Risk responsibility for supply in deregulated electricity markets - the Chilean case

The presentation reviews the supply problems faced in the Chilean electricity market oven recent years, and how market and regulations have worked in relation to allocating the responsibility for supply. The risks associated with that responsibility are discussed and how Chile has taken actions in this regard, and the consequences of those actions. The Chilean regulation transfers full responsibility to suppliers. In theory, different types of penalties and compensations are applied when load is not supplied; in practice they have been difficult to put into operation. The presentation analyzes the performance of this approach, the crisis faced in 1998-1999 and the changes introduced to the regulation due to that crisis. Conclusions on the effectiveness of the regulations and the changes are developed as well as an assessment of unexpected impacts in the market.