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5.3. Connection costs

In general terms, connection costs related to transmission equipment, substation, protection, control and measurement systems must be considered as part of a generation project. This equipment is necessary to safely inject energy from the power plant into the electric system, respecting the minimum technical requirements established in the regulations and standards (time periods, minimum design standards of the installations, security standards and service quality, operation and monitoring of installations). These costs form part of the project and the amounts depend on each specific project.

In addition, in the case of connections to distribution networks, the regulations envisage possible connection costs that are outlined in the following section.

Both PMGDs and projects under the Netbilling Law must pay connection costs to access the distribution networks.

The text that regulates this matter with regard to PMGD is DFL N°4 of 2007 in its article 149, which states in its sixth paragraph that all additional works that are necessary to allow the injection of power to the networks of distribution are borne by the owners of the means of generation. Specifically, the above article states that the following:

“Concessionaries of the public electricity distribution service, as well as those companies that possess electricity distribution lines that make use of public, national assets, shall allow connection to their distribution installations by generators whose capacity surplus supplied to the electric system does not exceed 9.000 kilowatts, notwithstanding compliance with current security and service quality requirements. The additional works needed to enable the injection of that capacity surplus shall be carried out by the owners of the respective distribution system and their costs will be charged to the generator owners, in accordance with the regulations. To calculate these costs, the additional costs in adjacent zones of the injection point will be taken into consideration as well as the cost savings in the rest of the distribution network, in accordance with the procedures defined in the rules. The value of these additional installations will not be considered as part of the new replacement value of the respective distribution company”

According to the S.D. N°88/2019, the additional works, adjustments or adjustments that are necessary to allow the injection of the excess power of the PMGD must be executed by the corresponding distributors. The costs of said works must be consigned in a connection cost report and will be borne by the owner of a PMGD. By resolution, the CNE will define the unit costs of the various components that make up the works of this nature, as well as their application conditions. Prior to this, the CNE must issue a technical report with the calculations for the definition of said costs.

The costs of connecting the projects under the Netbilling Law are solved by the owners of the generation systems. However, these costs should, in general, be considerably less than the connection costs of a PMGD.

In the event that additional works are required for the connection, the distribution company must indicate through electrical studies those additional works and/or adjustments that are technically necessary for a correct connection of the generation equipment to the distribution network. The CNE will issue a technical report with the unit cost calculations of the various components that make up these works and will be defined by resolution. The valuation of the works must be calculated considering the necessary requirements to maintain the standards of safety and quality of supply in the current standard.

This calculation should consider the values of each of the components of the additional works and/or adjustments, associated assembly costs, and the surcharges established in the procedure for determining the New Value of Replacement (VNR) of the distribution facilities, established by the Superintendency.

Likewise, if the fitting connection of the splice is required, the costs associated with its extension and replacement shall be borne by the owner of the generation equipment.

The current regulations do not include connection costs to the transmission systems. The costs attributable to a generation project are established in the charges that it must pay for the use of the transmission systems 17. However, the transmission facilities necessary to connect the generation project to the system are the responsibility and cost of the owners of the generation projects themselves. In addition, it should be mentioned that the Coordinator defines a set of technical requirements necessary for the integration of new generation sources, which may result in expansions of transmission systems, which, if considered as necessary works of expansion, will be financed by all users (see Section to review the payment principles of the transmission network). In the case of Dedicated Transmission Systems, their extensions are negotiated between the owner and the user.