Through CREG Resolution 101 125 of 2026, Colombia’s Energy and Gas Regulatory Commission (CREG) opened an exceptional, temporary window allowing electricity retailers serving regulated customers to contract energy directly with market participants authorized to sell energy, without going through public calls for bids, in order to increase contract coverage during the 2026-2027 El Niño event.
As a general rule, energy purchases to serve regulated customers must be carried out through mechanisms that promote competition, within a regulatory framework based on transparency, neutrality and efficiency. The new resolution creates a temporary exception, expressly authorized by CREG to address the current circumstances.
Why was direct contracting authorized?
According to CREG, the measure is intended to reduce regulated demand’s exposure to spot-market prices during a period of low hydrology and high price volatility. As of July 20, 2026, retailers’ spot-market exposure stood at around 13.6% of their obligations. CREG further projected that regulated-market exposure could reach approximately 30%-35% during the critical window in late 2026 and 2027 as contracted coverage declines.
Against this backdrop, CREG warns that greater spot-market exposure could translate into sharp and volatile increases in the energy procurement component (G) of regulated customers’ tariffs. By introducing this flexibility, the Commission aims to enable faster contracting and broaden the available options for securing coverage, particularly through contract structures such as the PCEV, under which delivery is contingent on the seller’s energy available for sale on the spot market.
A temporary window subject to specific limits
- Contract types: the permitted structures are Pay-as-Contracted (PLC), Pay-as-Contracted Conditional on the Seller’s Surplus Energy (PCEV), and Pay-as-Demanded (PLD).
- Maximum quantity: each retailer may contract directly only the portion of its monthly regulated demand that is not already covered through public calls for bids, auctions administered by the Ministry of Mines and Energy, or the other authorized procurement mechanisms identified in the resolution.
- Price: the hourly price vector must be fixed in nominal Colombian pesos when the contract is executed and may not be indexed to variables whose future values are not yet known, such as the spot-market price or Mc. Mc is the weighted average cost of energy purchased under contracts resulting from the public calls for bids currently in force for serving the regulated market.
- Related-party purchases: quantities contracted directly with generators or retailers with which the buyer has a control relationship count toward the regulatory limit on own purchases.
- Tariff pass-through cap: during the first half of each contract, the amount that may be passed through to regulated customers is capped at the lower of the agreed contract price and 1.5 times Mc; during the second half, it is capped at the lower of the agreed contract price and Mc. The cap applies separately to each contract.
Contracts entered into under this measure are excluded from the calculation of Mc.
XM has published the contract registration procedure
XM has published the registration procedure for contracts entered into under CREG Resolution 101 125 of 2026. According to XM, the deadline for submitting a registration request is Friday, September 25, 2026. Requests must be filed through the Contract Registration System (SRC); if the platform is unavailable or experiences technical issues, ASIC has provided an alternative filing mechanism.
The supply period must begin no later than March 1, 2027, and the contracts may remain in effect through December 31, 2027, at the latest, with no possibility of extension.
It remains to be seen whether this added flexibility will achieve its intended purpose: turning a more agile negotiation process into additional contract coverage for regulated demand. Once the window closes, the indicators that XM is required to publish will allow the market to assess how much energy was contracted, the extent to which spot-market exposure was reduced, and the level of participation in the mechanism.