Bets on renewable energies to extend the electric energy access in La Guajira

In development of Decree 1085 of July 2, 2023, by which the State of Economic, Social and Ecological Emergency was declared in La Guajira, the Government issued Presidential Decree 1276 of July 31, 2023 by which measures are adopted to expand access to electricity service and preserve the means of subsistence of the population, rescuing the energy transition in La Guajira.

For the above, the following measures are adopted:

• • • Transfers to areas outside the influence of energy projects: A first transitional paragraph is added to Article 54 of Law 143 of 1994, which allows extending the percentage of transfers to other municipalities and districts in La Guajira that are not within the project´s area of influence. Additionally, a second transitional paragraph in this article establishes an allocation of 50% of the percentage of transfers from the electric sector to energy transition projects of energy communities.

Both measures are subject to the regulations issued by the Ministry of Mines and Energy for each case.

• • • Special and differential tariff regime: A transitional paragraph is added to Article 44 of Law 143, authorizing the Energy and Gas Regulation Commission (CREG) to establish, upon request by the Ministry of Mines and Energy, a temporary special and differential tariff regime in La Guajira. This regime will take into account the vulnerability of the inhabitants of this department and their electricity needs.

• • • Resources for energy solutions: It is established that, with the aim of developing energy solutions in Non-Interconnected Zones, during six (6) months following the publication of the Decree, the public energy service bill for users in strata 4, 5, and 6 nationwide will be increased by one thousand pesos ($1,000), and for commercial and industrial users nationwide, it will be increased by five thousand pesos ($5,000) with the charge labeled as “Aporte Departamento de La Guajira” (Contribution to the Department of La Guajira).

• • • Reliability charge auctions: A paragraph is added to Article 74.1 of Law 143 of 1994, which determines that during the reliability charge auctions convened by the CREG to assign Firm Energy Obligations (OEF), the obligations will be awarded to generation projects with Non-Conventional Renewable Energy Sources (“FNCER”) located in the department of La Guajira that offer the price at the closing of the auction, after deducting the OEF from the target demand.

• • • Incentives for storage systems, batteries, grid stability, and ancillary services: Article 5 extends, during the current fiscal year, the tax incentives of Law 1715 of 2014 to the storage schemes, batteries, grid stability, and ancillary services developed in La Guajira. 

• • • Special authorization to Ecopetrol: Article 6 authorizes Ecopetrol to carry out Non-Conventional Renewable Energy Projects (FNCER) in La Guajira, either independently or through any associative modality.

This authorization is subject to measures adopted by the CREG to prevent abuses of Ecopetrol’s dominant position.

• • • Suspension of supply contracts from auctions CLPE 02-2019 and CLPE 02-2021: The seventh article adds a paragraph to Article 85 of Law 143, stating that the contracts from the auctions CLPE 02-2019 and 02-2021 may temporarily suspend their obligation to supply energy until the project subject to the contract becomes operational, and in any case, until July 22, 2025.

The suspension period will automatically extend the contract, unless the buyer notifies the seller of their intention to terminate the contract with at least one year prior to the expiration of its term.

• • • Financing for GECELCA: Article eight establishes that the Ministry of Finance and Public Credit will establish a mechanism for the financing of GECELCA S.A. E.S.P., aiming to transform the coal-fired power plants Guajira 1 and Guajira 2, owned by Termoguajira, into a model of generation with net zero CO2 emissions. This is done by adding a transitional paragraph to Article 79 of Law 143 of 1994.

• • • Budgetary additions: Articles nine and ten determine certain measures of addition to the Revenue and Capital Resources Budget, and the Expenditure Budget or Appropriations Law of 2023, for a total amount of $42,692,469,000. These additions are aimed at partially financing the mentioned projects.

The Constitutional Court is reviewing the constitutionality of Decree 1085 of 2023. In case it is declared unconstitutional, Decree 1276 would have no effect.