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Chile

( Last update: September 2006 )

Electricity Market
Sector structure
Upstream The sector is fully privatised.

Four electric interconnected systems: the Sistema Interconectado Central (SIC) that servers the central part of the country (69,1% of installed capacity); the Sistema Interconectado del Norte Grande (SING) that serves the desert mining regions in the north (34% of installed capacity); and the AYSEN and MAGALLANES systems which serve small areas of the extreme southern part of the country, respectively the 0,28% and the 0,54% of installed capacity).

31 power generation companies very often vertically integrated along the supply chain.

20 generation companies operate in the SIC. The first company is Endesa Chile SA, controlled by Energis SA (ENERSIS), majority owned by the Spanish multinational Endesa SA (ENDESA).

Six generation firms operate in the SING. The largest one is Elecroandina, jointly-owned by Belgium’s Suez Tractebel SA, a wholly subsidiary of SUEZ (TRACTEBEL) and Codelco SA, the largest copper producer worldwide.

The large majority of electricity supply of this system comes from thermal sources (natural gas imported from Argentina).

Balancing services are provided by the principal distributors and transmission operators organised into two institutions: Centros de Despcho Economico de Carga (CDEC) of SIC and of SING.

Wholesale price are market based for sales to eligible customers and to the Centro de Despacho Económico de Carga CDEC and are regulated for sales to distributors (which mainly supply non eligible customers).
Networks Transmission and distribution activities are fully privatised.

The great part of the national transmission grid that servers the four systems is owned and operated by HQI Transelec Chile S.A. (TRANSELEC), majority-owned by Hydro Quebec the largest Canada’s electricity company.

MAGALLANES system is operated by Edelmag SA that runs all generation, transmission and distribution activities. Similarly Edelaysen SA operates the AYSEN system.

Free access to transmission services for generators.

A RTPA regime has been adopted for transmission grids.

The ministry of economy adopts transmission and distribution tariffs, on the advice of The National Energy Commission (CNE), the energy regulator.
Downstream The sector is fully privatised.

Distributors operate under a public service licence regime and have public services obligations.

34 distribution companies.

SIC serves the 90 per cent of the electricity consumers in Argentina mostly regulated ones. The dominant distributor of SIC is Chilectra SA (CHILECTRA) controlled by ENERGIS.

Three distribution companies (EMELARI SA, ELQSA S.A. and ELECDA SA) operate within the SING that serves mostly industrial or big costumers not subjected to regulation.

Eligibility level sets at 2,000 (KW) and, only under certain conditions, consumers between 500 – 2000 (KW) of interconnected power can choose among market-based or regulated price. The rest of consumers are captive ones.

The Ministry of Economy adopts tariffs for regulated costumers.
Gas Market
Sector structure
Upstream The sector is partially privatised.

One State-owned Empresa Nacional del Petróleo SA (ENAP) is the main licensee for exploration and production activities.

Domestic production, approx. 30 per cent of consumption, comes from Costa Afuera fields. Demand is met by import form Argentina.

Gases y Graneles Líquidos S.A. (GASMAR), the sole LNG terminals of Chile, is owned and operated by Compañía de Consumidores de Gas de Santiago S.A. (GASCO).
Networks Transmission is partially privatised while distribution is fully privatised.

Seven pipelines link Argentina with Chile and supply mainly methanol power plants.

Bandurria, El Cóndor-Posesión and Dungeness - DAU 2 pipelines, which supply the southern Chile, are owned and operated by the largest worldwide methanol producer Methanex SA (METHANEX).

METHANEX also runs the methanol hub placed in the southern Chile and adiacent to Argentina.

GasAtacama pipeline (300 Mmcf/d), owned jointly by ENDESA and CNS, a USA-based company, and NorArdino pipeline (250 Mmcf/d) operated by TRACTEBEL supply the north part of Chile.

Central regions, municipal consumers and thermal power plants are supplied by Gasandes pipeline (307 Mmcf/d), majority owned by TotalFinaelf SA, the France oil company, and Gasducto del Pacifico pipeline (343 Mmcf/d), majority owned by TransCanada (30%), El Paso International (21%) and GASCO (20%).

National pipeline connecting production fields in the Magallanes basin to major consumption centres is owned and operated by ENAP.
Downstream The first distributors is GASCO throughout its subsidiaries Gassur SA Metrogas and Gasco Magallanes. Other operators are Energas SA controlled by Chilquinta Energía S.A. and Gasvalpo controlled by Australian Gas Light.
Current issues Expanding hydroelectrically power generation (70-MW Quilleco plant on Rio Laja proposed by COLBUN; 32-MW Palmuco plant on the Biobio River proposed by ENDESA; 155-MW La Higuera plant on the Tinguiririca River proposed by Australia’s Pacific Hidro and Norway’s SN Power Invest).

Large-scale power projects in the development pipeline for Chile (250-MW Candelaria combined-cycle gas-fired turbine (CCGFT) planned by COLBUN; 370-MW CCGFT at its existing San Isidro plant, near Santiago to be completed by ENDESA; 740-MW Totihue CCGFT south of Santiago proposed by AES Gener, a subsidiary of US-based AES Corp; 390-MW Campanario plant in southern Chile proposed by Innergy Holdings, a Chilean gas distributor).

Increase electricity competition by eliminating vertical integration and cross-ownership of shares. Reduce market uncertainty.

LNG import terminal projects under discussion (i.e. Quienteros LNG in the central region of Chile).

Ongoing Building up of an 810 Mmcf/d pipeline linking Perù’s Camisea natural gas with northern Chile.

Ongoing development process of the “natural gas ring” proposed by Peru, Chile, Argentina, Uruguay and Brazil aimed to link national reserves and build up the energy market integration among these countries.
National Legislation Electricity legislation is available on CNE website
Gas legislation is available on CNE website
Sources IERN staff on publicly available information.