The risk of blackout is still uncertain, but electricity will go up

A blackout in Colombia is uncertain for the time being, at least that is what experts consulted by this newspaper pointed out. What is imminent is a rise in the price of electricity bills due to the dry season.

A report shared by Óptima Consultores points out that the Oceanic Niño Index (ONI) shows an increase in temperature that is already affecting the hydric contributions to the Colombian electricity system.

This is relevant as hydroelectric power plants provide about 70% of the energy supply in the country, and if the reserves in the reservoirs decrease, everything indicates that the contribution of thermal plants will increase. Meanwhile, kilowatt/hour prices continue to rise in the wholesale market (see Para Saber Más).

According to XM, operator of the National Interconnected System (SIN), the kilowatt per hour shot up from $374 in January to $1,064 as of September 23. In other words, the energy they are buying is becoming more expensive for marketers and, of course, this will be reflected in the bill at the end of the month (see Para Saber Más).

The outlook

Bearing in mind that the key factor here is the drought, Alejandro Castañeda, director of the National Association of Generating Companies (Andeg), noted that the value of the kilowatt/hour in the energy exchange has shot up during September because El Niño has already begun to materialize.

"The contributions that reach the reservoirs are more or less at 50% of the historical average. To contrast that with the El Niño that occurred between 2015 and 2016, the contributions for September of that year were at 75%, that is, the reservoirs are drying up faster than we expected," he explained.

The other thing that the union leader pointed out is that "80% of our reservoirs are emptying in less than three months, so if it doesn't rain, we are making a mess of our lives".

And he commented that "that is why hydroelectric generators have started to raise their prices in the stock exchange and that is what is reflecting these high values. The message sent by the hydro generators is: we need all the thermal power plants on".

Will there be a blackout?

This is the fourth El Niño event in less than two decades and each one of them has taught hard lessons to the regulatory authorities and to the companies involved in the chain.

Hence the concern among various sectors about the likelihood of a blackout. In fact, the Comptroller's Office pointed out two major risks that could jeopardize the national supply.

Drought is one of them, but there is also the poor financial situation of the electricity companies (they have a hole in their cash flow of more than $6 billion), which would find it difficult to buy energy on the stock exchange at such high prices.

In view of this, Omar Camacho, Minister of Energy, defended that the Government and the competent entities are not lowering their guard and "this allows us to follow up on the energy, economic and technical measures that must be addressed". From his point of view, the country has the capacity to face El Niño without falling into a shortage.

For Alejandro Lucio, director of Óptima Consultores, a blackout will depend on the intensity and duration of the dry season: "If the phenomenon is not too intense and long, there will be no blackout. However, the accounts are very fair, if the phenomenon is extended, or if any extraordinary event happens in the system, rationing cannot be ruled out, at least in some hours of the day and in some areas of the country".

In turn, Andrés Jaramillo, research professor at the EIA University, pointed out that, "for example, in El Niño 2016 several things happened, such as the damage in the Guatapé power plant. So you do not know, anything can happen. At the moment the level of the reservoirs is not dramatically low, but nobody knows how sustained the drought will be or what will be the availability of gas for the thermal plants. This is a scenario with multiple variables, which makes it very difficult to ensure that the country will be able to weather an El Niño".

Drought does make the bill more expensive

XM data confirm that the price per kilowatt per hour in the energy exchange (where generators sell to traders) has shot up more than 184% between January and September. Although the guild's accounts indicate that only 20% of the bill is affected by the quotations, Alejandro Lucio pointed out that "the logic is: of the 100% of the tariff that users pay, approximately 50% is due to the cost of generation. Of that 50%, depending on the management made by the marketers, a percentage has a fixed price and the rest is at a variable price". The truth is that there is an exposure to stock market values.