The decree that makes the president’s decision official was published gustavo petro to resume, for the term of three monthsthe general functions delegated to the Commission for the Regulation of Drinking Water and Basic Sanitation (AVE) and the Energy and Gas Regulation Commission (creg).
Therefore, these two regulatory commissions they will continue to expand administrative acts of a private nature that exercise at the date of issuance of this decree.
(Also read: Fitch sees risks due to Petro’s intervention in the regulation of electricity)
The decree also establishes that President Petro may request the technical support of the Creg and the CRA and other entities of each sector to carry out these general regulation functions.
The Administrative Department of the Presidency of the Republic (Dapre) argues that the need for the President to temporarily resume this power lies in the fact that development of regulatory activity should be directed and pointed out the general policies of administration and control of the efficiency of residential public services.
This is because, despite the regulatory measures that were taken in 2022 to lower energy rates, the expected results will not be achieved, although the upward trend will be stopped. According to the Ministry of Mines and Energy, the average reduction nationwide was 1.2 percent between August and December of last year.
This is in addition to the high prices that hydraulic plants are offering in the Energy Market, because they even reached 685 pesos per kilowatt hour in February 2022, despite being periods with high water contributions.
«In Colombia there are only six large electricity generators, it is an oligopolythere is no free competition. When there are so few, they have the ability to manipulate the price and that is why many of the complaints from Colombian society about the price of the public energy service,» said the president on Tuesday from Cúcuta.
It will be subsequently and based on the decree that is issued, that regulatory decisions are adopted
The regulatory provisions will take into account four general guidelines: subjection to constitutional and legal principles, fines and values; guarantee of public disclosure and participation in the proceedings in this matter; relevance, opportunity and quality that guarantee the principles of efficiency, sufficiency, comprehensiveness and tariff solidarity; and criteria of the tariff regime of economic efficiency, neutrality, solidarity, redistribution, financial sufficiency, simplicity and transparency.
Despite 17 unions and companies submitted 54 observations and they made recommendations to this decision that President Petro announced towards the end of January, only one was taken into account.
made her the Colombian Association of Oil and Gas (PCAClean ) and made reference to including a period of beginning and end of the resumption of presidential functions. In the final version of the decree, it was stipulated that it will be for a period of three months.
Although he did not hold any other observation, Dapre did respond that the president has not ignored, nor will he ignore, the powers of the Creg and CRA. Furthermore, he said that with this decree «The institutionality of the public services sector is not affected at all».
He also stated that this decree is only limited to restoring to President Petro some general functions of a regulatory nature and does not contain «proper regulation.»
However, «it will be after and based on the decree that is issued, that regulatory decisions are madewhich will be subject to the procedures, norms and principles of this type of measures».
Therefore, Dapre made sure in its responses to the observations of unions and companies that the effects of the regulatory change only They will be verifiable once the regulation is issued.because the mere fact of the change of competences does not generate appreciable transformations in the legal system.
(Read also: Reliability Charge auction called to ensure energy supply)
The concerns of the electricity sector
The comments made by the companies and unions to the draft decree, which appeared only two days in consultation, revolved around the Concern that exists for possible effects on the institutional framework and uncertainty in the face of changes in the rules of the game.
In addition, they said that it is necessary to ensure the no free services and they warned that the changes in the regulation could discourage investment and affect the confidence of the electricity sector.
They also asked to know exactly what was the purpose and necessity of spending this decree, since it is considered that this decision of «intervene in the regulation of public services» lacks technical support.
Specifically, the National Association of Public Services and Communications Companies (Andesco) said regulatory functions that do not come from the presidential delegation, but directly from a Law of the Republic, therefore it could not be assumed by decree.
Meanwhile, the Colombian Association of Electricity Distributors (Asocodis) warns that article 23 of Law 143 of 1994 establishes that the Creg has the function of defining the methodology for calculating rates for access and use of networks electricity, define the tariffs applied to regulated users and know the tariffs of non-regulated users and, finally, the president is not competent to assume that regulation.
(Also read: Creg responds to Petro: ‘Regulatory bodies must be independent’)
Hidrogeno Colombia went further and said that «institutional stability and legal security are fundamental pillars of our democracy and cornerstone of the economy. Modifying the rules of the game will put trust at risk and stability required for investments in generation projects with non-conventional energy sources and hydrogen production, on which the energy transition is based».
To the latter, the Presidency responds that it does not accept the observation because in the regulation issued by the president, not only constitutional principles and values will be taken into account, but also the tariff principles or criteria contained in Laws 142 and 143.
Meanwhile, Celsia said that the one-person exercise of the regulatory function implies a structural change to the electricity market that deserves to be considered more carefully. This concentration could imply a political-regulatory risk that affects decisions related to investments in electrical infrastructure.
Even Empresas Públicas de Medellín (EPM) said that there is no technical justification to support the decision and that the change discourages investment because it generates uncertainty.
Presidency told EPM that the comment did not last because the reasons for the decision are not only economic, but also social: «The purposes of the regulation not only have an economic content, but also have a social scope, since they must walk on the path of complying with the social fines of the State as derived from the mandate contained in the first paragraph of article 365 of the Political Constitution».
