The Energy Regulation and Markets Review - Stikeman Elliott

Chapter 6
Colombia
Patricia Arrázola-Bustillo and Fabio Ardila 1
I
OVERVIEW
Under the Colombian Constitution of 1991, the government is responsible for ensuring
the provision of public utility services. In order to enable the government to fulfil these
obligations, the Constitution grants the government the powers to monitor and regulate
public utility companies to ensure the continued availability of such services.
Prior to 1991, the Colombian government either provided public utility services
directly through specialist providers or granted concessions to private parties to provide
such services. Since 1991, the government has adopted a strategy designed to restructure
the power sector by implementing various programmes that seek to reduce administrative
inefficiency in electric enterprises, to establish a rational tariff structure that will allow
energy companies to recover the true economic cost of electric services and to establish
opportunities for the participation of private entities. In fact, the constitution allowed
private parties to provide public utility services, although the government retained
ultimate responsibility for the efficiency and availability of such services.
In 1994, significant reforms were undertaken to the public utilities industry. These
reforms, contained in Law 142 of 1994 (‘Law 142’) and Law 143 of 1994 (‘Law 143’)
were the result of constitutional amendments made in 1991, and created the basic legal
framework that currently governs the electricity sector in Colombia. The most significant
reforms included the opening up of the electricity industry to private sector participation,
the functional segregation of the electricity sector into four distinct activities, namely
generation, transmission, distribution and commercialisation, the creation of an open
and competitive wholesale electricity market (‘the MEM’).
As previously mentioned, the most important legislation regulating this sector are
Law 142, which contains the legal framework for public utilities and Law 143, which
regulates the generation, transmission, distribution and sale of power. Other relevant
1 Patricia Arrázola-Bustillo is a partner and Fabio Ardila is an associate at Gómez-Pinzón Zuleta.
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