Electrical Multicarrier entity proposed by Government introduces concept of Financial Administrator similar to Transantiago (Public Transport) Financial Administrator (AFT)
17-Jul-2012 Diario Financiero – News
Model would allow for deeper NCRE pervasion and energy efficiency furtherance
Electrical Multicarrier entity proposed by Government introduces concept of Financial Administrator similar to Transantiago (Public Transport) Financial Administrator (AFT)
Antuko Energy analysis indicates potential market for traders would be 771 GWh/year for 2012. Initially it would not have any effects on current distributors
On June 15 Government received the survey results to install energy traders, one of the ideas set in the Government National Energy Strategy. The study made by Antuko Energy Consultants indicates, amongst other things, that the multicarrier system would allow for a deeper inclusion of NCRE in the system as a more efficient alternative against quota systems at the same time it would further energy efficiency.
Multicarrier is meant to split networks operation and their trade which are both business interests of electric power distributors.
The proposal is suggesting to create an entity similar to Financial Administrators at Transantiago “that would play a double role: installing, maintaining, operating, and administrating electricity measuring of all consumers as well as acting as Compensation Chamber for transactions made by traders not only downstream (towards customers) but also upstream (towards energy purchasing)”, the report explains.
As for effect over rates, one of the study authors, Fernando Cubillos, says that “it is difficult to be certain of the impact (over rates)”, but one way to obtain savings would be incorporating “more efficiency through trading management (…) because of lower transaction costs which in fact represent 30% of fixed costs. I consider such costs may be considerably reduced by increasing competition, exactly as it happens with AFP or mobile phones companies when they must effectively compete by price and service”. Traders might well specialize by energy type, “by geographical area, type of supply or type of clients”, and customers might then choose from which one to buy, Cubillos states.
Model proposed
The “Disaggregated Distribution Model” that has been proposed considers traders, which are companies dedicated to selling energy in areas where distributors have been granted concession agreements. Besides they also establish sub-transmission companies to hold, operate, and run sub-transmission networks.
Other companies would own distribution network and would also operate and run those networks. But now a new player comes into the scene, these are companies to administrate the system measuring and invoicing process where they must install, operate, maintain, and run measuring and invoicing systems in distribution networks of areas that were granted concession agreements.
However, these modifications will not affect the distributors that are working today as they will continue operating without variations until their contracts expire. “We consider potential market for traders is 771 GWh per year for 2014 and from that point it would continue increasing up to a two-digit figure”, partner of Antuko Energy states.
In the case the proposal is accepted, it would be implemented in three stages. “Early stages to be started one year after political decision to move forward is made. For first stage minor modifications to regulations are required to start with industrial and commercial clients. Second stage covers a wider scope of clients in the extent demand blocks increase without affecting blocks currently contracted by distributors”, Cubillos states. At the same time, “with improved trading alternatives the NCRE projects might well achieve a viable status”, the expert says. Nowadays main hurdles NCRE are facing to increase their market share is lack of funding and market access. “With trading agents and an Organized Wholesale Market (MMO for its acronym in Spanish”, a NCRE project investor may have access to market to secure steady income and thus also secure financing”, the report states. Consequently, trader and MMO significantly change “risk perception of NCRE projects investors by easing investment in this kind of projects”, the report adds.
