The decision of President Gustavo Petro to intervene in the regulation of public services, especially that of electric powernot only set off alarm bells for the consequences it could bring to this sector, but also opened the door to a legal debate.
In a letter sent to the Minister of Mines and Energy, Irene Vélez, The experts from the Energy and Gas Regulation Commission (Creg) reiterated that the president would not be empowered by law to resume the functions of regulation of this service.
(Also read: The Creg warns that intervening prices can lead to rationing)
Law 143 of 1994 assigned to the Creg the functions of regulating the electricity service, without being subject to a delegation of these by the president
The decree issued by the Presidency says that Petro will resume the general functions of the Creg during a period of three months, which were delegated to him by decrees 1524 and 2253 of 1994, in accordance with article 68 of law 142 of July 11, 1994.
However, the commissioners of the CREG assure that, although Law 142 of 1994 established the general and sectoral functions that the regulation commissions would exercise -if the President of the Republic decided to delegate them- «Law 143 of 1994 assigned to the Creg the functions of regulation of the electricity service, without subjection to a delegation of these by the president».
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Indeed, Law 143 of 1994, in its article 23, provided that the Creg will have, among others, the function of «creating the conditions to ensure the availability of an efficient energy supply, capable of supplying the demand under social criteriaeconomic, environmental and financial viability, promote and preserve competition».
In accordance with the interpretation made by the commissioners of the scope of this article, the president, when delegating functions to the regulation commissions, through Decree 1524 of July 15, 1994, in article 1 delegated the functions of article 68 and concordant provisions of Law 142 of 1994 in the CRA and in the Creg.
Subsequently, realizing that the functions indicated in Law 142 of 1994 had not been delegated to the Creg, regarding the home public fuel gas serviceissued Decree 2253 of October 7, 1994.
As a conclusion of the constitutional, legal and institutional framework, the commissioned experts of the Creg point out that the legal regime of residential public services and the functions assigned to the different authorities, including those for the regulation of services, are not based on the exclusive constitutional article 370.
In addition, they affirm that the legislator assigned the responsibilities of the different agents with a criterion of specialization and technical independence and that Law 143 of 1994 assigned directly to the Creg the functions of electricity service regulation.
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Who is right?
Experts consulted ensure that what Law 143 says –because it is more recent- prevails over what has been established in Law 142. Meanwhile, the firm Baker McKenzie explains that Law 143 of 1994 determined the functions of the Creg in relation to with the tariff regime.
While the competence that was attributed to President Petro through article 370 of the Constitution was indicated the general policies of administration and control of efficiency of residential public services. In addition to exercising through the Superintendence of Residential Public Services the control, inspection and surveillance of the entities that provide them.
Thus, Baker McKenzie considers that article 370 could not be interpreted as granting the president powers in tariff matterssince this is a charge of the Creg.
«To interpret that the competence in tariff matters belongs to the President of the Republic based on the provisions of article 68 of Law 142 (and article 370 of the Political Constitution) does not include an analysis of the provisions of article 367 of the Constitution,» he adds.
However, since these are interpretations of different actors, we would have to wait for the pronouncement made by the instance before which Decree 227 of 2023 is requiredsomething that could happen in the short term.
Impossible to accelerate the energy transition under these conditions, nor to increase the supply of generation that increases competition and ensures reliability and a drop in prices
But beyond this legal dispute, the Creg is concerned that an intervention in the prices of the wholesale energy market could increase the chances of rationing of electricity in the country.
«If an extreme dry hydrology situation were to occur next summer, given the probability of occurrences of a fename of the childWe have a very complex panorama with the risk of facing the possibility of not meeting the demand on an ongoing basis”, he assured.
Likewise, it stresses that it is important that the regulatory framework of the electricity sector be the product of a technical discussion between the Government, experts from an independent regulatory agency (such as the Creg), academia, industry, user organizations and other interested parties. , which provides the security that the sector will continue to develop in an environment of State intervention characterized by the issuance of technically justified rules and with a long-term vision.
(Also read: ‘Investor confidence in the energy sector must be restored’)
Meanwhile, the firm Óptima Consultores stated that «the signal for current and potential investors is devastating»and more taking into account that there is no clarity on how excellent the new rules of the game will be, who will be led and with what criteria decisions will be made, with what opportunity and technical solvency.
Likewise, he mentions that this decision by President Gustavo Petro is creating delays in the negotiations due to the great uncertainty that it has generated in the electricity sector.
Therefore, investment decisions could be frozen at the moment when they are most required. «Impossible to accelerate the energy transition under these conditionsnor increase the generation supply that increases competition and ensures reliability and a drop in prices”, he added.
