Chile supports families in winter: Chile’s Energy Minister explains the package of emergency measures presented by the Government

Minister, what are the Government’s energy measures about and how will they affect families in Chile?

Chile Apoya, Plan de Invierno en Energía (Chile Supports, Winter Energy Plan) is an initiative whose goal is to help families living in Chile, supporting them during the winter months with their paraffin, electricity and liquid gas bills.

It contains a package of energy measures, which include submitting a number of bills, such as one to inject resources into the Oil Price Stabilization Fund (Fondo de Estabilización de Precios del Petróleo, FEPP); another to create an Electricity Tariff Stabilization Fund (Fondo de Protección al Consumidor, FPC); and a third bill to increase competition in the gas market, especially for liquid petroleum gas (“gas at a fair price”).

Furthermore, the Solid Biofuels Bill will be sent for immediate discussion. This includes the regulation of firewood, which is currently in the second constitutional procedure.

Speaking about the injection of resources into the Oil Price Stabilization Fund, by approximately how much will the price of paraffin drop?

This resource injection will allow the price of paraffin to drop in the short term.

In general, we estimate that we will reach the price that the fuel had in February 2022, before the crisis in Ukraine. This will prevent major price fluctuations throughout the winter, which is when this fuel is most used for heating.

Will this resource injection also affect the prices of oil and gasoline?

Owing to external factors, international oil prices have shown sustained growth recently.

During the first month of our administration, we presented a bill to extend the coverage of the Fuel Price Stabilization Mechanism created by Law No. 20.765 (“MEPCO”) under the Treasury Ministry. In this way, we protected Chileans from a sudden rise in the price of vehicle fuels.

How will the electricity tariff stabilization bill benefit families and for how long?

When electricity tariffs were frozen in 2019, consumer bills did not increase. However, we expect there to be price increases in electricity bills over the coming months. This is why we are creating a new electricity tariff stabilization system to avoid sudden hikes in electricity prices. During 2022, electricity bills will be frozen for families and, from 2023, gradual increases will be recorded to adapt to real prices, in a smooth and progressive way.

It's very important to understand that, in the context of the Chile Apoya winter energy plan, the idea is to support Chile’s recovery and combat inflation. It is therefore essential that people’s bills are stable this year.

What is the “gas at a fair price” measure about?

During May, we will present a bill to address the increase in the price of liquid gas and competition in the market. The goal is for people to be able to buy gas at the lowest possible price.

The bill is intended to regulate the gas market. What is particularly significant is that an agency will be created to monitor competition from a regulatory perspective, through the National Energy Commission (CNE). This will make it possible to periodically analyze whether the prices at which gas is marketed are the lowest possible.

Furthermore, as an immediate measure, we will start a pilot plan with 3,000 cylinders through the state-owned oil company, ENAP, which we plan to later roll out nationwide. This pilot plan is just the beginning, as we hope to grow progressively, maintaining safety and efficiency criteria, supporting those who need it most.

As a government, what actions will you take so that there is greater competition in the market and thus prevent price collusion, for example?

We will create a competition enforcement division for energy markets within the National Economic Prosecutor’s Office (FNE), and more powers will be given to the National Energy Commission (CNE) to request information from fuel companies.

What is the Solid Biofuels (BCS) draft bill about?

This bill is in the second constitutional procedure in the Senate. We are looking to make it law this winter by immediately discussing it.

The initiative is designed to define quality standards for BCSs, mainly firewood, which is used by a large number of Chilean families in the country’s southern central zone. The intention is to help improve air quality, safeguard people’s health and safety and, in particular, also anticipate and improve the pollution rates that they generate.

In addition to making progress in the development of a formal and transparent market, the initiative will generate jobs and improve the competitiveness of companies in the sector.

Other solid biofuels (BCS) will be included within the scope of the bill, such as pellets, briquettes, charcoal and agricultural waste.

These measures are draft bills. How long do you estimate that it will take for families to benefit from the measures presented by the Government?

We hope that they’re approved as quickly as possible, that they gain support from members of Congress and are enacted by President Boric before winter starts.