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6.3. Payment for use of networks

As described in section, the payment of the transmission is an aspect that was recently modified by the new Law 20.936 of 2016. The principle of this legal modification was based on the need to move from a payment system based on the allocation of costs and complex to calculate, to a simpler and transparent system of stamp to demand. Due to the great change that this means for the market and the agents, a transitional regime was established that is detailed below and that tries to make a smooth transition and harmonic, while avoiding double payments by the consumers.

Until December 2018, the National Transmission payment regime maintained the principles of the old system. That is, under the following criteria:

  • The charge of the transmission system considers the following two components: payment for use of the facilities corresponding to the common area of influence and for the facilities outside this one.
  • In the sections belonging to the common area of influence, generation plant owners will finance 80% of the total charges, in proportion to the expected use of their injections of each segment of transmission system. The remaining 20% is paid for withdrawals.
  • Outside of the common area of influence, when power flow goes towards the common area of influence, the transmission cost will be allocated to the owners of plants located upstream of the power flow, prorate according to actual usage of generation assets on different transmission segments. On the other hand, when power flow does not goes towards the common area of influence, the payment of the total charge of the transmission segment shall be assigned to the companies that make withdrawals downstream of the power flow, in proportion to their usage.

During the period between January 1, 2019 and December 31, 2034, the system of payments for the use of the National Transmission System by the generating companies will differentiate between injections and withdrawals according to the date of the associated contract.

For injections and withdrawals associated with supply contracts entered into prior to the entry into force of the Law 20.936 (July 2016), the same principles of the old system will be applied, but with some adjustments. One of the most relevant adjustments corresponds to an adjustment of the charge to pay for the injections for each year, which will cause a gradual decrease of the payment until completely eliminated in the year 2034, as indicated in Figure 34. The difference will be absorbed by the final customers through a single charge. Likewise, for the calculation of charges during this period, the installations of the national system whose date of entry into operation will not be later than December 31, 2018, nor the facilities associated to the SIC – SING interconnection will be considered. Both will be fully paid by the final customers through a single charge. The detail of other adjustments for the payment of charges of injections associated with contracts prior to transition period is found in Transitional Article twenty-fifth of Law 20.936.

The injections associated with supply contracts after the entry into force of the Law were not subject to the payment of charges for the use of the national transmission as of January 1, 2019.

With the amendment of the Law of 2016, the use of Zonal Transmission Systems is 100% charged to final customers and therefore generators are released from this payment [36].

The Law 20.936 of 2016 establishes that the unused capacity of the Transmission Systems for Development Poles will be remunerated by the single charge, and the annual value not covered by this charge, that is, the capacity used of the pole of development will be remunerated by the generators that injected in this system [37].

The single charge is determined with the installed capacity of generation and transmission, and will be calculated up to seven tariff periods, from then on, the existing generation capacity will be calculated [38].

The payment of charges for use of the distribution system is only applicable in the event that a generator has a supply contract with a free customer located in the concession area of a distribution company. This free customer constitutes a retirement for the NCRE generator. In this case, the value of the charge will correspond to the component paid by users regulated by the use of the distribution facilities. This component is known as Value Added Distribution (VAD), and is determined every 4 years. The value of these charges is regulated in S.D. N°99/2005, which establishes the formulas to determine their amount.

It is important to note that distributed generation projects of up to 300 kW (Law 21.118) do not pay distribution charges.