December 2, 2019
Investment

What's the creation of the mechanism for stabilizing electricity prices all about?

What's the creation of the mechanism for stabilizing electricity prices all about?
The creation of a mechanism for stabilizing electricity prices under which the latest increase of 9.2% in bills will be reversed.

The President Sebastián Piñera unveiled a social agenda in response to the citizen demands that, over the past few days, have triggered a social crisis in the country.

In this context, he announced the creation of a mechanism for stabilizing electricity prices under which the latest increase of 9.2% in bills will be reversed.

“We will put in place a stabilization mechanism that will allow us to bring forward the price drop expected as from 2021 as a result of the entry of renewable energies, and neutralize the effect of the dollar. In this way, we can ease the burden for Chilean families,” explained Energy Minister Juan Carlos Jobet.

The immediate effect is that electricity bills will return to their level prior to the latest increase in the second half of this year, which began to be charged as from October 10.

For example, the typical bill of 23,176 pesos, paid by 60% of Chilean households, increased to 25,308 pesos but, under this mechanism, will go back to 23,176 pesos.

Minister Jobet indicated that implementation of the mechanism requires a legal change and approval by Congress. “We hope to have the necessary support in Congress to approve this legal modification quickly so that we can help our country’s families,” he said. He added that, in the case of those households receiving their bill this month, the second-half increase will be reversed, explaining that “the announced benefits are for all the country’s families and will be applied to their bills automatically, without them needing to take any action.”

He stressed that “implementing a mechanism like this has required in-depth technical analysis and transversal political dialogue, with representatives of the government and opposition, deputies and senators, consultants and companies.”

Minister Jobet also emphasized that this mechanism is in addition to other changes on which intense work is taking place, such as the short distribution law currently before the Senate, which will reduce companies’ profit margin, and the long distribution law, which seeks, among other objectives, to improve service quality for users and ensure greater competition.

Source: Energy Ministry