What do we do?

AREAS OF PRACTICE

Energy Law

Legal advice on matters related to electric power (conventional and alternative) and renewable energies in the following activities:

Due diligence.
Representation in regulatory matters and in administrative proceedings before the Superintendence of Public Utilities.
Legal assistance in transactions related to the financing of infrastructure projects, international bids for acquisitions, settlement of infrastructure projects and negotiations of public concessions and reversals
Representation of clients in mergers and acquisitions or “joint ventures” in the sector.
Representation of clients in the selection of contractors and other bidding processes developed by state agencies, including structuring of projects, preparation of public tenders and due diligences.
Assistance in the negotiation and conclusion of supply contracts.
Legal assistance related to tariff regulations.
Advice on regulatory issues regarding the Commission of Regulation and Energy and Gas (CREG) and the Ministry of Mines and Energy.

New Measures to Control Energy Prices in Colombia

On September 16, 2022 the government announced the following specific measures, to be implemented as of November 2022, to contrul the rising prices resulting from workshops with different actors in the sector:

Draft resulution 701 017, for a 12-month period. This resulution seeks:
- To invulve all sector actors in the reduction of tariffs.
- To assist traders by implementing an 18-month deferral of their obligations with generators and distributors, in at least 20% of from September to December 2022. The interest rate of such deferred obligations shall be the lowest between that reported by the market administrator XM and a preferential rate.
- To renegotiate regulated market agreements between traders and generators, including the modification of payment terms and consumption periods in 12 months.
Draft resulution 701 018, to be enforced in 5 months. This resulution seeks:
- Optimize thermal plants’ operation according to their number of units and capacity.
Draft resulution 701 019, also projected for a 12-month period. This resulution seeks:
- To determine the percentage of variation of the tariff option for hte first month after the resulution is approved. After that, a tariff option increase rate will be defined. Before the resulution this may not be less than 0.6. Now it may be equivalent to “0” or even negative.
- To adjust distribution and transmission charges at the Producer Price Index (PPI) of December 2020. These values shall be brought to present value and may vary according to the Consumer Price Index (CPI).
- Moving forward and as a transitory measure, one the sector index is defined, charges shall be updated with the lowest between the CPI, PPI or any other index proposed by the operators. These will have a 5 business day deadline to inform CREG about their adjustment acceptance.

One step closer to Energy Transition in Colombia

The Colombian Senate has passed Bill 365 of 2020 establishing new mechanisms and goals for energy transition in the country and aiming at a safe way to transition from traditional energy sources to the use of renewable resources.

The three main pillars of Law 365 of 2020 are:

The transition from conventional to non-conventional sources as an important element in the fight against climate change.
The revitalization of the Colombian energy market, known as the transformation process from years of using fossil fuels and non-renewable sources to the implementation of new sources of energy; and
The economic reactivation needed due to the recession caused by the Covid-19 pandemic.

Nowadays, the sustainable energy consumed in Colombia is less than 1% of the total production.

The purpose of the new Bill is to increase the consumption of sustainable sources of energy by different sectors of the economy by 2022, with the goal of reducing atmospheric CO2 by 51% thus reducing the greenhouse gases effect. This bill fosters the use of non-conventional energy sources as green nor blue hydrogen, and carbon capture and storage, including geothermal generation.

Other important points that are clearly introduced in the bill are:

Strengthening the special fund for non-conventional energy and efficient management of energy (FENOGE). This fund was created by Decree 1543 of 2017 with the purpose of financing investigation and development programs related to non-conventional energy and promoted by Ministry of Mines and Energy
Fostering new and green energy resources as well as electric mobility using hybrid and electric vehicles. In Colombia, according to the Chamber of Commerce of Bogotá (CCB) only 0,02% of the vehicles on streets in 2019 were hybrid or electric vehicles. This percentage has been increasing the last two years by 1%. However, with this law, there’s a higher expectation of increasing the number of electric vehicles in streets.
Applying incentives for the promotion of efficient energy management measures. These incentives were created by Law 1715 of 2014 with the objective of promoting new searching mechanisms and to encourage companies to use non-conventional energy in their production process.
Improving the reliability charge as a mechanism created in 2006. This charge was created to ensure the supply of energy during periods of drought. And is based on Firm Energy Obligations (OEFs) awarded by the Colombian Administrator of Commercial Exchange Systems. These OEFs are obligations undertaken by generators to provide reliable and stable energy to the power matrix during hard times.

According to the CCB and the Energy Architecture Performance Index (EAPI) Colombia is leading the top 10 of Latin-American countries on sustainable energy and is one of the countries that uses solar energy the most. (BCC,2018)

Unfortunately, Colombia suffered an important loss on the demand of energy by 16% in 2020 due to the Coronavirus Pandemic, and another loss of 17% in 2021 due to the economic recession. Nevertheless, economic programs were implemented with the intention of straightening and recovering the economy such as the promulgation of this Law and the economic reactivation plan in Colombia that will beneficiate the different energy sectors.

