Wednesday, October 17, 2007

Chilean Government Commission Backs Aysen Dam Project

Endesa and Colbún’s massive proposed hydroelectric project in the Aysén region received the government’s official backing last week. In an unprecedented gesture of support for the energy companies, National Energy Commission executive secretary Rodrigo Iglesias announced that the project “could strengthen (Chile’s) energetic security and independence, due to its scale and hydrologic stability… This will reduce exposure to the volatile prices of imported fuel that Chile uses to generate electricity.”

The Free Competition Defense Tribunal (TDLC) had solicited the government’s opinion on the project as part of its ongoing investigation into the potential effects of the Aysén dam project on the Chilean energy market. Concern has been raised about a possible monopoly on water rights in the Central Interconnected System, or SIC.

Spanish electrical giant Endesa currently holds 40 percent of water rights in the SIC: it controls 3,459 megawatts and has requested the rights to another 1,081 megawatts, a petition currently being processed by the General Water Directorship (DGA). The DGA administers the nation’s water code in order to regulate water rights and prevent monopolies (ST June 28). Chilean energy company Colbún currently controls about 2,000 megawatts in water rights.

The US $2.5 billion “Aysén Project” would construct four massive hydroelectric dams along Region XI's two largest rivers (Baker and Pascua) and generate an additional 2,400 megawatts of electricity in the SIC (ST June 16).T

hough this is the first official government commentary in favor of the Aysén Project, the southern river project previously received support from government officials looking to find a solution to Chile’s precarious energy situation. Senator and ex-President Eduardo Frei called the project a “national priority”, while Energy Minister Marcelo Tokman has said the hydro-powered plants are necessary to increase the electrical system’s capacity.

Here is the full article.

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