The Energy Regulation and Markets Review - Stikeman Elliott

Colombia
iv Transfers of control and assignments
Law 142 states that companies that render public services must avoid unjustified
privileges and discriminatory acts, as well as abstaining from any act that has the capacity,
purpose or effect of generating unfair trade or restricting competition in any way, or
abusing their dominant position. Similarly, those companies are subject to the special
unfair competition regime foreseen in Colombian law.
Therefore, in the event that any company does not comply with its obligations
regarding promotion of competition, the SSPD may impose penalties and can even take
over the business. Also, several resolutions issued by CREG have established additional
norms regarding competition and promotion in the electric sector. Specifically, the
regulation states that the SIC is the competent authority when dealing with company
integrations in the energy sector. According to the regulations, Law 1340 of 2009, the
SIC can object to an integration when it results in undue competition restrictions and
when they are used to obtain a dominant position in the market.
As previously noted, CREG regulations additionally establish some rules that
must be taken into account, such as the following:
a no electricity generator may have a participation in an electricity distribution
company exceeding 25 per cent of the distribution company’s capital (however,
this ownership restriction does not apply to affiliates or subsidiaries of electricity
generation companies);
b pursuant to CREG Resolution 60 of 2007, no company can have market
participation above 25 per cent in the generation activity; and
c according to CREG Resolution 24 of 2009, no company can, directly or indirectly,
have a greater participation than 25 per cent in the commercialisation activity.
III
TRANSMISSION/TRANSPORTATION and DISTRIBUTION
SERVICES
i Vertical integration and unbundling
As previously mentioned in Section II.iii, supra, the vertical integration of utilities
incorporated before the enactment of Law 143 with utilities incorporated after such
enactment is not permitted.
ii Transmission/transportation and distribution access
Electricity transmission is defined by applicable CREG regulations as the transportation
of electricity at a tension level equal to or greater than 220kv. In Colombia, electricity
transmission is regulated independently from other components of the electricity sector,
and has the unique characteristics of a natural monopoly. The National Transmission
System (‘NTS’) is an interconnected system for electricity transmission comprising
an array of electricity transmission lines and corresponding interconnection modules,
operating at 220kv or above.
The vast majority of generating stations, grid supply points for electricity
transmission and end-users are directly or indirectly connected by the NTS. The NTS
enables the operation of generating stations to be coordinated, which reduces the amount
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