Since 1992, the Peruvian electricity sector has evolved positively. The reforms introduced greater competition in the electricity generation and contract sectors, an independent regulatory power from the Government, and significant participation from the private, national and international sectors.
53-Andean-integration-alca-y-sector-electrico-del-peruThe result for the consumer is a safe and quality electricity service, with stable prices and an increasing electrification coefficient. However, the transformation of the sector is not over yet. Integration with the Andean Community (CAN) will generate a "more harmonized" electricity sector with the other member countries.
Furthermore, the Free Trade Area of the Americas (FTAA) proposes free trade in all sectors (including the electricity sector), which could result in more radical reforms than have been carried out so far. In this article we analyze the changes and reforms that should be considered in the near future.
The current Peruvian electricity sector
At the end of the 1980s, the Peruvian electricity sector was in a serious crisis situation. The state monopolies faced chronic financial problems, discouraging investment, and the consequences were translated into an inefficient sector and limited and unreliable electricity coverage, with inappropriate rates.
Although the financial problems were linked to the constant devaluation of the sun and a politicization of the sector, rather than a totally deficient sector structure, the solution chosen in the reforms included four important axes:
- The horizontal and vertical disintegration of Electroperú and Electrolima into new companies The partial and progressive privatization of these new companies Free competition for the contracts of large consumers (> 1 MW) The creation of independent regulatory bodies and the use of the principle of the marginal costs in the computation of the regulated tariffs.
Consequently, as shown in Table 1, the electricity sector developed in a very disintegrated market around 2001 (more than 30 companies produced electricity, 7 had transmission infrastructures and 21 did distribution). In that year, more than 50% of the energy produced was sold in the free market, where the specifications of the contracts were privately negotiated.
The privatization of the sector was not total. The main generation (Electroperú) and transmission (Etecen) companies remained state-owned, like most rural distributors, where the density and consumption of users did not attract private investors.
“Even though various aspects of privatization and disintegration could be debated during the 1990s, the need for reforms was indisputable. Today, the changes that the Andean integration and the FTAA will bring have no direct reason for the problems in the current electricity sector. "
The performance indicators of the sector indicate a significant advance in the 1990s. The electrification coefficient grew above 70% in 1999 (it was below 50% in 1990), the energy losses of the distributors decreased from 21 % to 10% between 1993 and 2000, and total energy sales doubled, from 7,603 GWh in 1990 to 15,525 GWh in 2000.
For consumers, prices are less stable; Thus, large consumers can contract in the long term, while small consumers see the price change every semester, with the respective change in long-term marginal prices. Finally, as the price for the residential consumer is comparable to the international level –around 0.1 US $ / kWh–, it can be concluded that the reforms were globally positive for the country.
Despite the fact that during the 1990s various aspects of privatization and disintegration could be debated, the need for reforms was indisputable.
Today, the changes that Andean integration and the FTAA will bring have no direct reason for the problems in the current electricity sector. In this sense, in the case of the electricity sector, these integration processes are rather acts of faith in the market, rather than steps towards solutions to problems.
