The water–energy nexus in Chile: a description of the regulatory framework for hydroelectricity

Abstract

This article offers a general description of hydropower regulations in Chile wherein two sectors that are regulated separately come to meet each other: water (as a natural resource) and electric industry (as an activity). First, the characteristics for pursuing the activity are described together with the manner in which the hydropower plants perform their function as an energy source both in terms of implementation (setting up the plants) as well as in terms of operations (functioning as an energy source). Second, the legal schemes that serve as the institutional foundation and regulatory system for water and energy are laid out. Lastly, specific regulation applicable to developing hydropower is reviewed in terms of both hydroelectric power plant projects (their construction) as well as operations.

Keywords:

• water
• electricity
• hydropower
• institutional foundation
• practical and juridical connection

Notes

1 For a variety of perspectives on the case of Chile, refer to the following: Carl Bauer, ‘Dams and Markets: Rivers and Electric Power in Chile’ (2009) 49 Natural Resources Journal 583 (trans ‘Represas y mercados: ríos y energía eléctrica en Chile’ (2015) 5 Revista de Derecho Ambiental 9); Manuel Prieto and Carl Bauer ‘Hydroelectric Power Generation in Chile: An Institutional Critique of the Neutrality of Market Mechanisms’ (2012) 37 Water International 131; see also Alejandro Vergara, Daniela Rivera, Valeria Moyano, Elisa Blanco, ‘Aguas y energía: propuestas para su autogobierno y resolución especializada de conflictos’ in Propuestas para Chile, Concurso Políticas Públicas 2013 (Ediciones Centro de Políticas Públicas UC 2014) 241–70. One practical perspective of this nexus that is distinct from the traditional and incorporates the element of global change and the influence this has on the remainder of the elements contained in this equation, as well as the links that arise among them, can be seen in Francisco Meza and others, ‘Water–Food–Energy Nexus in Chile: The Challenges due to Global Change in Different Regional Contexts’ (2015) 40 Water International 839.

2 Ana María Errázuriz and others, Manual de Geografía de Chile (2nd edn, Editorial Andrés Bello 1992) 119–25.

3 Ibid.

4 United Nations World Water Assessment Programme (UN Water), Water and Energy: The United Nations World Water Development Report 2014 (UNESCO and UN Water 2014) 38.

5 Ibid, 38–95. For similar information, see Antonio Embid and Liber Martín, El nexo entre el agua, la energía y la alimentación en América Latina y el Caribe. Planificación, marco normativo e identificación de interconexiones prioritarias (Ediciones Comisión Económica para América Latina y el Caribe, CEPAL 2017) 33.

6 Concerning the greater (reservoir plants) or lesser (streaming plants) control of hydro variability, see Bauer 2015 (n 1) 31.

7 The closing phase or abandonment of the facilities or activity is not included here despite the fact that it is recognised in the Chilean environmental legislation given that the topic exceeds the intentions of this work.

8 Problems and impacts that make up part of the environmental regulation, in connection with the industrial regulation of water and energy, are issues that we will not address here. Embid and Martín (n 5) 32 critique the classification of hydroelectricity as a renewable energy source that has a non-consumptive water use and low impact on the environment and other users.

9 Information taken from the website: Environmental Justice Atlas https://ejatlas.org accessed 12 June 2017.

10 Eduardo Astorga and others, Evaluación de los conflictos socio-ambientales de proyectos de gran tamaño con foco en agua y energía para el período 1998 al 2015. Informe final (Consejo Nacional de Innovación para el Desarrollo 2017).

11 UN Water (n 4) 38.

12 Similarly, Art 7 of DL No 2.603 states that: ‘The owner of the use rights shall be presumed to be whoever has the property that is currently using said rights. In the event the aforementioned standard were not applicable, the owner of the usage rights shall be whoever is currently making effective use of the water.’

13 Similarly, a complete analysis can be found in Christian Rojas Calderón, La distribución de las aguas. Ordenación y servicio público en la administración hídrica y en las juntas de vigilancia de ríos (Thomson Reuters 2016) 144–93 and 219–306, who classifies the work done by the supervision committees as a ‘private service in the public interest’ (SPIP).

14 A diagnosis and proposal concerning conflicts in the field of water can be reviewed in Vergara and others (n 1) 243–45 and 261–64.

15 Prieto and Bauer affirm that one of the key elements of the new legal framework for electricity in Chile is the introduction of free competition in the production sector. This would imply that there should not be any institutional preferences for specific energy sources. However, in the opinion of the authors, this would not happen since the legislation for both water and electricity contains a series of preferences that make hydroelectricity cheaper than other sources of energy. See Prieto and Bauer (n 1) 139–40.

16 Eugenio Evans and María Carolina Seeger, Derecho Eléctrico (LexisNexis 2007) 2–3.

17 ‘The project and construction of any modifications that were necessary over the natural or artificial waterways for the purposes of building works… that may harm the life, health or wellbeing of the population or in any way alter the run-off pattern of the water shall be the responsibility of the interested party and must be previously approved by the General Water Directorate …  The meaning of the word modification not only concerns changes to the watercourse path, but also… the construction of new works, arches, throughways above or below level, or any other substitutions or additions.’

18 Act No 20.936 of 2016 set out a new electricity transmission system and created an independent coordinating body for the national electricity system. This greatly alters the administrative organisation, the results of which will be seen over the course of its application that recently came into effect.

19 Bauer 2015 (n 1) 25–27 and 63; Prieto and Bauer (n 1) 135.

20 Prieto and Bauer (n 1) 143.

21 Ibid 136–37.

22 Ibid 136. For similar information, see UN Water (n 4) 96.

23 Prieto and Bauer (n 1) 141–42.

24 Ibid 142–43.