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Chilean Electric System as a Source of Energy For Mining Projects (English and Spanish)

Felipe Bascuñán M., Mining and Oil and Gas Law, Development, and Investment - Book 2 (2007)

Chile was one of the pioneers in the world in liberalizing its electricity system, clearly dividing generation from transmission and from the distribution of electric capacity and energy. It was also a pioneer in encouraging the participation of diverse players in each of these areas of the electricity sector. The intent was to avoid monopolies and create operative and competitive markets in each of these areas. Through Statutory Decree No. 1 of the Ministry of Mining of 1982, known as the General Electricity Law, hereinafter “the Law,” the foundations for those different sectors of electricity activity were created, setting out the conditions and incentives for their development. As we will see below, this was very important although not entirely sufficient. For that reason, two important amendments were made to the Law during 2004 and 2005. Those amendments filled in certain blanks or inconveniences within the Law, especially in regard to incentives to build new power stations, in addition to increasing the clarity and transparency of access and the toll structure for transmission systems.

The foregoing has been fundamental to confronting the increase in the demand for electric energy seen in Chile in the last 15 years, the average being a growth of approximately 7% annually, motivated fundamentally by the development and expansion of mining activity, particularly fo