Electricity Tariff Protection Law

On July 31, 2026, Law No. 21.833 on Electricity Tariff Protection (Bulletin No. 18.384-08) was published in the Official Gazette. This law is part of the 2026-2030 Energy Route and pursues three objectives: (i) to contain the impact of tariff increases on regulated customers; (ii) order and give certainty to the distribution and transmission tariff processes; and (iii) strengthen the security and quality of supply.

The main matters regulated by the law are summarized below:

I. Voluntary renegotiation of supply contracts (PPAs).

The National Energy Commission (CNE) is authorized, on a one-time basis and subject to a mandate from the Ministry of Energy (the “Ministry”), to develop a voluntary mechanism to modify future energy supply contracts in force, with the agreement of both parties, in order to lower the price of the energy component in the accounts of regulated customers.

The mechanism must be governed by the principles of legal certainty, voluntariness and economic efficiency. The latter criterion shall be established in a regulation of the Ministry, which must be issued within 180 days after the promulgation of the law.

This power granted to the CNE must be exercised only once until December 2027.

The Ministry will have to inform the Mining and Energy Commission of both chambers of the National Congress about the modified contracts, the tariff reductions for regulated customers and the new contractual terms.

II. Tariff Stabilization Fund (FET) and payment to generators.

The objectives of the FET are expanded, which in addition to stabilizing tariff will finance the electricity subsidy of Law No. 21,667 (Transitory Subsidy) and the payment of the debt with companies for resettlements of the Value Added Distribution (VAD) and medium-sized systems¹.

The electricity subsidy is extended until 2027 (previously in force only until 2026), maintaining the contribution of USD 120 million per year charged to the FET.

The fines applied by the Superintendence of Electricity and Fuels (SEC) for differences in inventories will be contributed to the FET, which will be reported to the Mining and Energy Commission of the Senate.

The Ministry shall report semiannually to the Mining and Energy Commission of the Chamber of Deputies and, together with the CNE, submit annually to the Mining and Energy Commission of both chambers of the National Congress a report on the effective supply prices paid by regulated customers and on the evolution of prices and charges of the contracts in force.

III. Tariff freeze in the regions of Los Ríos and Los Lagos.

The tariffs applicable in the communes of the Los Ríos and Los Lagos regions remains in force, so that their regulated customers do not experience the increase of close to 19% projected as of July 2026.

IV. Tariff Normalization Balance.

The law creates the Tariff Normalization Balance, which will be quantified by the SEC through a report and includes the debts for the resettlement of the VAD for the period 2020-2024 (in the order of $800,000 million) and for the resettlement of generation-transmission of medium-sized systems for the period 2022-2026 (in the order of $16,000 million).

In order to pay this balance, the Tariff Normalization Component (NT) of the Public Service Charge is created, which amounts to 5 pesos per kWh (readjustable by CPI, base July 2026), applicable from January 1, 2028 and until the debt is extinguished, no longer than 2035.

Free customers to whom the resettlement of the VAD is paid will be exempt from financing the NT Component.

Without prejudice to the fact that its exclusive purpose is to pay the Tariff Normalization Balance, once said balance has been extinguished, the surpluses may be used for the subsidy of Article 151 of the General Law of Electric Services (LGSE), other than the Transitory Subsidy already mentioned.

The payment of the balance will be materialized through tariff normalization payment documents issued by the General Treasury of the Republic, charged to the FET, without state guarantee and due no later than 2035.

The calculation of the VAD may not consider the transfer of the costs associated with the payment of the compensations occurring due to distribution failures.

V. Regularization of distribution tariff processes.

The distribution tariff process is regularized, which accumulates significant delays in its entry into force.

The decree on tariff formulas for the 2024-2028 four-year period is extended as the 2024-2030 six-year period.

The reliquidation debts of the 2024-2030 six-year period will be incorporated into the tariff level of the 2030-2034 process, without delays.

VI. Valuation of facilities.

The validity of Decree 7T of 2022, of the Ministry of Energy, is extended until December 31, 2028, and the 2024-2027 process will serve as an input for the 2029-2032 process.

Within the framework of the defined period, the companies that own transmission facilities must correct their inventories, when applicable, no later than December 31, 2026, in which case the provisions of section VI of this document will be applicable to them.

In the new transmission tariff process, the preliminary technical report must be issued by the CNE no later than September 30, 2027 and the inventory information must be submitted no later than March 31, 2027.

The CNE must report annually to the Senate's Mining and Energy Commission on the new valuations of transmission facilities.

VII. Voluntary mechanism for reporting discrepancies in inventories.

Transmission companies may correct errors in their inventories of facilities before the CNE and the National Electricity Coordinator (Coordinator).

If the Coordinator approves the correction, the facilities will not be excluded from the next fare process.

If the Coordinator considers that the background information is insufficient, the facilities will be excluded completely and the amounts received in excess (up to five tariff periods) will be deducted.

The Coordinator will report every six months on the companies that have updated their inventories.

VIII. Qualification of Facilities.

Greater stability is given to the qualification of the facilities.

The freeze on the current rating of facilities (2024-2027) is extended until December 31, 2032, covering the entire new tariff process and reducing the risk of reclassification.

Installations that have changed their classification in 2024 must be valued in accordance with article 52 of DS 10.

IX. Security of supply and new powers of the Ministry.

The assumptions by which the Ministry can dictate preventive measures in the face of supply deficits, currently limited to prolonged failures of power plants or drought, are expanded.

The new wording adds "any other circumstance" that determines the insufficiency of the system to supply consumption, duly founded in a report. This expands the margin of intervention of the authority on the operation of the system in scenarios of stress or deficit.

X. Investment plans in distribution.

Distributors may submit investment plans to improve the quality of service in their concession area, following a call from the Ministry. These plans are complementary to the VAD and are remunerated for 20 years, associated with quality goals, with limits of 5% of the New Replacement Value (VNR) per plan and 20% of the VNR per company.

XI. Protection of electrodependent customers.

Households with registered electrodependent people will have priority in the allocation of the electricity subsidy, with a guaranteed minimum amount equivalent to the effective consumption associated with the operation of the equipment necessary for the treatment of their pathology.

Article 207-2 of the LGSE is amended to oblige health services, private providers and ISAPRES to inform the SEC about certified electrodependent persons, so that distributors register them in the respective registry.

XII. Next steps.

The law contemplates the following implementation deadlines:

• Within 30 working days from its publication, the Ministry of Finance must issue the decree amending the regulations governing the operation of the FET.

• Within 6 months of its publication, regulations must be issued to implement the law.

• Within 20 working days from its publication, the CNE must update the resolutions necessary to apply the law.

Footnote

1. Those electrical systems with an installed generation capacity of more than 1500 kilowatts, which are disconnected from the national electricity system and are intended to supply energy to free and regulated customers.