IEEE Power & Energy Magazine - July/August 2016 - 60

Auctions have been used in Colombia to select agents
responsible for the implementation and operation of centrally
planned transmission facilities since the early 2000s.
The bill was formulated through a novel wide-participatory
process led by Pontificia Universidad Católica de Chile, the
Ministry of Energy, and the National Energy Commission.
It was approved by the lower Chamber and is under evaluation by the Senate. This bill tackles issues ranging from the
remuneration of transmission agents to the creation of a new
power system independent coordination agency. Measures
aimed at mitigating implementation issues, which are the
focus of this article, are also included in the bill.
Drive Toward Proactive
Transmission Expansion Planning

The bill would modify the process and criteria for planning
(long-term energy planning in general and transmission
expansion in particular) in Chile, in a clear shift toward a
proactive process. Determinative transmission expansion
planning would be carried out annually by CNE, considering
a horizon of at least 20 years. The objectives to be considered by the system planner are extended to explicitly include
transmission expansion to facilitate competition in the generation segment, support access to high-quality generation
resources, and minimize supply risks, considering different
scenarios, such as unavailability of energy infrastructure,
natural disasters, or extreme hydrological conditions. These
criteria are aligned with proactive planning, as previously
mentioned. The need to bestow the transmission system with
sufficient slack capacity and redundancy to achieve these
objectives is explicitly mentioned in the bill.
Achieving this objective would require coordination with
the long-term energy plan, which shall, according to the bill,
incorporate prospective scenarios of the evolution of generation
development. Mechanisms to ensure societal participation in
the development and approval of plans are also contemplated.
The concept of development hubs is introduced in the bill,
in regions with high-quality generation resources where exploitation is a matter of public interest. The planning of the infrastructure required to access these hubs, through a set of transmission facilities designed to accommodate the current and the
anticipated demand of projects and connect them to the main
grid, is introduced as a mandate of CNE. The development
costs for these facilities would be transitorily assigned to consumers, until the moment at which generators connect to them.
Making the Most of Existing Assets

Moreover, while establishing the criteria to be considered by
CNE for transmission expansion planning, the bill explicitly
mentions that this institution shall evaluate alternatives with
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modifications in existing transmission facilities, presumably
including repowering and technical improvements to confer operational flexibility to the system. The guideline to
make the most of existing assets, in a context where implementation of Greenfield facilities encounters difficulties is,
therefore, also contemplated in the bill.
Stronger Role of State in Determining Routes
and Ensuring Rights-of-Way

The bill also introduces a novel procedure for the study
and approval of transmission line routes. Under the current
framework, once a transmission line is identified as necessary by the system planner, the facility is offered in an auction with little information on its route. The actual route is
to be defined ex post by the transmission concessionaire that
wins the auction. The proposed mechanism proposed establishes that the Ministry of Energy would actively engage
in the preliminary definition of transmission line routes
by contracting studies for this definition prior to the auction and according to detailed criteria on the nature of the
social, environmental, demographic, physical, and economic
aspects to be considered. The preliminary route identified
in this study is subject to strategic evaluation and approval
by a Sustainability Council of Ministries. Upon approval,
a formal governmental decree is issued, also prior to the
auction, fixating the route and specifying that rights-of-way
shall be established to allow its effectuation. The mechanism
aims to mitigate risks for transmission concessionaires since
the rights-of-way would be imposed as soon as the concessionaire, after the auction, obtains an environmental license,
except in exceptional circumstances specified in the bill.

Colombia
Successes of Model and Recent Difficulties
with Transmission Implementation
Auctions have been used in Colombia to select agents responsible for the implementation and operation of centrally
planned transmission facilities since the early 2000s. In this
country, bidding and winner selection rules are slightly different; participants' bids correspond to information that allows
calculating the net present value (NPV) of the AARs at a discount rate determined by the regulator, and the winning bid
is that with the lowest NPV.
Figure 7 displays the results of auctions for the national
transmission system since 2013. Blue bars express the winning bid as a percentage of the highest bid in the auction, with
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Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - July/August 2016