In Chile, electricity consumers face the ongoing effects of the Mecanismo de Protección al Cliente (MPC), introduced to recuperate nearly US$6 billion of generator debt accumulated due to tariff freezes from 2019 to 2022. The MPC surcharge applies to monthly electricity consumption exceeding 350 kWh and affects both regulated customers and free consumers, who comprise large industrial and mining clients. Between 2024 and 2027, the tariff is set at 22 Chilean pesos per kWh above the threshold, decreasing to 9 pesos per kWh from 2028 to 2035, with biannual inflation adjustments. Exceptions apply to micro and small enterprises consuming under 1,000 kWh monthly on average.
Free market clients are subject to MPC charges based on their transition date from regulated tariffs. Those migrating from regulated to free market status between late 2019 and mid-2022 pay until 2027, while later migrants remain liable until 2035. Although free consumers did not directly benefit from prior tariff freezes, they contribute to debt service, which raises questions of cost allocation fairness. However, these clients possess greater contractual flexibility to negotiate mitigation measures, potentially easing financial pressure.
The MPC mechanism adds complexity to energy cost structures, particularly for sectors like mining and industry, where electricity consumption is significant. Companies are prompted to reassess energy procurement and efficiency strategies to limit MPC impact. Meanwhile, regulatory reviews have identified prior tariff calculation errors that inflated bills, suggesting potential tariff reductions in selected regions, adding further dynamics to Chile’s evolving electricity landscape.
This article was curated and published as part of our South American energy market coverage.
