Chile's Joint Citizen-Parliamentary Commission on Energy produces solid recommendations for reform, President Piñera should listen

This year, President Piñera partially followed the advice from the OECD, NRDC and Chilean environmental groups to review Chile’s national energy policies and laws and develop a new energy strategy. When President Piñera was elected such a review was one of our key recommendations to improve the national energy sector, ensure opportunities for clean energy and avoid the worst polluting and environmentally damaging energy choices. 

Unfortunately, President Piñera’s review process was held behind closed doors, rather than though a transparent and open process like we recommended. The results show the flaws in the process (my colleague Doug Sims will be blogging on this shortly). 

Fortunately for Chile, the Chilean Congress and citizen groups refused to be shut out of this discussion and formed their own energy policy review commission. They recently released their report and delivered it to the President. The report includes key recommendations to improve the Chilean electricity sector and create long-term energy policy.

Here is a quick summary of their key reform recommendations:

Market Reform

  • Ensure regulators and grid-operators are independent from power-plant owners and improve transparency and civic engagement opportunities in the energy system.
  • Ensure a level playing field for renewable power generation to reduce barriers to new market entrants
  • Improve market incentives to close or retrofit old, inefficient and environmentally damaging power plants
  • Ensure adequate definition and regulation of biomass, including firewood.
  • Establish low income energy price assistance for low-income groups
  • Require the Ministry of Energy to produce a “Strategic National Energy Security Policy,” to coincide with OECD requirements for Chile’s entry to the International Energy Agency (IEA).

The Renewable Energy Standard

  • Increase Chile’s Renewable Energy requirement to 20% by 2020, and guarantee compliance of at least 20 GWhrs of renewable energy in 2020.
  • Require long term purchase requirements for renewable energy technologies, to eliminate barriers to entry.

Net Metering

  • Improve the net metering opportunity to include distributed renewable energy systems up to 300 kW in order to provide greater renewable opportunities to agricultural cooperatives, fishing associations, local businesses, health centers, hospitals and educational establishments.  Reforming the current law for solar water heater subsidies (for low-income housing) to broaden the incentive to include residential electricity generation (net metering).

Energy Efficiency

  • Create a new Energy Efficiency (EE) Law that institutionalizes the goals, instruments and status of the Chilean Energy Efficiency Agency (ACHEE) and bring it back under governmental control.  At minimum, the law should define the scope, included sectors, goals, the roles and responsibilities of the involved actors, requirements for energy-intensive companies and financial structure of the agency. 
  • Establish energy consumption norms for energy-intensive companies based on international best practices.
  • Prohibit inefficient incandescent light bulbs in Chile through a minimum performance standard.
  • Decouple fixed cost recovery from sales for electricity distributors in Chile.
  • Implement the presidential commitments to the Heating Policy and the Refrigerator Exchange Program.

Internalize the environmental costs of fossil fuel power plants

  • Regulate heavy metal emissions from power plants including Mercury (Hg), Vanadium (V) and Nickel (Ni)
  • Address Environmental impacts of Power plant cooling
  • Tax fossil plants proportionately to their environmental impacts

President Piñera should work with the Congressional leaders and citizens that produced this report to develop a new national energy strategy.