Towards Distribution Revenue Adequacy in Chile: Lessons Learned from Australia

The integration of distributed PV has raised several concerns on the distribution financial adequacy. Due to the Chilean's regulation on energy distribution rates, most distribution costumers own traditional meters, which are only capable of measuring energy. As a result, one part of the income obtained is employed on financing the energy generation, and another covers distribution's infrastructure costs. When PV integration occurs at the distribution level, the energy consumed by the distribution's clients decreases, so, correspondingly, both energy and infrastructure collection decrease as well. While the reduction on the energy's collection does not significantly affect the distribution operation, the reduction on the part of the collection set aside for distribution's infrastructure is not related with a significant reduction on investment nor operational costs of the distribution systems. Thus, a financial imbalance may happen, which may discourage PV integration from a public policy perspective. This work describes the financial problem of PV integration and distribution financial adequacy and examines the experience of Australia on the matter.