The energy market, producers and consumers have important expectations on this new Law that only needs to be voted in the Colombian Chamber of Representatives so it may pass for presidential sanction. This is an important step for the energy market in Colombia because this bill brings with it a lot of benefits given to its commitment with the environment and a sustainable development in the mining and energy sector.

New guidelines for tax incentives on renewable energy

By Gabriela Mancero and Andres Felipe Gomez Peña Mancero Lawyers

November 24, 2015

To promote the so-called non-conventional energy sources, the Ministry of Mines presented the decree 2143 of 2015 which regulates tax incentives from the investment in Conventional Energy Sources in November.

Thereby seeks there an array of diversified energy generation in Colombia to give entry to new technologies in the energy system. The 1715 decree implementing the Law on tax benefits, approved in May 2014.

What are the non-conventional renewable energies?

Are understood as non-conventional renewable energies energies are characterized in their processing and use into useful energy not consumed or depleted in human scale.

Examples of these sources are many, among them they can be counted hydro, mini hydro, biomass, the geothermal, solar, wind and ocean.

What classifies some renewable energy as conventional not the degree of development of technology for their use and penetration that take energy markets. Among the aforementioned sources, solar, solar panels need to exist.

In Colombia, to date there have been few facilities Networking made solar and wind technology. In Colombia we find that the primary source of energy in the electricity mix is hydraulic, with about 70 percent of generation, while the rest of the mix is mainly covered by fossil fuels.

However, these energy changes and the measures contained in the decree of 4 November 2143 are set to be longer materialize from February next year (2016).

The four tax incentives

From the force of the decree, all projects of power generation with Conventional Energy Sources can get four benefits, namely:

a deduction is introduced in the payment of income tax of 50 percent of the investment within five years.
Accelerated depreciation of assets is applied.
are exempt from the application of Value Added Tax (VAT) on goods related to the project.
Exemption from customs tariff.
Regarding these new guidelines, the Minister Tomas Gonzalez Estrada said:

“Our goal is that Colombia may have better parent friendly to the environment and more diversified. In this way we ensure the reliability required gradually replacing fossil fuels which are more costly and polluting.”

Precisely these benefits seek to increase the profitability of the projects, allowing them to be attractive for investment. A reality facing the issue is that the costs of technologies to harness these energy sources have declined in recent years, but still do not compete with energy from water and gas.

Technological upgrading

From the previous technological landscape, the 2143 decree aims to support technological upgrading more efficient equipment, in order to avoid waste and consume less energy and thus compete with traditional energy sources used. The country’s economic competitiveness to energy efficiency benefits would be. According to the Ministry, Colombia has the potential to save up to 10% of the electricity consumed, equivalent to having 2 projects Hidrosogamoso (the country’s largest hydroelectric regarding water storage).

On the other hand, the country’s abundant water resources has made electricity generation focus on this source, that translates into negative consequences for the environment.

Meanwhile, energy- Mining Planning Unit UPME since last September launched a study on “Integration of Non-Conventional Renewable Energy in Colombia” which contains recommendations on the development of projects with this type of energy, which is for example wind proposals in high potential areas such as La Guajira.

The Fund for Non-Conventional Energy and Efficient Energy Management (Fenoge), under Law 1073 of 2015, seek to work in coordination with the energy sector and finance initiatives of unconventional energy sources and achieve efficient management, both with public and private resources and international.

The current regulation of tax benefits worked hand in hand with the Directorate of National Taxes and Customs, the Ministry of Finance and Public Credit, the Ministry of Environment and Sustainable Development and the Ministry of Commerce, Industry and Tourism.

See the decree.

Photo: Portfolio, Economics [photo]. (2014). Recovered from http://www.portafolio.co/economia/marco-legal-energias-alternativas-colombia

Getting the Deal Through – Electricity Regulation 2010

Título: Electricity Regulation 2010
Fecha de publicación: 2010
Descripción de la publicación: Overview of the regulation and business of electricity generation, transmission, distribution and supply, provided by lawyers writing on the markets in their own jurisdictions. Areas covered include: governmental policy, legislative framework and industry overview, government and administrative authorisations, interconnection of generation to the grid, transactions between utilities and their affiliates, access to transmission services and the distribution grid, tariffs and price regulation of transmission, distribution and sales, authorisations, regulators, merger control and competition, special requirements for foreign companies, public service obligations and cross-border electricity supply. Include one chapter of Colombia.
Editorial: Getting the Deal Through
Autor: Gabriela Mancero

Getting the Deal Through – Electricity Regulation 2008

Título: Electricity Regulation 2008
Fecha de publicación: 2008
Descripción de la publicación: Overview of the regulation and business of electricity generation, transmission, distribution and supply, provided by lawyers writing on the markets in their own jurisdictions. Areas covered include: governmental policy, legislative framework and industry overview, government and administrative authorisations, interconnection of generation to the grid, transactions between utilities and their affiliates, access to transmission services and the distribution grid, tariffs and price regulation of transmission, distribution and sales, authorisations, regulators, merger control and competition, special requirements for foreign companies, public service obligations and cross-border electricity supply. Include one chapter of Colombia.
Editorial: Getting the Deal Through
Autor: Gabriela Mancero