Investors FAQs

What is Colbún?

We are a leading company in the generation of sustainable, reliable and competitive electric power. We are the second largest operator in the Central Interconnected System (SIC) where we have about 20% market share (measured in installed capacity – MW). We are also present in the National Interconnected Electric System (SEIN) of Peru with 9% market share in terms of generation. We develop projects and manage power infrastructure to generate long-term value. We commit our energy through long-term power purchase contracts to large distributors, mining and manufacturing companies since 1986. We are a social player that generates sustainable and shared value with all its stakeholders.

What is Colbún’s main business?

Colbún seeks to generate long-term value by developing and managing energy infrastructure assets to excel in integrating the technical, economic, environmental and social dimensions thereof. Within the scope of the asset management, Colbún’s main business is the generation of electric energy.

What is Colbún’s ownership structure?

Colbún is controlled by Grupo Matte (49.96%), a business group that has investments in the electric, financial, forestry, real estate, telecommunications and port sectors. The remaining shares come from Grupo Angelini (9.58%), Pension Fund Managers from Chile, AFP (19.44%), and Other Shareholders (21.02%).

Who are the members of Colbún’s Board of Directors?

Our Board of Directors is composed of nine members who may be re-elected indefinitely, and may or may not be shareholders. Currently, of the nine incumbent members, two are independent.

Our Board is made up of the following members: Juan Eduardo Correa García– Chairman, Vivianne Blanlot Soza – Vice Chairman, María Ignacia Benítez Pereira (independent), García, Luz Granier Bulnes (independent), Bernardo Larraín Matte, Andrés Lehuedé Bromley, Arturo Mackenna Íñiguez, Jorge Matte Capdevila and Francisco Matte Izquierdo.

The Board of Directors appoints the Chief Executive Officer, who exercises all the powers and undertakes all the obligations pertaining to a business agent and others contemplated by the law, as well as those that the Board of Directors may expressly establish.

What is Colbún’s installed capacity?

We have a diversified portfolio of hydroelectric power plants (reservoir and run-of-the-river) and thermoelectric power plants (coal-fired and combined and open cycle with natural gas and/or diesel) contributing power by 3,852 MW in Chile and Peru. Hydroelectric power plants add up a capacity of 1,589 MW and are distributed in 16 power plants, of which four have their respective reservoirs. Likewise, thermoelectric power plants add up a capacity of 2,255 MW and are distributed in 8 power plants, of which 3 are combined cycle with gas or diesel, 4 are open cycle with diesel and one corresponds to a coal-fired power plant. Thermo power plants are located both in Chile (7 plants) and Peru (1 plant).

What is Colbún’s commercial policy?

One of the most relevant pillars of our business is the Company’s commercial policy that defines the contracting level, the prices and their indexing factors as well as the corresponding commercial clauses whereby we seek to share the risk with the clients. To that end, we take into consideration several factors, namely: our generation matrix, sale price levels, indexation mechanisms, other mechanisms and clauses to share the risks with the customers, the projections of our new capacity and the system’s capacity, and the evolution of spot prices, among others. The above added to statistical data and simulation models enable us to determine our optimum contracting level.

Colbún’s commercial policy seeks to establish a contracting level that is in agreement with its competitive generation capacity, with indexation factors that are compatible with the cost structure of a mild to dry year. Such policy results in committing the energy produced by our base capacity facilities in long-term contracts, e.g. hydroelectric power plants (assuming generation under mild to dry hydrological conditions) and our efficient thermoelectric facilities considering a reasonable availability factor.

Who are Colbún’s main clients?

Generation companies and therefore, Colbún may: (i) commit to sell energy to customers through contracts (generally medium/long term); (ii) sell their energy production to other generation companies with a deficit in the spot market; (iii) or select a mix of both. The generation companies may sign contracts with three types of customers:

  • The regulated customer market, made up of distribution companies
  • Non regulated customers where contracts are negotiated freely with their suppliers
  • Lastly, it is possible for a generation company to commit to supply power to another generation company through a contract which price is negotiated freely.

What are the short and long-term node prices?

In Chile, the Short-Term Node Price is used for contracts subscribed with regulated customers before 2005. It is calculated twice a year by the National Energy Commission (CNE) by means of a method that calculates the average of the marginal costs or spot prices expected for the next 48 months, based on assumptions of new capacity, growth in demand, fuel costs, among others. Since the “Short Law 2” was published in May of 2005, sales prices to distribution companies must be the result of public, open and transparent bids. Therefore, in the measure that the contracts subscribed before 2005, the Short Term Node Price calculated by the CNE will no longer be used to sell to distribution companies. Long-Term Node Prices include indexation formulas that incorporate indicators such as the United States’ inflation index, fuel price indices namely diesel and coal, and even indexation to energy prices in the spot market, among others.

What is Colbún’s expansion plan?

The company is looking for growth opportunities in Chile and in countries in the region such as Peru and Colombia, to maintain a relevant position in the power generation industry and diversify its sources of income.

