State-owned electricity company: is it possible and profitable?: this is what experts say about Pardow’s proposal

by times news cr

2024-08-18 22:05:32

Sources consulted by EL DÍNAMO addressed the debate opened by the Minister of Energy and shed light on the role that the State should assume in this matter.

Following the frontal system that hit the south-central area more than a week ago, Enel y CGE face harsh criticism for the prolonged power outages which still have thousands of customers without supply. In light of this, the Minister of Energy, Diego Pardow, opened the debate on the possibility of creating a state-owned electricity company.

The Secretary of State, in conversation with La Tercera, said that it would be “It is safer for citizens to have some part of the electricity distribution under the figure of a state company“After that, he added that “we need to have a deep discussion about what are the capacities that we want the State to have, independent of the Government (…) to take charge.”

In this context, the Minister of Public Works, Jessica López, and the Government spokesperson, Camila Vallejo, referred to this idea, distancing himself from Pardow’s statements.

The head of the MOP said on Radio Duna that the “The State has limited resources” and that in his opinion progress should be made in deepening the capacity for intervention and the capacity to sanction.

While Vallejo He assured that “The State has no musclecurrently, to replace the work that electricity distributors must do today” and that the Executive’s priority for now is ensuring that electricity companies meet their obligations legal.

Is the creation of a state-owned electricity company viable?

Regarding the approach of the Minister of Energy, Diego Pardow, following the delays that Enel and CGE have had in restoring the supply, sources consulted by THE DYNAMO They boarded the possibility of a state-owned company being part of the electricity distribution.

In this regard, Humberto Verdejo, an academic from the Department of Electrical Engineering at USACH, assured THE DYNAMO: “Let the State create a company to solve the problem of distribution networks is not the solution to the existing structural problems.”

Continuing along those lines, he pointed out that “The amounts of resources associated with and necessary to strengthen the electrical networks have always been financed through public-private partnerships. Unfortunately, the State has not been successful in this context; it is enough to remember some short-term examples such as the Gas para Chile initiatives and the crises affecting Codelco and Enami.

In addition, he stressed that The State does not have the infrastructure or the economic resources to carry out an initiative like this..

“Currently, the government does not have the resources to cover the recent announcement related to the subsidy of electricity bills that aims to cover 4.5 million families. For this reason, it is difficult to evaluate the scenario in which the State commits significant amounts of resources to assume a responsibility that is now the responsibility of companies and to set aside other priorities that only the State can fulfill,” he said.

Safe for citizens and with a shorter response time: would a state-owned electricity company meet these requirements?

Following the late response of the electricity distributors to restore service in the Metropolitan Region and the south-central zone of Chile, one of the points to consider if the concessionaire were to become a state-owned company is that it would not have greater demands, since it would be subject to the same quality standards and compliance with indicators required by the regulations, regardless of whether they are public or private.

In this context, Mario Herrera, an academic from the Faculty of Legal and Social Sciences at the University of Talca, assured EL DÍNAMO that “state-owned companies do not guarantee better quality of service, but they do guarantee that when there are emergencies, when there are these types of situations, state resources can be made available for use.”

For his part, Humberto Verdejo said: “To face the storm crisis, hundreds of crews should have been available and that turns out to be inefficient given that Events of this magnitude are punctual. It is difficult to assess whether the State would assume fixed costs just to respond to extreme contingencies.”

“What yes It is necessary to better coordinate response times between the different actors in the sector. This is of vital importance since extreme weather events will surely repeat themselves in the short term,” he added.

The State’s response to prevent thousands of homes from being affected

After being asked about the roadmap that the Government should face in relation to a possible introduction to the energy distribution market, the USACH expert stated: “Rather than thinking about creating a state-owned company, It would be advisable to strengthen the role of the SEC, increase fines and the amount of compensation.”

The above, referring to the fact that currently the Superintendency of Electricity and Fuels (SEC) only sanctions when the supply indicators fail due to power outages.

“It is necessary to consider that can fine when companies do not carry out improvement plans associated with the continuous review processes carried out by the organization,” explained Verdejo.

In addition to this, he suggested that it should be reconsider the mechanism for calculating the distribution tariffsince “to this day it does not consider whether or not the company meets the service quality standards.”

“Basically, the tariff is calculated every four years and if the company cuts off the electricity, the company pays the fines and compensations. By the way, it is important to note that The fact that compensations are transferred to tariffs was a decision of the National Energy Commissionwhich considers it more efficient for some clients to remain below quality standards and avoid forcing companies to build additional infrastructure that would significantly increase rates,” Verdejo concluded.

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