On July the 27th 2016, Law No. 20.936 that establishes New Power Transmission Systems and creates an Independent Coordinating Body for the National Power System (the "Transmission Law" or "New Law") was published. Its stated objectives are to ensure that transmission does not become an obstacle to power generation, increase competition in the electrical market and boost the development of non-conventional renewable energies. The New Law introduces relevant changes to the current electrical regulation contained in the Electrical Services General Law ("LGSE"), that was established by Decree No. 4/20.018, and to Law No. 18.410 that establishes the Superintendence of Electricity and Fuels ("The SEC Law").
Among the main modifications introduced by the Transmission Law are the following:
1 Creation of an Independent Coordinating Body for the National Power System
A new, centralized coordinating entity (the "Coordinator") for the electrical system will replace the current Economic Load Dispatch Centers ("CDEC" or "CDECs"). The Coordinator will be independent of the electrical market's players. This is in direct contrast to its predecessor, the CDEC, which was composed of members who were chosen by key players in the electrical system. The Coordinator will be a non-profit organism with an independent legal entity that is not part of the government's administration.
The New Law states that the Coordinator will assume the CDEC's current responsibilities of ensuring the safety of the service provided by the electrical system, guaranteeing both the most cost-effective operation and open access to every transmission system. The law also requires that the Coordinator track and monitor industry competition and the payment chain, while ensuring information transparency.
According to Article No. 1 of the New Law, it is expected that the specific regulation of the Coordinator regarding its duties and faculties will come into force before July, 20th 2017.
2 New definition of the current Transmission Systems, Power Programming and Transmission Expansion
The Transmission Law re-defines the terms by which each current transmission systems is named:
(i) The Trunk Transmission System is replaced by the National Transmission System; (ii) The Sub Transmission System is replaced by the Zonal Transmission System; and (iii) The Additional Transmission System is replaced by the Dedicated Transmission System.
A new Transmission System is created under the name of Generation Development Hubs (the "Development Hubs"), which will be used to distribute power production from those...