CREG issues resolutions CREG 101 027 and 029 of 2022 making a call to agents in the energy market to renegotiate the price indexing formulas in their contracts, among other aspects. It is important to highlight that these mechanisms are optional and voluntary on the hand of the involved agents, which must analyze if they accept the proposal included in the resolutions or not. Not whatsoever, the results of the application of these measures will be published via a Memorandum of the Executive Directorate of the CREG, so they will be of public knowledge.
In accordance with what has been stated in the supporting documents, the issuance of the resolutions is a direct result from some events occurring during the years 020 and 2022, which have led the unitary cost (CU) -which is the price which is charged by the agents to the users for the delivery of the electrical energy utility- to significantly increase in all the retailing markets around the country.
Among them, CREG identifies: (i) COVID-19, where pursuant to CREG Resolution 058 of 2022, CREG compelled the retailing utility companies to offer to the regulated users from the 1st and 2nd social stratum, deferred payment options of their utility bill for up to 36 months and, in addition, forced the retailing companies to apply the tariff option included in CREG Resolution 012 of 2020, when an increase of 3% in the CU materialized or in any of its components, (ii) the atypical behavior of the Producer Price Index (PPI) during the years 2020 and 2022 (which is the price indexing formula used to update certain costs and tariffs included in the CU -article 17 of CREG Resolution 119 of 2007), considering the fact that during the period 2017-2019, the variation of the PPI was approximately 3% on an annual basis, but during the period of December 2020 to June 2022, the increase was approximately 37%, (iii) the methodology used to define the income and charges of the electrical distribution activity, has a strong dependency of PPI (CREG Resolution 015 of 2018), (iv) the transitory special regime of the Caribbean region, defined in article 318 of Law 1955 of 2019, Decree 1645 of 2019, MME Resolution 40272 of 2020 and CREG Resolutions 010 and 188 of 2020 and, (v) the recognition of additional assets of Celsia Tolima SAS ESP (CREG Resolution 001 of 2020).
For CREG Resolution 101 027 of 2022, the proposed option is the possibility to adjust the use charges (cargos por uso) replacing the current indexing price factor (PPI) for one which maintains the indexing with the PPI until December of 2020 and then proposes to index said values with the Consumer Price Index (CPI) as from December 2020 until August 2022. In addition, the retailing companies shall inform the users through the utility bills if the respective grid network operator (OR) has accepted the application of the measures, as well as the transmission companies which have accepted to apply the included measures. It is important to highlight that the measures included in the resolution will not be applied to assets which have been built through public tenders.
For CREG Resolution 101 029 of 2022, CREG proposes: (i) among selling agents and purchasing agents, being parties to power purchase agreements currently in force which were affected by the inflationary conditions of PPI in the abovementioned periods, CREG calls upon them to renegotiate the indexing terms. The CREG emphasizes that the agents could use as reference the proposal set forth in CREG Resolution 101 027 of 2022, (ii) selling agents and purchasing agents are called upon to renegotiate by mutual agreement, to extend the payment terms of the consumption periods billed within the following twelve (12) months of the issuance of the resolution and, (iii) enables retail utility companies to partially defer their payment obligations in the spot market and for the use of grid networks (up to 20%) liquidated by the ASIC and the LAC, up until a period of 18 months counted as from January 2023, applying an interest rate over those deferred payments and, the respective agent having to constitute and deliver payment guarantees in favor of ASIC and LAC over the deferred payments.
It is also stated that the agents may amend contracts which are executed, destined to the attention of the demand of non-regulated users.