In a letter addressed to Andrés Camacho Morales, the Minister of Mines and Energy, the Colombian Association of Electric Power Generators (Acolgén) responded to the portfolio’s proposals to reduce energy prices in the Caribbean region and reiterated his ideas to achieve that goal.
The union assured that it reiterates its “permanent willingness to work hand in hand with the National Government in the construction of measures that guarantee efficient rates, reliability and security in the supply of electricity, and diversification of our energy matrix towards carbon neutrality, in a context of efficient complementarity of resources“.
(See: Minenergía proposes three measures to reduce energy prices in the Caribbean).
However, he states that he sees “immense concern“the proposals presented by the Ministry of Mines and Energy, as they result, according to the union, “contrary to the Constitution and the law“, and argues that their application would constitute a violation of the principle of good faith and “of legitimate trust on which the regulation of home public services is protected“.
“In this same sense, the proposed measures constitute a violation of the obligation of the Colombian State to grant fair and equitable treatment to investments made in the Republic of Colombia and could lead to an illegitimate exercise of power that causes an illegal expropriation under the Political Constitution and international law“he added.
Acolgén was also critical of the fact that only receive two calendar days to carry out the analysis and comments on the proposals, while clarifying that the information was received on Saturday, May 4.
“Acolgén represents 16 companies that provide 85% of the energy generated in Colombia and, given the complexity of the proposals that seek to change structural elements of the sector, much more time is needed for a true debate that, in the presence of all sectors of the chain, allows us to reach real and permanent solutions for the identified problems”.
(See: Creg launched energy disconnection program for users).
Andrés Camacho, Minister of Mines and Energy Milton Díaz / Portfolio
Acolgén’s proposals
The union insisted that it has presented proposals “that can generate a reduction in electricity rates in the Caribbean region, given the particular circumstances of said area. Such proposals, furthermore, respond to the invitation that was made to us on Tuesday, April 30, 2024, in the afternoon, in the first and only of the work tables to which we have been summoned by the Ministry and that took place at the request of a presidential order, with the participation of representatives of the distribution and marketing companies of the Colombian Caribbean: Air-e and Afinia“.
Thus, he stated that his package of ideas aimed at reducing rates in the Caribbean (and in some cases in the rest of the country), in the short, medium and long term, “They are made from our position as representatives of the generation sector, within the unrestricted framework of respect for free economic competition, and prioritizing the need to provide efficient, timely solutions and within the framework of legality, to the situation of users in Caribbean. Such proposals, therefore, must be reviewed in detail, so that we all, as a sector, can build on them.“.
(See: Responses to the complaint by the mayor of Medellín about the ‘sale’ of Afinia).
Among the proposals are:
– Direct Government turn: possibility of resources from the public budget being allocated to partially or totally cover the pending balances to be recovered from the Air-e and Afinia marketers.
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– Tariff Relief Bonds (BAT): Through the securitization of the balances of the rate option (and even a part of the distribution rate), through the issuance of bonds in the financial market, the objective of financing, with longer terms, better rates is achieved. and lower risk, the debt that users currently have with their marketers.
– Adjustments to the subsidy scheme.
– Adjustments to guarantees in the Wholesale Energy Market (MEM).
– Adjustments to contracting schemes that enable greater coverage.
(See: Industry, marketers and thermal plants are looking for more gas: why).
– Investment in distribution networks.
– Reduction of non-technical losses.
– Smart Metering – AMI.
– Energy communities, “which would be key to the development of the electricity market, the fulfillment of the country’s objectives in terms of energy transition and the achievement of greater autonomy and empowerment of vulnerable communities.“This initiative, commented Acolgén, would serve to reduce dependence on the network and alleviate its stress,”especially in periods of hydrological criticality“.
(See: ‘We must take care of the Creg from revolving doors’: Minenergía).
– Energy efficiency, since he argued that “The efficient consumption of water and energy must be a fundamental axiom on which the country’s growth is based in the future.“.
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For Acolgen, The solution to the tariff situation in the Caribbean depends on work between the National Government, sector agents and users.
“Although the challenges are huge, we believe that there are enough alternatives so that, within the framework of the institutions, under the applicable international, constitutional and legal framework, and without discouraging the development of the sector, they can be overcome. However, if all the measures noted, and even those proposed by other actors, are not accompanied by efforts to increase the generation supply in the country, everything will be fruitless or, at least, insufficient in the short, medium and long term.“.
The Government’s proposals
The proposals made by the Government to reduce energy prices in the Caribbean were:
– The creation of a differential rate for special areas, in which it is proposed that all hydraulic generators must deliver energy to markets defined as special.
– Rate option balance, which for the Caribbean is about $2.5 billion, according to Asocodis calculations. In this regard, the letter indicates that several actors in the chain must finance this amount.
(See: Council of State orders the President to appoint Creg commissioners as property).
– Energy generation and communities. For this, they propose that an investment plan be generated for energy communities and distributed generation.
BRIEFCASE
