Subsidy scheme
Chile published a decree establishing an end-user electricity consumption subsidy scheme that will be in place from 2024-26.
Such an initiative – targeting vulnerable households – was set out in a bill, approved this half, that unfreezes regulated client power rates, which have remained virtually unchanged for four years.
Clients will be able to apply for the subsidy via a government online platform.
The unfreezing and subsidy moves come amid a need to reduce a multibillion-dollar generator debt pile that has built up and to normalize the sector.
Average end-user power bills are due to climb in the double digits.
Lower priced power-purchase agreements (PPA) are due to enter force over the coming years, driven by competitive renewables generators. However, the impact on bills will be muted as any original PPA reduction will be offset by the likes of generator debt repayments as well as associated contract price adjustments. The generator debt is due to be repaid by 2035.
Power rates were frozen for longer than originally planned, a situation that drew criticism from some sector players, pointing out that the longer the delay, the bigger the eventual implications. They nevertheless welcomed the legislative move to normalize the situation.
Discussion has started over potentially expanding the scope of the subsidy scheme. One option being mulled is a temporary carbon tax increase, which currently stands at US$5/t.
Authorities froze all bill components – generation, transmission and distribution – in 2019 in response to the social protests that erupted in October of that year. Economic fallout from the COVID-19 pandemic of 2020-23 added pressure to keep rates steady – which happened, with the exception of an unfreezing in 2023 of the transmission component of bills.
Click here to read the decree
Hydropower dam transfer
Three companies were established in Argentina to take the reins of three hydroelectric power stations whose concession contracts have expired.
State firms Energía Argentina and Nucleoeléctrica Argentina are the joint owners of the ventures: Alicurá Hidroeléctrica Argentina, Chocón Hidroelectrica Argentina and Piedra del Águila Hidroelectrica Argentina.
The move comes amid plans to transfer the assets to the State and then eventually auction new operating contracts for the plants: Alicurá, Chocón and Piedra del Águila.
In May, the federal energy department ordered the current operator of Alicurá and Chocón – AES Argentina – to keep running them until August 11. Central Puerto was required to remain in control of Piedra del Águila until December 29.
The May order also encompassed Cerro Colorados, recently acquired by Aconcagua Energía from Orazul Energy.
Neuquén province, along with neighboring Río Negro – home to the facilities – has previously requested an active role in the administration of the plants.
In a related development, authorities in Mendoza province recently made a 12-month extension to the operating contract held by Hinisa for the Los Nihuiles system in the jurisdiction. The original 30-year contract had expired on June 1.
Contracts for two other complexes are due to expire this year.
Hydrogen decree
Chile published a decree that establishes safety rules for fixed hydrogen installations, after the office of the comptroller general gave the document the green light.
Known as supreme decree No. 13 of 2022, it sets out minimum safety requirements for stationary facilities that produce or consume hydrogen as an energy resource.
The rule change is among goals and targets in Chile’s national hydrogen strategy of 2020 and its 2023-30 hydrogen action plan.
Click here to read the decree
