the post-World War II period.
[11] In the period 1970–73, Salvador Allende's government had undertaken a process of nationalization of many large companies, including utilities and banks.
[11] There have been various attempts to modify the 1982 Electricity Act (Ley General de Servicios Eléctricos) with the purpose of adjusting to developments in the sector over the last 20 years.
This led Argentina to unilaterally decide, in 2004, on a reduction of its gas exports to Chile, which had been subject to a 1995 treaty between the two countries.
These cuts have had serious implications for Chile, leading to an expensive substitution of fuel oil for gas in the midst of a shortage of hydroelectric capacity.
The project is built under an Engineering, Procurement and Construction Contract by the Chicago Bridge & Iron company, while BG will be the long term supplier of LNG.
The plant received project finance for US$1.1 billion from a consortium of international banks[32] and is due to start operating in July 2009.
The Chilean government, as an additional response to secure electricity supply, proposed a new bill to the National Congress in August 2007.
The main objective of this bill is to minimize the negative consequences derived from a generator's failure to meet its contracted supply obligations (i.e. due to bankruptcy).
[23] In addition, the National Energy Commission (CNE) has recently approved Resolution No.386, a new piece of legislation that will allow regulated final consumers to receive economic incentives to reduce their electricity demand.
The total amount of the subsidy (US$33 million) will triple the resources committed in previous campaigns and is a response to rising electricity prices caused by the increasing use of diesel as a substitute for natural gas and the low precipitations of 2007, which have hindered hydropower generation.
[18] As a result of the 1982 reform of the electricity sector, 100% of generation, transmission and distribution activities in Chile are in the hands of private companies.
The distribution sector, with about 25 companies, is also dominated by four main groups: CGE Distribución S.A., Chilectra S.A., Chilquinta Energía S.A., and Inversiones Eléctricas del Sur S.A.(Grupo SAESA).
[18] Currently (September 2007), there are eight energy-related registered CDM projects in Chile, with expected total emissions reductions of about 2 million tons of CO2e per year.
A US$50.26 million loan was approved in 2004 with the objective of increasing the effective and productive use of sustainable infrastructure services by poor rural communities from selected territories in the regions of Coquimbo, Maule, Biobío, Araucanía and Los Lagos.
The project, to be completed in 2010, seeks, among other goals, to improve quality of conventional electricity services and to promote off-grid and renewable energy solutions, such as generators, solar panels and wind turbines.
