Rincón Distances Herself from Government’s Electricity Rate Hike Plan: «We Will Review the Proposal»

Original article: Rincón toma distancia del proyecto del Gobierno por alza de la luz: “vamos a revisar la propuesta”

The Government Proposed a Formula Combining a Unique, Transparent Charge Limited in Time with a Focused Subsidy to Prevent the 40% Most Vulnerable from Bearing the Burden of Rate Increases

«We will review the proposal,» stated incoming Energy Minister Ximena Rincón as she distanced herself from the current government’s initiative to address the electricity rate hike.

It is important to note that the Superintendence of Electricity and Fuels (SEC) has requested electric distribution companies to collect outstanding balances associated with the rate freeze approved in 2019.

According to SEC figures, the debt accumulated between 2020 and 2024 amounts to approximately $730 billion and is set to begin repayment in April over a period of 48 months.

In light of this situation, President Gabriel Boric’s administration has proposed a legal initiative that includes an average monthly fixed charge of $1,450 per household for 48 months, supplemented by a state subsidy focused on the most vulnerable 40% of the Social Household Registry.

However, the future secretary of state avoided committing to the support of the incoming government led by José Antonio Kast.

After a meeting with current Energy and Economy Minister Álvaro García, Rincón emphasized that «for the elected president, the issue of transparency in rate-setting and ensuring that the public pays the lowest possible cost for energy is important.»

«We need to review this proposal and discuss it with technical teams, the president-elect, and the finance minister to determine our position regarding the project announced by the outgoing government,» added Rincón, also an elected senator, indicating that there is currently no formal commitment to the proposed mechanism.

Rincón’s comments reveal a clear divergence from the inherited project, especially as rising electricity bills have become a pressing concern for citizens. The position of the next government, led by José Antonio Kast, remains undefined and will be analyzed in the coming weeks.

A «Financially Viable and Socially Responsible» Solution

Following the meeting, Minister Álvaro García outlined the scope of the initiative and defended its relevance.

«We will propose to the incoming authorities a repayment method for this debt consistent with what was done earlier with the generators’ debt, a solidarity formula that prevents the most vulnerable population from bearing the increase in electricity debt. We will propose a bill that establishes a unique repayment charge of $1,450 additional per month for all regulated residential customers, over 48 months,» detailed the official.

«We have emphasized our proposal that this be implemented as a unique, transparent charge for all customers, while simultaneously advancing a subsidy to ensure that the most vulnerable 40% do not pay this increase in rates,» he said.

According to official estimates, the subsidy would cost around $15 billion, while the projected revenue from the unique charge would reach approximately $19 billion, which, according to García, would cover the benefit without causing a negative fiscal impact.

«It is a technical, financially viable, and socially responsible solution,» he emphasized, adding that «the more a family consumes, the more they will pay; while the less they consume, the less they will pay. What is equalized is the cost of the kilowatt-hour,» he noted, as reported by Diario U. de Chile.

Nonetheless, the political viability of the project will largely depend on the decision made by the incoming administration. When asked about this, the biminister acknowledged that the fate of the initiative is subject to the timeline and decisions of the new government. «This bill only makes sense if a political process occurs. It is quite natural for the future government to take some time to analyze it,» he said.

Although she refrained from commenting on the specific content of the project, Ximena Rincón affirmed that «the minister is in office, his term ends on March 11, and they have evaluated, after the superintendent has made a proposal and worked more with an expert committee, a solution that they will introduce with a bill for parliamentary discussion.»

«We will review the proposal,» she reiterated.

With this approach, the Government aims to set the groundwork for a solution to the normalization of electrical debt, providing the next Executive with a «technical, financially viable, and socially responsible» proposal to address the impact of increasing electricity bills. However, the ambiguity regarding support from Kast’s government leaves the future of the initiative in a state of uncertainty.

The final decision is expected to be revealed in the coming weeks once the incoming team completes its technical and political review of the project. Until then, uncertainty looms: neither a commitment nor a rejection, just a review.