IEEE Power & Energy Magazine - May/June 2020 - 39

between 6 and 14%. At the company level, however, profits
are allowed to rise above that range. To calculate profits, real
companies' expenses are determined by considering their
actual infrastructure (not that of model firms) and valued at
current market prices by using the replacement-cost concept.
Arguments For and Against
Current Remuneration Practices

There are advantages and disadvantages to the model-firm
approach applied in Chile. Three of the chief benefits are 1)
firms' perceived incentives to limit costs, 2) simplicity and
low-cost implementation, and 3) the ability to deal pragmatically with significant information asymmetries between the
regulator and firms since there is no reliance on real companies' expenses. The approach was exported to other countries in Latin America, such as Argentina, Peru, and Bolivia,
and to Central America, demonstrating its attractiveness and
practicality at a time when limiting costs (while improving
coverage/access) for recently privatized companies was key.
However, experts pose several questions about the method,
since there is no evidence that it will deliver the objectives of
the present energy-policy agenda.
Concerns Regarding Supply Security
As mentioned, one of the primary objectives of today's
energy policy is to enhance the supply security and resil-

iency. Chile wants to reach a 1-h SAIDI by 2050 (uniformly distributed across the country), with an interim
goal of 4 h in 2035. That would be a significant improvement from the current SAIDI, which averages 15 h at the
national level and can climb higher than 50 h in regions
such as Tarapaca, Atacama, and Araucania. Table 3 gives
the geographical distribution of the SAIDI, which can
change significantly by year depending on exogenous factors, such as natural hazards.
There is significant debate regarding how to improve
the remuneration method to deliver efficient investments
to ensure a more secure, reliable, and resilient future. As
with any other incentive-based, network-remuneration
method, the model-firm approach needs additional incentives (such as penalties and rewards) to discourage reliability degradation, since delivering adequate reliability
usually requires spending more, which is clearly discouraged
by an approach that aims to reduce expenses. There are
security standards in Chile that establish limits for various
reliability metrics, including the SAIDI, with associated
penalties for distribution companies that fail to deliver.
However, they are unlikely to be sufficient because reliability improvement requires network investments. Penalties will not encourage companies to make investments
when there is insufficient funding or enough certainty
about future revenue streams.

table 3. The SAIDI in hours per region and per year in Chile.
Region

Population

2012

2013

2014

2015

2016

2017

2018

Seven-Year
Average

Aysen

103,158

23.1

27.9

26.1

29.9

19.7

31.2

14

24.6

Magallanes y Antartica
Chilena

166,533

6.2

8.8

8.2

9.2

5.1

6

6.9

7.2

Arica y Parinacota

226,068

21

14.3

33.9

12.3

10.7

15.3

23.2

18.6

Atacama

286,168

25.9

19.5

22.8

53.6

11.1

22.6

16.4

24.6

Tarapaca

330,558

29.8

24.4

59.9

23.8

20.2

18.1

14.6

27.3

Los Rios

384,837

27.9

25.6

25.1

26.6

22.3

24.7

19.5

24.5

Antofagasta

607,534

18.6

14.9

25.2

22.9

15.9

16.3

11.7

17.9

Coquimbo

757,586

10

11.5

9.8

44

11.5

10.5

10.1

15.3

Los Lagos

828,708

30.1

24.2

25.9

23.9

18.4

22.3

17.2

23.2

O'Higgins

914,555

16.6

18.2

18

20.4

17.9

23.2

16.8

18.7

La Araucania

957,224

34.1

34.6

30.7

32.3

31.5

51

28.3

34.6

Maule

1,044,950

20.1

14.1

16.9

26

20.8

33.1

14.7

20.8

Valparaiso

1,815,902

12.4

9.3

10.1

17.2

9.4

10

7.1

10.8

Biobio y Nuble

2,037,414

28.6

19.3

20.6

19.3

16.9

20.5

13.2

19.8

Metropolitana de Santiago

7,112,808

8.9

7.7

8.4

8.8

8.2

13.6

8.5

9.2

Country level

17,574,003

16.7

13.9

15.7

18.1

13.4

18.6

12.1

15.5

Exceptional events are included. Values higher than 50 h are in red. Regions are sorted according to population.
may/june 2020	

