Insolvency in the electricity sector: the underlying discussion
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Daniel Salazar J. Former executive director of the National Electrical Coordinator, partner Energie

Daniel Salazar J.

During the last weeks we have witnessed the debate that has been generated based on what was reported by the companies María Elena Solar and Ibereólica Cabo Leones II (ICL II), regarding the impossibility of meeting their payment obligations in the short-term electricity market. term, immediately setting off alarms regarding a break in the payment chain.

Based on the above, the “Short-Term Market Public-Private Roundtable” led by the CNE was established, with the aim of analyzing the particular and systemic causes that would be influencing this situation.

“The Coordinator’s performance, somewhat hasty, is in question. It is intended to solve a problem typical of a vacuum in the regulation of supply tenders to regulated clients through other channels that are not appropriate”.

To this has recently been added what was reported by ICL II about the replacement in its capacity as Coordinator with respect to the assets that it operated or exploited to date, one of them owned by GPG Solar (related company) to a third party (Enerbosch), causing a strong exchange of communications between the National Electrical Coordinator and the company.

The legal norm never anticipated the situation that is presented today, since a restriction or prohibition is not identified so that a supplier of regulated clients can part with their assets while their contract is still in force, without any type of sanction. In the field of coordinated operation, the only requirement for a replacement to operate in the capacity of coordinator with respect to an installation interconnected to the electrical system, is that it be the owner of an installation and that the replacement be complete with respect to the coordination obligations to to which said facilities are subject, which does not include their contractual commitments.

For this reason, the action of the Coordinator, somewhat hasty, is in question. This not only undermines his reputation, but also reveals the lack of comprehensive analysis of the problem. This, since it is intended to solve a problem typical of a vacuum in the regulation of supply tenders to regulated customers through other channels that are not appropriate.

Beyond the legality of the actions that we have seen, which will surely be discussed, this case requires a thorough review of the design of tenders for regulated customers. It does not seem acceptable that these contracts have such low “exit costs”.

The mechanism that is beginning to be known is surprising and leads one to think that we are in the presence of a problem that is not fully addressed by the current regulation. In this case, the regulatory framework for supply tenders should discourage this type of contractual operations, through deeper regulation aimed at safeguarding the interests of consumers.

The relevant issue -this time- is not the physical and economic operation of generation assets, but the existing gap in the regulation of tenders and supply contracts between supply and distribution companies. That is the underlying discussion.

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