Second Generation Reforms in Chile, Power Exchange

D. Watts, P. Atienza, and H. Rudnick (Chile)


Deregulation, Market Power, PX-ISO, Capacity payment.


Many countries have decided to restructure their electric power systems, encouraging competition in generation and allowing private investments to participate. Chile was the pioneer introducing this kind of reforms, through the application of a centralized Poolco model, trying to emulate a dispatch under perfect competition. The energy crisis and the rationing occurred in second half of the 90’s, in addition to the lack of competition made the regulator to review the regulatory framework The Chilean electrical services’ law draft suggests major modifications in the structure of the market. One of the main changes is the replacement of the Chilean electricity pool (CDEC) by two organizations, the Power Exchange (PX) and the Independent System Operator (ISO). Based on the electricity market’s international experience and considering the characteristics of the Chilean market, an analysis of the consequences that a change in the pricing and dispatch mechanism, is done. Topics like Market Power (MP), horizontal concentration, transmission constrains, withdraw of the capacity payment and the strategic use of the hydro resources must be carefully analyzed in a market design, in order to increase competition and assure peak demand supply, especially in hydro-thermo systems like the Chilean SIC.

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