The Energy Regulation and Markets Review - Stikeman Elliott

Colombia
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establishing the methodology for calculating usage charges for the regulated
market;
defining the regulated and unregulated end-user markets;
establishing the regulations for the planning and coordination of the operation of
the national transmission system; and
establishing technical criteria relating to the quality, reliability and security of
supply.
ii Regulated activities
As a general rule, the generation, transmission, distribution and commercialisation are
all activities that are subject to the CREG’s resolutions. In order to undertake any of
these activities there is no need of a specific licence; however, depending on the specific
situation these activities may require environmental licences and urban planning
permissions.
iii Ownership and market access restrictions
Pursuant to applicable regulations, the electricity sector is largely segregated. In order
to achieve efficiency in the provision of electricity services and encourage privatesector
investment, Law 142 and Law 143 segregated the electricity industry into
the four mentioned service functions: generation, transmission, distribution and
commercialisation. Therefore, pursuant to Article 74 of Law 143, the vertical integration
of utilities incorporated after the enactment of such Law is prohibited.
Likewise, according to Article 1 of CREG Resolution 095 of 1994, aiming to
keep the activities referred to in Article 74 of Law 143 fully separated, neither is the
vertical integration of utilities incorporated before the enactment of Law 143 of 1994
with utilities incorporated after such enactment permitted.
Where electricity companies were integrated prior to the enactment of Law
142, they are allowed to continue engaging in all of the functions in which they were
previously engaged on condition that they maintain separate accounting records for each
business activity.
On the other hand, companies incorporated after Law 142 and Law 143 can
simultaneously operate activities considered as complementary, such as generation and
commercialisation, or distribution and commercialisation; however, according to such
laws, companies cannot undertake generation and distribution activities at the same
time, and transmission companies cannot operate in any other activities.
There are others restrictions established by the CREG that are worth mentioning;
for example, there are regulations establishing certain other ownership and market share
restrictions such as:
a limits on the ownership interest that an electricity generation company may take
in an electricity distribution company; and
b pursuant to CREG Resolution 127 of 1996, no electricity generation company
may directly own more than 25 per cent of the capital of a distribution company.
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