The Ministry of Energy will publish within the following days a new regulatory framework for the generation of electricity energy.
In the last weeks, the Secretariat of Energy move forward with the discussion about an update of the fees that the private companies receive in respect of the operation of the current generation stations.
Although they will keep the scheme implemented by the prior administration –that contemplates an audit of the generation costs to calculate the fess on a cost-plus basis- the new regulation will incorporate several changes in respect to the amounts and ways of collecting it.
As an example, it is expected that the companies will be able to calculate their fees in USD, avoiding devaluations and inflation impacts, with an increase of 50% as from January 2017. Such increase will go up to 80%. These fees will be applicable for the already existing generation plants. For the new stations the Government will call for bids with higher prices to guarantee the recovery of the investments.
This update of the income of generation companies should not generate consequences on the tariffs of residential consumers, since these fees are established autonomously.
THE ELECTRICITY SECTOR IN ARGENTINA
The electricity sector in Argentina constitutes the third largest power market in Latin America. It relies 60% on thermal generation and 36% hydropower generation. still has a large untapped hydroelectric potential.
The government of Argentina is in the process of implementing large ambitious projects, both in the generation and transmission sectors. It is estimated that about 1,000mw of new generation capacity are needed each year. An important number of these projects are being financed by the government while independent private initiative (PPI) is still limited as it has not fully being implemented.
The electricity sector is divided in generation, transmission and distribution since the reforms implemented in the 1990s. Generation is marketed in a competitive and mostly liberalized market in which 75% of the generation capacity is owned by private utilities. In contrast, the transmission and distribution sectors are highly regulated and much less competitive than generation.
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