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A new auction scheme for supply contracts for the distribution companies was introduced in 2005 in the Chilean electricity regulation. It was intended to establish a contract market scheme that not only would stimulate supply development to ensure future electricity supply, but would also give certainty to investors. Through competitive bidding, it was expected to achieve efficient long-term prices. Although the concepts aimed at strengthening the market, its application has restricted the achievement of the original objectives. This paper summarizes the application of the auction scheme, its results and limitations, identifies lessons learned and makes proposals for improvement. The analysis identifies two fundamental problems of the current mechanism which will have to be addressed and improved in future processes: the lack of flexibility to address future uncertainty and the absence of criteria to address the lack of competition.

Licitaciones para el abastecimiento eléctrico de clientes regulados en Chile. Dificultades y oportunidades