A new complaint filed with the Court for the Defense of Free Competition (TDLC) has generated concern within the non-conventional renewable energy sector.
The companies Hidromaule, Energía Coyanco, Duqueco, Besalco Energía Renovable and Trans Antartic Energía, submitted a petition to modify or repeal aspects of the price stabilization mechanism for Small Means of Electricity Generation (PMG/PMGD) stipulated in Supreme Decree No. 88.
Companies complain that the stabilized price is affecting free competition.
They suggest that all companies that are part of the Chilean electricity system pay a cross-subsidy to the PMG/D, which consists of the difference between the marginal cost of the system and the stabilized price that these plants of up to 9 MW receive.
In response to the TDLC's request for information, several entities and companies spoke out against the plaintiffs: From the National Energy Commission (CNE) and the Ministry of Energy, to trade associations, private renewable energy companies and banks.
In a dialogue with Energía Estratégica , Clemente Pérez , partner and leader of the energy, natural resources and infrastructure area of the law firm Guerrero Olivos , explains why the Court is likely to dismiss the companies' request.
"It was argued that this is not a subsidy, but a mechanism that provides a stabilized price that offers less fluctuation (than the spot market), and that in the long run tends to be equivalent to the market price because it is a correct projection of the future market value in the next 4 years in which each PMGD can connect," Pérez observes.
And he justifies: "So here there is no subsidy but deviations with respect to the prices that definitely occur, because these are projections.
Sometimes that difference is in favor of PMGDs, but other times it is against them.
"In fact, there have been more negative years than positive ones," he reflects.
The expert explains that the reason these stabilized prices were created is to make these small projects more financeable for credit institutions.
"This is an incentive, not a benefit, because it provides stability to future cash flows so they can be financed through project finance," explains the partner at Guerrero Olivos. What's next? After the reporting phase, the Court will now evaluate whether to issue recommendations to the National Energy Commission (CNE) based on the hydroelectric companies' objections to the stabilized price for PMG/D (presumably referring to a specific product or service), or simply dismiss the claim.
"I think the case will be dismissed because the presentations, both from the authorities and the companies, were very compelling," says Pérez.
While there is no set date for the Court to issue its ruling, Guerrero Olivos' partner believes the answer could come within the next three months, considering the agency's work dynamics.