Background and Relevance
The Ministry of Mines and Energy in Colombia has announced the readiness of a decree aiming to regulate energy costs. This measure will decrease the price per kilowatt-hour by between $20 and $120 Colombian pesos during periods of low water availability.
This decision comes as a response to the increasing energy expenses faced by low-income households in Colombia, classified in strata 1, 2, and 3. These households are more exposed to fluctuating energy market prices during drought periods, as observed in the 2024 El Niño season. The decree highlights that high and volatile energy prices are caused by reduced hydroelectric generation and increased thermal generation, which incurs higher costs.
Expected Impact
The Ministry anticipates that energy costs will decrease due to long-term resource contracts. Furthermore, hydroelectric energy producers are required to sell at least 95% of their output at stable prices through fixed-term contracts.
“A user in the Caribbean region, who currently pays between $700 and $1,200 per kilowatt-hour due to climate conditions, will now see a stabilization in electricity tariffs,” the Ministry stated.
Regulatory Measures
Once the decree is issued, the Energy Regulatory Commission (CREG) will be authorized to establish mechanisms ensuring energy service reliability and tariff stability.
Strengthening Colombia’s Energy Policy
Edwin Palma Egea, the energy minister, emphasized that this decree will bolster Colombia’s energy policy by prioritizing users affected by high energy costs and promoting environmental sustainability, a cornerstone of the Just Energy Transition.
Public Consultation
- How can the public access the draft decree? Interested parties can review the draft decree on the Ministry of Mines and Energy’s portal (www.minenergia.gov.co) in the Citizen Service > Forums section.
- What is the deadline for submitting comments? The public has 15 days to send their comments, extending until May 13, 2025.
