Chile published Law 21.833 on Electricity Tariff Protection in the Official Gazette on July 31, which, among other provisions, enables an exceptional way to voluntarily modify supply contracts intended for regulated customers.
Article thirteen of the transitional provisions empowers the National Energy Commission (CNE) to develop, on a one-time basis and with a maximum term until December 2027, a mechanism that includes future energy supply and aims to reduce the current price of supply to regulated customers.
The reduction may be agreed upon in exchange for changes to the clauses relating to the price, term, and conditions of one or more existing contracts, or through the execution of a new supply contract. The Commission must act in a well-founded manner and have the prior mandate and authorization of the Ministry of Energy.
The publication enacts into law one of the most sensitive chapters of the project known as “Let’s Get the Account in Order,” although it does not automatically reopen the regulated portfolio. The National Energy Commission (CNE) is authorized to design the mechanism, but, due to its voluntary nature, it cannot unilaterally impose a reduction on the generators. The Ministry of Energy itself used that term during the legislative process and after the publication of the regulation.
The procedure must be guided by the principles of legal certainty, voluntariness, and economic efficiency , which will be established in regulations issued by the Ministry of Energy. Article thirteen stipulates that these regulations must be issued within the first 180 days following the promulgation of the law, which occurred on July 24.
According to Rafael Loyola, executive director of the Renewable Generation Association (AGR) , much of the scope will remain open until that text is known.
“We believe the specific scope should be defined by the CNE in the regulations. The essential thing is that the mechanism maintains its strictly voluntary nature and allows for the analysis of each contract according to its own characteristics,” he stated in an interview with Energía Estratégica .
The regulation does not establish thresholds for price, age, technology, or volume to determine which agreements could be incorporated. In practice, the methodology adopted by the CNE will be crucial in identifying which agreements offer room for negotiation and under what conditions a modification would fulfill the objective established by the law.
Loyola warned that not all regulated portfolios should be evaluated under the same logic.
“AGR’s associates’ contracts are already among the most competitive and convenient for regulated clients, so any analysis must recognize that reality,” he said.
The position differs from the diagnosis of Fundación Chile Sustentable , which identified the contractual review as the component with the greatest structural scope of the legislation.
In an open letter signed by Sara Larraín and Gonzalo Melej following the legislative approval, the organization argued that "the renegotiation of contracts is the most relevant structural tool of the project," because, in their view, it would allow for correcting distortions and making the cost of energy more transparent for regulated customers.
The foundation specifically pointed to agreements made under conditions different from those currently present in the Chilean electricity system.
“Many old contracts do not reflect current market conditions, but rather past conditions, that is, prices tied to expensive fossil fuels and exposed to the volatility of international markets,” he argued.
A negotiation without a uniform formula
Law 21.833 identifies the clauses that may be modified, but does not establish what specific consideration a generator must receive to accept a reduction in the current price.
The parties may agree to changes in price, term, and other contractual conditions. The regulation also allows for a new contract that includes future supply. Therefore, a possible extension of the contract's duration appears as a potential alternative within the negotiation process, but not as a legally mandated consequence.
According to Loyola, the absence of a predetermined formula is due to the financial differences between the projects.
“Since it is a voluntary mechanism, there is no single formula. Each contract has a different financial structure and must be evaluated on a case-by-case basis,” he explained.
The CEO of AGR also asked for consideration of the situation faced by companies during periods of greater market stress.
“In the case of our associates, they are also renewable energy companies without a fossil fuel legacy that faced significant economic stress during the 2022 crisis to fully meet their supply commitments, so that reality must also be taken into account,” he stated.
Since this is a statement from the trade association, the competitiveness of its contracts, the financial stress faced, and the fulfillment of its obligations are correctly presented as AGR's position, not as conclusions established by law.
The viability of the mechanism will depend on whether the modifications allow for a reduction for regulated customers and, at the same time, create conditions that lead the holder to voluntarily accept the review of a long-term commitment.
When asked what the most convenient contractual combination might be, Loyola avoided identifying a general alternative.
“That will depend on the specifics of each contract. It will be up to the CNE to evaluate which combination is most efficient, considering the financial structure of each project and the benefit to consumers. We don't believe there is a one-size-fits-all solution for all contracts,” he explained.
The benefit cannot be limited to the initial discount
The law requires that the mechanism aim to reduce the current supply price and be guided by the principle of economic efficiency. However, it does not expressly establish the methodology to be used to assess the new obligations assumed, nor does it require, in those words, measuring the benefit over the entire life of the contract.
AGR argues that the analysis should prevent an initial decrease from being subsequently offset by a longer term, less favorable indexation, or other economic conditions.
“The principle should be that any modification generates an effective benefit for customers throughout the entire term of the contract,” Loyola said.
Among the variables that could prove relevant are indexation, term, supply profile, guarantees, risk allocation, and the project's financial sustainability. These elements are not listed by law and must be defined during the mechanism's design.
“We trust that the CNE will establish the necessary technical safeguards to verify that result and prevent the objective of the law from being distorted,” the union representative added.
Fundación Chile Sustentable, meanwhile, emphasized the importance of preventing the voluntary nature of the tool from leading to inaction.
“It is urgent that the Government, through the CNE, decisively promote this renegotiation,” the organization stated, which believes that the review would reflect current generation efficiencies and costs and pass them on to consumers without distortions.
The scope of the new contracts
Another outstanding issue is how the possibility of entering into a new supply contract will be implemented.
Article thirteen does not expressly define whether this agreement must be entered into with the holder of a current contract who agrees to modify its terms. Nor does it establish a competitive procedure for incorporating other generators. The scope will have to be determined by the regulations and the mechanism designed by the CNE.
The definition will have effects on competition. Negotiations limited to the parties of existing contracts could facilitate their modification, while a system that includes some comparison with other bidders would allow for a comparison of the proposed conditions for future supply. This latter possibility is a design scenario and not a modality expressly mandated by law.
“The law contemplates different alternatives, and the National Energy Commission (CNE) will define its implementation. The important thing is to preserve competition and take advantage of the greatest possible efficiencies for the benefit of consumers,” Loyola stated.
“We have full confidence in the sound judgment of Minister Ximena Rincón and her technical team to design a balanced regulation that safeguards both the interests of regulated clients and the legal and financial certainty of investments,” he concluded.
The reference is correct: Ximena Rincón took office as Minister of Energy in March 2026 and is listed in that capacity among the authorities who signed Law 21.833.
The legislation stipulates that the Ministry of Energy must inform the Mining and Energy Committees of the Chamber of Deputies and the Senate about the modified contracts, the tariff reductions obtained for regulated customers, the new contract term, and any other modifications that the authority deems pertinent to communicate. The article does not specify a timeframe for this reporting.
Separately, the Ministry and the National Energy Commission (CNE) must submit an annual report to Congress on the actual prices paid by regulated customers. This information must include the evolution of prices and charges, indexation mechanisms, and other relevant economic conditions of current contracts, while safeguarding commercial information and keeping it confidential.
The publication of Law 21.833 thus clarifies the legal authorization, but shifts the core of the discussion to the regulations: what contracts can be incorporated, what contractual considerations could be agreed upon, and how the CNE will assess whether each operation meets the objective of reducing the current price under criteria of economic efficiency.