ieee power & energy magazine 	

39



IEEE Power & Energy Magazine - May/June 2020

Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - May/June 2020

Contents
IEEE Power & Energy Magazine - May/June 2020 - Cover1
IEEE Power & Energy Magazine - May/June 2020 - Cover2
IEEE Power & Energy Magazine - May/June 2020 - Contents
IEEE Power & Energy Magazine - May/June 2020 - 2
IEEE Power & Energy Magazine - May/June 2020 - 3
IEEE Power & Energy Magazine - May/June 2020 - 4
IEEE Power & Energy Magazine - May/June 2020 - 5
IEEE Power & Energy Magazine - May/June 2020 - 6
IEEE Power & Energy Magazine - May/June 2020 - 7
IEEE Power & Energy Magazine - May/June 2020 - 8
IEEE Power & Energy Magazine - May/June 2020 - 9
IEEE Power & Energy Magazine - May/June 2020 - 10
IEEE Power & Energy Magazine - May/June 2020 - 11
IEEE Power & Energy Magazine - May/June 2020 - 12
IEEE Power & Energy Magazine - May/June 2020 - 13
IEEE Power & Energy Magazine - May/June 2020 - 14
IEEE Power & Energy Magazine - May/June 2020 - 15
IEEE Power & Energy Magazine - May/June 2020 - 16
IEEE Power & Energy Magazine - May/June 2020 - 17
IEEE Power & Energy Magazine - May/June 2020 - 18
IEEE Power & Energy Magazine - May/June 2020 - 19
IEEE Power & Energy Magazine - May/June 2020 - 20
IEEE Power & Energy Magazine - May/June 2020 - 21
IEEE Power & Energy Magazine - May/June 2020 - 22
IEEE Power & Energy Magazine - May/June 2020 - 23
IEEE Power & Energy Magazine - May/June 2020 - 24
IEEE Power & Energy Magazine - May/June 2020 - 25
IEEE Power & Energy Magazine - May/June 2020 - 26
IEEE Power & Energy Magazine - May/June 2020 - 27
IEEE Power & Energy Magazine - May/June 2020 - 28
IEEE Power & Energy Magazine - May/June 2020 - 29
IEEE Power & Energy Magazine - May/June 2020 - 30
IEEE Power & Energy Magazine - May/June 2020 - 31
IEEE Power & Energy Magazine - May/June 2020 - 32
IEEE Power & Energy Magazine - May/June 2020 - 33
IEEE Power & Energy Magazine - May/June 2020 - 34
IEEE Power & Energy Magazine - May/June 2020 - 35
IEEE Power & Energy Magazine - May/June 2020 - 36
IEEE Power & Energy Magazine - May/June 2020 - 37
IEEE Power & Energy Magazine - May/June 2020 - 38
IEEE Power & Energy Magazine - May/June 2020 - 39
IEEE Power & Energy Magazine - May/June 2020 - 40
IEEE Power & Energy Magazine - May/June 2020 - 41
IEEE Power & Energy Magazine - May/June 2020 - 42
IEEE Power & Energy Magazine - May/June 2020 - 43
IEEE Power & Energy Magazine - May/June 2020 - 44
IEEE Power & Energy Magazine - May/June 2020 - 45
IEEE Power & Energy Magazine - May/June 2020 - 46
IEEE Power & Energy Magazine - May/June 2020 - 47
IEEE Power & Energy Magazine - May/June 2020 - 48
IEEE Power & Energy Magazine - May/June 2020 - 49
IEEE Power & Energy Magazine - May/June 2020 - 50
IEEE Power & Energy Magazine - May/June 2020 - 51
IEEE Power & Energy Magazine - May/June 2020 - 52
IEEE Power & Energy Magazine - May/June 2020 - 53
IEEE Power & Energy Magazine - May/June 2020 - 54
IEEE Power & Energy Magazine - May/June 2020 - 55
IEEE Power & Energy Magazine - May/June 2020 - 56
IEEE Power & Energy Magazine - May/June 2020 - 57
IEEE Power & Energy Magazine - May/June 2020 - 58
IEEE Power & Energy Magazine - May/June 2020 - 59
IEEE Power & Energy Magazine - May/June 2020 - 60
IEEE Power & Energy Magazine - May/June 2020 - 61
IEEE Power & Energy Magazine - May/June 2020 - 62
IEEE Power & Energy Magazine - May/June 2020 - 63
IEEE Power & Energy Magazine - May/June 2020 - 64
