IEEE Power & Energy Magazine - July/August 2016 - 55

table 1. The physical characteristics of the studied countries.

Country

Average Electricity
Demand Growth
(%/Year)

Per Capita
Electricity
Consumption
(kWh/Year)

Installed
Generation
Capacity (GW)

Total Length
Transmission Lines
(≥220 kV) (km)

Average Growth
in Length of
Transmission System†
(%/Y)

Brazil

2.6% (2004-2014)

2,509 (2012)

126.7 (2014)

125,640 (2014)

4.6% (2004-2014)

Chile

3.0% (2004-2014)

3,793 (2012)

20.1 (2014)

12,330 (2015)

5.0% (2004-2014)

Colombia

4.7% (2004-2014)

1,130 (2012)

15.7 (2014)

14,117 (2013)

N/A

†Including lines reported as part of the transmission system, but at voltages lower than 220 kV.

reliability options in Colombia and of energy contracts in
Brazil and Chile) is a clear example of this, and so are the
auctions for transmission concession contracts.

Common Elements of Regulatory
and Institutional Framework
for Transmission Expansion
The transmission expansion framework in Brazil, Chile, and
Colombia combines: 1) centralized expansion planning with
2) decentralized implementation and operation of assets by
agents selected via auctions for concessions (or similar governmental franchises) to provide transmission services. The
essential items of this framework are described next, without
detailing slight differences among the countries.
The process begins with transmission expansion planning by government institutions at the national level. Planning is periodic and determinative: the planner identifies
which assets shall be built and their target COD. The plan
is typically approved by the ministry, which then instructs a
governmental institution to group the whole set of facilities
identified in the plan into sets and organize auctions to select
the agent to which a concession to build and operate each set
will be awarded.
The auctions for transmission concessions establish a
level playing field for public and private companies (including formerly incumbent agents and new entrants) to compete for the mandate to provide transmission services, which
involves both the obligation to implement a set of facilities

and operate it for a predefined period and the right to be
remunerated for that. This mechanism typically results in
a large number of transmission companies operating in the
country, as illustrated in Table 2.
Within the auction, the companies compete based on the
annual revenues they require to implement and operate under
each concession. The concession is awarded to the company
that has bid the lowest annual revenue requirements (ARR),
and the remuneration of the concessionaire will correspond
to its bid for the duration of the concession, which is specified
in a concession contract or a regulatory instrument.
This ARR is basically fixed during the concession contract or, in the case of Colombia, it varies according to a
predefined pattern. The remuneration of transmitters based
on congestion revenues is not commonly used in Latin
America. The concession contract and the regulation establish perform incentives to which the transmitters will be
subject, and these typically include incentives to keep equipment availability within acceptable ranges and penalties due
to delays in the implementation process.
The success of this model is evidenced by the notable
attraction of private capital to electricity transmission. Foreign companies with a background in electricity transmission
or other infrastructure segments, ranging from Canadian
and European companies (such as Brookfield, Isolux, and
Abengoa) to Chinese ones (such as State Grid), acquired
several transmission assets in South America in the previous decade. Local transmitters formed consortia with private

table 2. The attributions of governmental institutions within the planning
and auctioning process and the number of transmission companies in each country.

Country

Institution with Attribution
of Planning

Brazil

EPE

Chile

CNE‡

Colombia

UPME

Technical body
subordinated to
ministry‡

Periodicity of
Determinative
Planning
(Years)

Institutions to Which
Organization/Execution of
Transmission Auctions Is
Delegated

Number of Transmission
Companies†

1

ANEEL

(Regulator)

96

(2015)

4 (annual
revision)

CDECs

(System
operator)

14

(2015)

1

UPME

(Planner)

9

(2015)

†May include special purpose vehicles from holdings active in the transmission segment.
‡CNE (National Energy Commission) is formally an independent body whose communication with the presidency channels
through the Ministry.
56

ieee power & energy magazine

july/august 2016



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