Experience and new challenges in the Chilean generation and transmission sector

The Chilean electrical sector was deregulated in 1982, where unbundling was applied, and generation competition and marginal costing were introduced. Description of the main features of the generation market and system operation is presented, followed by a synthesis of the main achievements and difficulties experienced in the practical application. The experience with the troubles faced in the reformed power sector after 18 years is used to look at the possible advantages of the second stage of deregulation. The challenges of a new legislation, where the system is expected to join the second generation of deregulation are discussed. Advantage and risks of opening the energy market with a bidding system separate from ancillary service market are analysed. The experience with the troubles faced in the reformed power sector after 18 years is used to look at the possible advantages of the second stage of deregulation.