President Gustavo Petro stated during yesterday’s Council of Ministers meeting that energy companies in Colombia are abusing service fees.
Petro denounced that through a 30-year-old model “that must be stopped,” an “oligopoly of electric power generation companies is stealing funds that should benefit users and Colombia’s productive sector.”
The Council of Ministers addressed the issue of rising public service prices, particularly impacting the Caribbean coast. The government approved an intervention plan to generate solar energy in the region, aiming to lower energy costs and ease the financial burden on consumers.
Petro denounces energy ‘oligopoly’ in Colombia
In a serious accusation, Gustavo Petro claimed that energy generation companies in the country form an “oligopoly” and argued that Colombia’s three-decade-old energy system must be reformed.
“It’s absurd, a kind of feudalism, and one of the major acts of corruption in Colombia. Trillions of pesos are transferred annually from the pockets of every Colombian—poor or rich—and from the country’s productive economy, which loses competitiveness because of this, as it’s a production cost,” the president asserted.
He added that this inflated production cost caused by corrupt practices is “harmful to all national production, whether from small, medium, or large businesses. Literally, money is being stolen—not by politicians, but by an oligopoly of electric power generation companies, primarily hydroelectric.”
“These costs have been passed on to users across Colombia through service fees, which is why this is one of the factors behind the scam,” he said, noting that the government has spent two and a half years trying to adjust the formula to provide fairer rates.
Shortly after taking office in 2022, Colombia’s president sought to intervene in the energy market through a decree, arguing that the Constitution protects access to energy as a fundamental right.
However, the Council of State suspended this presidential decree, which had granted the government authority to regulate the energy market.
A model that favors private interests, according to the Government
Regarding Colombia’s energy system, Minister of Mines and Energy Edwin Palma described it as “a 30-year-old model, as we explained here, that favors private interests because there is no public involvement. We saw how Isagen [a state-owned energy company] was sold, and that has clearly harmed users.”
The minister emphasized that given this situation, “citizens must take ownership of energy and generate their own power,” referring to self-sufficiency and solar energy initiatives, a model the government began implementing months ago in some rural areas.
Palma accused energy companies of “manipulating service fees.” “We’ve shown the Colombian people how there’s a kind of manipulation to keep electricity costs high. We’ve demonstrated how crucial it is for this government that citizens have affordable electricity, as it is also a vehicle for social mobility,” he stated.
Finally, the minister noted, “We reviewed the country’s electric power system. We explained to citizens, to the Colombian people, how it works and how they can not only stop being customers but also generate their own energy to reduce rates and avoid mistreatment by some distribution companies, as we’ve shown here.”
Colombia’s energy model, strengths and weaknesses of a 1990s framework
In the 1990s, Colombia overhauled its energy model with the passage of Laws 142 and 143 of 1994, which opened the electricity sector to market forces—a system the current minister recently labeled “the neoliberal model.”
This reform aimed to ensure efficiency, coverage, and sustainability by establishing a system based on competition among energy generators, transmitters, distributors, and marketers.
The new model led to the creation of the Energy and Gas Regulatory Commission (CREG) and market operator XM, overseen by the Mining and Energy Planning Unit (UPME). In theory, separating roles and promoting free competition would enable more efficient supply and fair prices for users.
However, over time, structural flaws have emerged. Reliance on hydropower—which accounts for nearly 70% of generation—makes the system vulnerable to phenomena like El Niño, jeopardizing energy supply.
Additionally, the model has concentrated power among few companies, stifling real competition. In remote regions, service remains costly and unreliable, particularly in the historically underserved Caribbean area.
Critics also highlight the lack of effective incentives for non-conventional renewable energy, whose integration has been slow. Meanwhile, rising service fees continue to fuel public discontent.
For months, President Petro’s government has denounced its inability to intervene in the market to lower prices, as seen in other regional countries.
‘Casas del Sol,’ the Government’s self-sufficient, sustainable model to avoid service fee abuses
To address this, Minister Palma announced CREG’s final approval of a resolution enabling the nationwide implementation of “Casas del Sol” (Houses of the Sun), previously called Energy Communities.
The measure, he said, will benefit over 500,000 families, allowing them to generate and sell energy collectively while enabling new self-generation and grouped generation schemes.
“This will pave the way for democratizing and decentralizing energy, placing users at the heart of energy development. Besides accessing sustainable green energy, they’ll earn income by selling surplus power,” the minister affirmed.
Palma also highlighted the resolution’s innovative “virtual aggregation of borders” feature, which will integrate users in different geographic locations, provided they belong to the same local distribution system and market.
Lastly, the government outlined its plan for unsecured loans to help citizens install solar panels for self-sufficient, sustainable energy generation.
President Petro specified that these loans will target lower-income populations, particularly vulnerable families and sectors.