Background

On February 16th, 2023, the President of the Republic issued Decree 227 of 2023, by which he resumed - for a term of 3 months - the general functions delegated to the Energy and Gas Regulation Commission and the Commission for Regulation of Drinking Water and Basic Sanitation, leaving at the head of these the power to issue administrative acts of a particular nature.

The foregoing, subject to constitutional and legal principles and purposes; the criteria of the tariff regime established in Law 142 of 1994, and citizen participation in actions on the matter.

Request for precautionary measure and arguments of the Council of State
The emergency precautionary measure was requested in the framework of an action for annulment filed against the Decree. The purpose of the precautionary measure was to provisionally suspend the Decree. The applicants proposed three main groups of arguments, namely: i) a first group, which proposed a failure to comply with legal requirements for the issuance of the act; ii) a second group, which attacked compliance with substantial requirements, such as lack of competence, false motivation and infringement of higher standards; and iii) a third group, which pointed out the existence of a eventual irremediable damage since the exercise of the powers in matters of public utilities under the terms of the Decree could affect the effective and efficient provision of public utilities.

The Council of State resolved to adopt the emergency precautionary measure, suspending the effects of the Decree, after finding reasonable two of the arguments presented in the request for annulment of the Decree, namely:

1. It found a proven breach of the legal requirements for the issuance of the act, in particular, regarding the publicity requirement, since no exceptional and/or adequate reasons were identified to justify the short period of time (2 days) that was granted for consultation of the draft decree by citizens.
2. He identified that, although the Constitution and the law are clear in specifying that the President of the Republic has powers in regulatory matters associated to public utilities, he is not the only party having legal competences on that matter. On the contrary, it identified that both the regulatory commissions and the President have been invested by the Congress with powers in regulatory matters associated to public utilities by the Constitution. Therefore, it is imprecise to affirm, as the Decree proposes, that the functions of the commissions are solely delegated by the President of the Republic (as the commissions do also have functions derived directly from the law). On the contrary, its functions in regulatory matters are limited to setting the general policies for their administration and efficiency control of these.

In turn, he specified that several of the functions in regulatory matters of public utilities are subject to legal reserve. In particular, it clarified that one of them is the tariff regime and the definition or assignment of functions to the competent authorities for the purposes of carrying out this task.

Consequently, the decision to provisionally suspend the Decree was adopted and, therefore, while a decision on the merits regarding the annulment of the Decree is adopted, the regulatory commissions will continue to exercise their functions in an ordinary manner.

Implications for the sector

The provisional suspension of the Decree supposes the reestablishment of the regulatory functions in charge of the regulatory commissions of the public utilities of electric power, gas and water. Consequently, they will continue to exercise their functions in an ordinary manner and the President of the Republic must, if applicable, through them, propose the regulatory adjustments that he considers pertinent.

In turn, the considerations of the Council of State are clear regarding the plurality of competent bodies in matters of regulation in public utilities. These functions fall on various administrative bodies and, as a general rule, they are not functions at the head of the executive and delegated to other bodies.

Finally, it is specified that an specific appeal (recurso de súplica) proceeds against this decision, which must be resolved by the other magistrates that integrate the First Section of the Council of State. A decision on the appeal would be issued under a devolution effect (so that the filing of the appeal does not suspend the effects of the decision while it is resolved) and could eventually revive the effects of the Decree (only in the event that the other magistrates come to accept the arguments of the appeal).