Chile Approves Electric Tariff Stabilization Law
The newly approved Electric Tariff Stabilization Law includes provisions for creating a subsidy benefiting over 1 million households, approximately 3 million individuals, from the lowest income bracket of the population, according to a press release by the government of Chile.
In anticipation of significant projected increases in electricity bills, the Ministry of Energy, in collaboration with parliamentarians, undertook pre-legislative efforts to explore solutions aimed at stabilizing energy prices for both households and small businesses.
The new law includes provisions for the creation of a subsidy benefiting over 1 million households, roughly 3 million people, from the most economically disadvantaged sector of the population.
This temporary subsidy will be applied to electricity bills and will be financed with $120 million from funds sourced from a fee levied on high-energy-consuming clients, such as mining companies, as well as resources from the Public Treasury.
Creation of a Territorial Generation Recognition Mechanism
A Territorial Generation Recognition Mechanism has been established with the aim of reducing electricity bills for families residing in communities where coal-fired generation plants are located, such as Mejillones, Tocopilla, Huasco, Puchuncaví, and Coronel.
The tariff impact of such a measure is significant in these communities. For instance, in Mejillones, a typical bill of $19,000 would be reduced to $12,500; in Tocopilla, from $24,000 to $17,000; Huasco from $25,500 to $17,300, Puchuncaví from $28,000 to $20,000, and Coronel from $29,000 to $21,300.
The new law addresses the mitigation of significant increases projected by the CNE, which could currently reach up to 150% for segments not protected by the current MPC mechanism, such as small businesses and families sharing meters.
This legislation will prevent, for example, a mini-market in San Bernardo from seeing its current bill double, allowing it to pay $310,000 instead of $500,000. Similarly, for a household in Talcahuano where several families share a single meter, they will pay $120,000 instead of the $200,000 they would otherwise be required to pay if no action were taken.
Task Force to Evaluate Other Sources of Financing
A task force will be convened to evaluate alternative sources of financing to increase the annual subsidy for low-income families and to analyze other policies aimed at reducing the increase in electricity tariffs for regulated customers.
Soledad Quartucci | CEO/Founder, Latina Republic
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