On June 15, 2025, the President of the Republic of Ecuador issued Executive Decree No. 32 (hereinafter “Executive Decree“), through which he amended the General Regulations to the Organic Law of the Public Electric Energy Service (hereinafter “RLOSPEE”). Below, we present the most relevant reforms to the RLOSPEE:
Amendments to existing definitions and inclusion of definitions. – The Executive Order replaces the definitions of “Energy Storage” and “Regulated Demand” and includes the definitions of “Preferential Price”, “Public Selection Process” and “Applicant”.
Own generation for high-voltage customers. – Customers (consumers) of high-voltage tariffs must have generation systems to supply their own demand. By exception, its surplus electricity generation may be delivered to the National Interconnected System (hereinafter “SNI”).
These customers, who to date do not have generation systems to supply their own demand, will have a period of 18 months, counted from June 15, 2025, to implement it.
Disconnection of high-voltage customers. – The National Electricity Operator (CENACE), in periods of generation deficit or rationing of the public electricity service, will be the operational authority to disconnect customers from the SNI.
Non-Conventional Renewable Energy generation projects of up to 10 MW. – The Ministry of Energy and Mines (hereinafter “MEM“) may directly delegate, through a concession contract, the execution of Non-Conventional Renewable Energy (hereinafter “NCRE”) generation projects of up to 10 MW, provided that the interested party justifies the technical feasibility, legal, economic, financial and environmental aspects. The MEM will verify that it does not affect projects contained in the Electricity Master Plan (hereinafter “PME”). The MEM will authorize the interested party to take advantage of the preferential conditions of price and dispatch, for which they must sign regulated contracts. When the interested party does not wish to avail themselves of the preferential conditions, they may develop the generation project, subject to authorization by the MEM, whose energy production will be subject to the types of transactions established in the RLOSPEE and other ARCONEL regulations.
NCRE generation projects, greater than 10 MW and up to 100 MW and transition generation projects up to 100 MW. – The interested party must justify the technical, legal, economic, financial and environmental feasibility. The MEM will verify that it does not affect projects contained in the PME. The MEM will authorize the interested party to take advantage of the preferential conditions of price and dispatch, for which they must sign regulated contracts. When the interested party does not wish to avail themselves of the preferential conditions, they may develop the generation project, subject to authorization by the MEM, whose energy production will be subject to the types of transactions established in the RLOSPEE and other ARCONEL regulations.
Priority attention will be given to those clean technology projects with storage capacity that include interconnection networks to the electricity grid of up to 100 MW; as well as transition generation projects of up to 100 MW, which include low-emission non-renewable generation technologies, which allow the gradual transition of the energy matrix, such as natural gas, nuclear, green hydrogen and others that may arise in the future.
Projects through PPS. – For NCRE generation and transition generation projects greater than 100MW, not foreseen in the PME, they will be presented by the private initiative and the MEM will determine if it is in the public interest and, if so, convene a PPS.
Criteria for awarding PPS to transmission projects. – The Executive Decree establishes the criteria to be applied by the MEM for the award of transmission projects subject to a PPS. Among these criteria, the bid that presents the lowest value of the Expected Annual Revenues during the Project’s Revenue flow must be awarded, within the period established for this purpose in the PPS.
Recognition of Swiss Challenge in PPS. – The Executive Decree introduces the concept of Swiss Challenge in the PPS, which was already recognized in the LOSPEE. That is, the proponent who initially submitted the project submitted to PPS may improve the offer compared to other offers submitted within the same process. The conditions for the improvement of the offer will be established in the PPS specifications.
Simplified procedure for granting Enabling Titles for NCRE greater than 10 MW and up to 100 MW. – A simplified procedure is established for NCRE generation projects with storage capacity that include interconnection networks of nominal power greater than 10 MW and up to 100 MW and transitional generation projects of up to 100 MW.
Assignment of the enabling title to financiers. – The enabling title may be transferred to the financiers of the project for serious non-compliance with the concessionaire’s payments and obligations to the financing contracts; and, when the concession contract is breached (enabling title). At the request of the concessionaire’s financiers, it may request to assume directly or through a third party previously evaluated by the delegating entity, the position of the concessionaire. The financiers must be notified in a timely manner by the delegating entity of the concessionaire’s non-compliance, in accordance with the concession contract.
Self-generators do not require the Ministry of Economy and Finance ruling. – For the subscription of the enabling title of a self-generator, the issuance of any opinion by the entity in charge of public finances will not be required. In the event that the enabling title incorporates contingent or budgetary obligations that affect or may affect public resources, the MEM must obtain the opinion of the governing body of public finances prior to signing the enabling title.
Payment guarantees. – The State and the Distributors, following a favorable report from the Ministry of Economy and Finance (hereinafter “MEF“), may establish tools to guarantee the payment of the contractual obligations of the enabling titles and regulated contracts:
- Contingent funds: Mechanism that allows resources to be provided to cover the payment of contractual obligations assumed by the State, these resources may come from its institutions or from third parties.
- Trusts: Mandate for the administration of resources destined to the payment, administration of funds, or coverage of the risks of one or more projects.
- Payment, credit or liquidity guarantees: A financial mechanism or instrument to directly assume payments, finance all or part of obligations or provide liquidity to cover the State’s contractual commitments. Provided by the State itself, its institutions, its companies, or by third parties.
- Other payment instruments: Any instrument that serves to hedge risks of contractual payment obligations.
Payment trust. – Distribution companies will be obliged to set up trusts with the contribution of the end user’s collection, which ensure compliance with the order of priority of payment (e.g. First order of priority is the payment to private parties that execute generation plants). The collection of trust values will not include payments and collections that are collected on behalf of third parties, such as garbage collection fees.
The trusts must be constituted within a period of 180 days, counted from June 15, 2025, with the contribution of the entire collection of the end user for the public service of electricity and general public lighting, which ensure compliance with the order of priority of payments.
Transfer of resources for territorial development projects. – Electricity generation companies that must allocate economic resources for territorial development projects must transfer these economic resources annually to the MEF, until the last working day of May of each year, and immediately report such payment to ARCONEL.
The electric generation companies, on the basis of their financial statements for the previous year, shall disclose to ARCONEL the surplus or profits, as applicable, if any. ARCONEL will control that the generators transfer the resources to the MEF.
Non-reversion of assets. – The RLOSPEE is harmonized with the latest reforms introduced to article 33 of the LOSPEE, with regard to the reversion of assets assigned to the public electricity service. Therefore, in the RLOSPEE, as in the LOSPEE, the assets of generators installed by the end user for self-supply, those of self-generators, cogenerators, and non-conventional renewable energy generators of up to 10 MW are excluded from the reversion obligation.
In the case of non-conventional renewable energy generators of up to 10 MW, this exception is applicable only to initiatives subsequent to the issuance of this regulation. For plants in operation, the provisions of their enabling title will be considered.
Natural gas import licenses. – In the case of generation plants whose source is Natural Gas, the State must grant the facilities to grant or grant import licenses for this fuel, which must be in force during the time of validity of the enabling title.
For more information, please do not hesitate to contact us.
This bulletin contains a summary of legal developments of interest, and therefore cannot be considered as provided advice. If you have any questions, please contact the AVL Abogados team.
