Last March 22, the Legislative Assembly approved a Reform to the General Electricity Law, in order to guarantee the sustainability and supply of electric energy in the country, due to the repercussions caused by the Covid-19 pandemic and the current Russia-Ukraine war, which has generated significant increases in international oil prices, directly affecting the production costs of thermal generators to supply the demand of electric energy in El Salvador. In this context and with the clear objective of minimizing the impact on the Salvadoran consumer, the Legislative Assembly approved with 62 votes this Reform, which seeks to achieve stability in the price of electricity tariffs for end users.
The following are the articles included in the new Reform to the General Electricity Law:
Art. 1.- Substitute letter a) of Art. 79 as follows:
“(a) The prices of energy and capacity contained in long-term contracts, approved by SIGET as well as in contracts of a public nature, in accordance with the methodology to be defined in a regulatory manner. Long Term Contracts will be governed by the principle of publicity and will be awarded through a free competition process, these must comply with the parameters and procedures established by the General Superintendence of Electricity and Telecommunications, SIGET.
The contracts of a public nature will be those that the distribution companies sign with companies in which the State has a majority participation and direct control, these contracts may be of short or long term and will be signed in accordance with the guidelines issued for such purpose by the General Directorate of Energy, Hydrocarbons and Mines and the procedures established by SIGET.
The form of supply of the contracts to be considered in the calculation of the tariff may or may not be standardized, depending on the characteristics of the resource to be contracted. The distributors will be obliged to sign long-term contracts and public contracts with market participants, in accordance with the minimum contracting percentages that will be established by regulation.
Art. 2.- On a transitory basis and until the General Directorate of Energy, Hydrocarbons and Mines issues the guidelines for the subscription of contracts of a public nature, the subscription of these contracts shall be defined by SIGET, based on the proposal submitted for such purpose by the generators in which the State has a majority shareholding and direct control. The Long Term Contracts in force and subscribed by the distributors with companies in which the State has a majority participation and direct control shall be extended by SIGET, under the same conditions.
Art. 3. – On a transitory basis and until the General Directorate of Energy, Hydrocarbons and Mines issues guidelines related to the periodic reports of information to be provided by the participants of the electric market, the distribution companies shall send monthly to the Hydroelectric Executive Commission of the Lempa River – CEL, a report containing the details of the technical and financial conditions of the existing contracts with electric generation plants connected to their distribution networks, this report shall include the type of technology and the hourly injections made by each one of the generation plants associated to these contracts.
This amendment has already been published in the Official Gazette, exactly in the Official Gazette number 59, volume 434, dated March 23 of this year, from page 14 to 18. Since this amendment has a vacatio legis of 8 days after its publication, it will become effective as of April 4th of the same year.
For further information, or if you have any questions, please contact María Alejandra Tulipano (firstname.lastname@example.org), Marcela Zelaya (email@example.com), Gustavo Vega (firstname.lastname@example.org) or Raúl Garcia (email@example.com). They are part of our team specialized in the regulated sector at Consortium Legal El Salvador office.