Chile publishes its energy transition law
Today, Law No. 21.721 was published in Chile’s Official Gazette, modifying the General Law of Electric Services (LGSE by its Spanish acronym) regarding energy transition and positioning electric transmission as an enabling sector for carbon neutrality.
This reform reinforces the role of electricity transmission in the country’s energy transition. It aims to encourage infrastructure development, promote competition, and boost storage through increased facilities and efficiency within the electricity market.
Key details of Law No. 21.721
In an effort to increase and refine the country’s deployment of electricity transmission infrastructure, the law identifies three main areas of focus:
- Electricity sector and climate change
- More efficient development of transmission works
- Promoting competition and encouraging warehousing
Law No. 21.721 introduces the following amendments to the LGSE:
- Article 91 bis is incorporated, contemplating the possibility of excluding works cataloged as "necessary and urgent" from the Ministry of Energy’s transmission planning process and detailing its procedure. According to the law, this process will be more expeditious than it was previously.
- The valuation of new works and expansions, as well as of urgent works, may not exceed the percentages indicated in the law, which were calculated based on the average values of transmission planning processes.
- Generating companies may propose and finance expansion works within their transmission facilities at their own risk. Likewise, Article 95 is replaced, requiring the owners of works to carry out bidding processes and help ensure their correct execution under the supervision of the National Electric Coordinator.
- In the event of early termination of a contract awarded for the execution of an expansion work, the owner of the work will be responsible for the execution in due time and form. For such purpose, the owner may alternatively take immediate possession of the work itself or rebid its execution. They may also request a revision of the investment value (VI), according to the mechanism of Article 99.
- Transitional rules are contemplated to request the National Energy Commission to review the awarded VI for ongoing processes and awarded works.
Going forward
The Ministry of Energy may issue additional regulations or amend existing ones as part of Law No. 21.721’s implementation, which is required to take place within one year of the law’s publication. Until such rules or modifications enter into force, the law’s provisions shall be subject to the terms, requirements, and procedures established therein and those established by exempt resolution of the National Energy Commission.
For more information, please contact the authors.
