Regulation of electricity utilities – sales of power

Approval to sell power

What authorisations are required for the sale of power to customers and which authorities grant such approvals?

The approval for carrying out distribution activities and the legal basis for the sale of power to customers (commercial and domestic) is the enabling title granted by the Ministry for these specific activities. On the other hand, customers have to sign an electricity supply contract to be sold power.

Commercialisation activities are not separate from distribution activities and therefore there is no commercialisation market beyond the market for the activities carried out by distribution companies.

Power sales tariffs

Is there any tariff or other regulation regarding power sales?

The electricity tariff is the sole tariff applied across national territory and is defined by ARCONEL, guided by the principles of solidarity, equity, cost, coverage and energy efficiency, but also based on consumption patterns and voltage levels. Differentiated rates may be set for consumers as an exception. According to the Organic Code for Production (a law for attracting investments), contracts for investment in the electricity sector that are executed with the Republic of Ecuador must include a stable power purchase price clause or otherwise a programmed price revision clause.

Rates for wholesale of power

Who determines the rates for sales of wholesale power and what standard does that entity apply?

ARCONEL issues a regulation each year to determine the costs of generation, transmission, distribution, commercialisation and public lighting that will be applied the following year.

The rate of public electricity services must cover costs related to power generation, transmission, distribution and commercialisation, as well as the cost of the service of public lighting. It is important to note that Ecuadorian law does not recognise the existence of a wholesale power market and, therefore, does not provide specific rules to regulate it.

Public service obligations

To what extent are electricity utilities that sell power subject to public service obligations?

Regulation of electricity transmission services

Pursuant to the LOSPEE, the following are the rights of consumers or end users and, consequently, the obligations of distribution companies:

  • to access the public electricity power service, in accordance with the constitutional principles of efficiency, responsibility, continuity, quality and fair prices;
  • to receive a commercial invoice based on actual consumption;
  • to file claims with the electricity company in case of a complaint about the public service received or values invoiced, as well as to receive a timely response thereto;
  • to be timely informed through any suitable means about works or actions that could trigger a suspension in the electric service;
  • to be timely informed of the rates to be applied based on actual consumption;
  • to receive equitable, non-discriminatory and non-abusive treatment in the provision of the public electric power service;
  • to have street lighting on public roads, depending on the relevant regulation;
  • to participate in public hearings held by the Ministry and ARCONEL; and,
  • to be compensated for damage caused by substandard quality in the public service.