IEEE Power & Energy Magazine - May/June 2020 - 65
IEEE Power & Energy Magazine - May/June 2020 - 66
IEEE Power & Energy Magazine - May/June 2020 - 67
IEEE Power & Energy Magazine - May/June 2020 - 68
IEEE Power & Energy Magazine - May/June 2020 - 69
IEEE Power & Energy Magazine - May/June 2020 - 70
IEEE Power & Energy Magazine - May/June 2020 - 71
IEEE Power & Energy Magazine - May/June 2020 - 72
IEEE Power & Energy Magazine - May/June 2020 - 73
IEEE Power & Energy Magazine - May/June 2020 - 74
IEEE Power & Energy Magazine - May/June 2020 - 75
IEEE Power & Energy Magazine - May/June 2020 - 76
IEEE Power & Energy Magazine - May/June 2020 - 77
IEEE Power & Energy Magazine - May/June 2020 - 78
IEEE Power & Energy Magazine - May/June 2020 - 79
IEEE Power & Energy Magazine - May/June 2020 - 80
IEEE Power & Energy Magazine - May/June 2020 - 81
IEEE Power & Energy Magazine - May/June 2020 - 82
IEEE Power & Energy Magazine - May/June 2020 - 83
IEEE Power & Energy Magazine - May/June 2020 - 84
IEEE Power & Energy Magazine - May/June 2020 - Cover3
IEEE Power & Energy Magazine - May/June 2020 - Cover4
https://www.nxtbook.com/nxtbooks/pes/powerenergy_091020
https://www.nxtbook.com/nxtbooks/pes/powerenergy_070820
https://www.nxtbook.com/nxtbooks/pes/powerenergy_050620
https://www.nxtbook.com/nxtbooks/pes/powerenergy_030420
https://www.nxtbook.com/nxtbooks/pes/powerenergy_010220
https://www.nxtbook.com/nxtbooks/pes/powerenergy_111219
https://www.nxtbook.com/nxtbooks/pes/powerenergy_091019
https://www.nxtbook.com/nxtbooks/pes/powerenergy_070819
https://www.nxtbook.com/nxtbooks/pes/powerenergy_050619
https://www.nxtbook.com/nxtbooks/pes/powerenergy_030419
https://www.nxtbook.com/nxtbooks/pes/powerenergy_010219
https://www.nxtbook.com/nxtbooks/pes/powerenergy_111218
https://www.nxtbook.com/nxtbooks/pes/powerenergy_091018
https://www.nxtbook.com/nxtbooks/pes/powerenergy_070818
https://www.nxtbook.com/nxtbooks/pes/powerenergy_050618
https://www.nxtbook.com/nxtbooks/pes/powerenergy_030418
https://www.nxtbook.com/nxtbooks/pes/powerenergy_010218
https://www.nxtbook.com/nxtbooks/pes/powerenergy_111217
https://www.nxtbook.com/nxtbooks/pes/powerenergy_091017
https://www.nxtbook.com/nxtbooks/pes/powerenergy_070817
https://www.nxtbook.com/nxtbooks/pes/powerenergy_050617
https://www.nxtbook.com/nxtbooks/pes/powerenergy_030417
https://www.nxtbook.com/nxtbooks/pes/powerenergy_010217
https://www.nxtbook.com/nxtbooks/pes/powerenergy_111216
https://www.nxtbook.com/nxtbooks/pes/powerenergy_091016
https://www.nxtbook.com/nxtbooks/pes/powerenergy_070816
https://www.nxtbook.com/nxtbooks/pes/powerenergy_050616
https://www.nxtbook.com/nxtbooks/pes/powerenergy_030416
https://www.nxtbook.com/nxtbooks/pes/powerenergy_010216
https://www.nxtbook.com/nxtbooks/ieee/powerenergy_010216
https://www.nxtbook.com/nxtbooks/pes/powerenergy_111215
https://www.nxtbook.com/nxtbooks/pes/powerenergy_091015
https://www.nxtbook.com/nxtbooks/pes/powerenergy_070815
https://www.nxtbook.com/nxtbooks/pes/powerenergy_050615
https://www.nxtbook.com/nxtbooks/pes/powerenergy_030415
https://www.nxtbook.com/nxtbooks/pes/powerenergy_010215
https://www.nxtbook.com/nxtbooks/pes/powerenergy_111214
https://www.nxtbook.com/nxtbooks/pes/powerenergy_091014
https://www.nxtbook.com/nxtbooks/pes/powerenergy_070814
https://www.nxtbook.com/nxtbooks/pes/powerenergy_050614
https://www.nxtbook.com/nxtbooks/pes/powerenergy_030414
https://www.nxtbook.com/nxtbooks/pes/powerenergy_010214
https://www.nxtbookmedia.com