Energy Alert – December 2024

The Substitute Text of Bill N° 04565/2022-PE was approved, which will amend Law N° 28832 with the purpose of guaranteeing the safe, reliable and efficient supply of electricity and promoting the diversification of the energy matrix.

On December 12, 2024, the Substitute Text of Bill N° 04565/2022-PE that will amend Law N° 28832 with the purpose of guaranteeing the safe, reliable and efficient supply of electricity and promoting the diversification of the energy matrix was approved. This bill will be sent to the President for its corresponding enactment and subsequent publication for its entry into force.

We comment on the most relevant aspects:

• Possibility to sign contracts for power or energy, separately: Non-conventional renewable power plants (e.g., solar and wind power plants) have limited recognition of firm power, which prevents them from competing on equal terms to sign contracts. This Bill will allow all generators to sign contracts with free users and distributors only for power or energy, up to the firm power or energy of their own or contracted with third parties.
• New measures for distributor tenders: Distributors (public and private) may establish their contracting modalities including energy blocks, or purchase of power and energy separately or jointly. To this end, distributors will prepare an annual supply program for the next 10 years, taking into account the new terms for the start of tenders and duration of contracts [1]. A regulatory provision will establish an energy and power distribution mechanism so as not to affect existing contracts with distributors. Ongoing bidding processes will have to be adapted.
• Complementary Services Market [2]: The Complementary Services Provider is created as an additional agent that may be different from the generator, transmitter, distributor or free users; including the possibility of having a particular enabling title. Those who provide these services will be compensated by the agents that generate instability in the electric system. For this purpose, the complementary services market will be developed through regulations, which will come into force on January 1, 2026.
• New reference to determine the Bar Rate: Currently the Bar Rate cannot differ from 10% of the weighted average price of the bids, and now it is added as a new reference to the contracts with free users. Existing contracts subject to the Bar Rate will continue to apply the previous regime.

The MINEM and the OSINERGMIN must approve the necessary regulations within a term of no more than 120 calendar days from the entry into force of this law.

In the following link you can find the Substitute Text of PL N° 04565/2022-PE.

[1] New advance terms and duration of contracts: 3 years of minimum advance for contracts of 15 years maximum, 2 years of minimum advance for contracts of 5 years maximum, 1 year of minimum advance for contracts of 3 years maximum and contracts without bidding with the limits that will be established by Regulation.

[2] The provision of complementary services is necessary to ensure the transport and supply of electricity from generation to demand, under conditions of safety and quality.

For further information, please contact Veronica Sattler (vsattler@estudiorodrigo.com), Alejandro Manayalle (amanayalle@estudiorodrigo.com) and/or Margarett Matos (mmatos@estudiorodrigo.com).