In Chile, Colbún has several potential projects, in different stages of development:

San Pedro hydroelectric project (160-170 MW): This project, located in the communes of Panguipulli and Los Lagos, will take advantage of the waters of the San Pedro river. The company has concluded the analysis of the surveys and geotechnical and land surveys carried out during the years 2010 to 2014. This has involved some adjustments to the original project, which are being analyzed. Notwithstanding the foregoing, the Company is preparing the background to carry out the re-entry of the EIA and in parallel, developing a plan of action with municipalities, public services, regional authorities, indigenous communities in order to socialize the project with these actors .

La Mina hydroelectric project (34 MW): This project, located in the commune of San Clemente, will take advantage of the waters of the Maule River. The project, which qualifies as a mini-hydro ERNC, obtained its Environmental Qualification Resolution in November 2011 and in May 2013, the approval of the EIA for optimization. In April 2014, the DGA granted the permit of hydraulic works. In September, the DIA received the approval of the high voltage line that will connect the project to the SIC and authorized the start of construction of the project. The Project was approved in September 2014 and began construction in January 2015 until April 2017. It is expected to enter commercial operation during the third quarter of 2017.

Guaiquivilo Melado hydroelectric project: is a hydroelectric complex located in the basins of the rivers Guaiquivilo and Melado, in the commune of Colbún, Province of Linares. It has a total power of 316 MW and an average annual generation of approximately 1,629 GWh. During 2017 continues the preparation of the Environmental Impact Study and the development of engineering of the last adjustments to the project.

Los Cuartos hydroelectric project: The Los Cuartos hydroelectric project is located on the Biobío River, near the town of San Carlos de Purén. This hydroelectric power plant has water rights that allow to reach a power of 93 MW, with an average annual generation of approximately 511 GWh. The project also considers an electric transmission line of 10 km in length to connect in the Mulchén substation. The project is in definition from the point of view of the business to be able to continue its development in the basic engineering stage.

El Médano hydroelectric project: El Médano is a hydroelectric project, which is located after the La Mina project on the Maule river. This includes an installed capacity of 6 MW and an average annual generation of 26 GWh, whose generated energy will be evacuated through the transmission line of CH La Mina. The Medano is conceived as a compact work, that is to say, in a same structure is concentrated the capture, the engine room and the restitution to the river. During 2017, the development of basic engineering and the preparation of the antecedents to carry out the processing of the DIA, continued in July of this year.

Colombia and Peru are markets of interest to the company due to its attractive economic environment and its electrical sectors have a well-established regulatory framework. In addition, participating in markets such as these can improve diversification in terms of hydrological conditions, generation technologies and access to fuels.

In the context of internationalization, in December of 2015 Colbún, through a consortium where it participates with 51% bought the company Fenix Power Peru S.A. The company has a natural gas combined cycle thermoelectric plant of 570 MW in the Chilca district, 64 kilometers south of Lima.

Does Colbún participate in other companies?

Colbún participates in 3 related companies:
1. Colbún holds 49% share in the ownership of Hidroeléctrica Aysén S.A. (“HidroAysén”) the company that seeks to execute the HidroAysén Project. This project, which is the principal investment initiative in the development of hydroelectric energy in the country, consists of the construction of 5 power plants in the Aysén region, utilizing the resources of Baker and Pascua rivers. The total installed capacity will amount to 2,750 MW.

2. Colbún holds 42.5% ownership share in Electrogas S.A. the company that operates a 130 km gas pipeline between the terminal San Bernardo and Quillota, through which the Nehuenco complex is supplied. Electrogas S.A. also operates a 21 km pipeline between Concón and Quillota, which supplies oil to the same complex and a 28 km gas pipeline between Quintero and Quillota which carries re-gasified natural gas from the liquefied natural gas terminal situated in Quintero.

3. Through Transquillota Ltda., Colbún holds 50% of San Luis substation and the 220 kV-line that connects to the trunk system through the Quillota substation. Our Nehuenco complex and Endesa’s San Isidro and Quintero power plants add up a total of 1,850 MW and inject their production into the SIC by means of the Transquillota transmission system.

What are the main risks faced by Colbún?

Colbún faces risks associated both to external factors as well as others relating to the main Company’s line of business, such as:
1. Risks of the power business:

  • Hydrological conditions
  • Fuel prices
  • Fuel supply
  • Equipment failures and maintenance
  • Project construction
  • Market related factors
  • Regulatory environment
  • Demand/Supply variations and power sale price changes

2. Financial Risks:

  • Rate of exchange
  • nterest rate
  • Credit
  • Liquidity

What is Colbún’s commitment with sustainability?

Our goal in Colbún is to create long-term value by generating reliable, competitive and sustainable energy to meet the power demands of our country. In order to achieve this in a sustainable manner, we need to generate shared value with all of our stakeholders:

  • With our workers, with whom we commit to provide a high quality employment and a work environment that fosters collaboration and personal development.
  • With our investors, by contributing value to the company, maximizing the long-term value of its assets through an outstanding management and a sustainable and profitable growth.
  • With the environment, balancing the pillars of safety and competitiveness with the sustainability pillar, minimizing the impact on the environment.
  • With the communities and the society, seeking to promote local development; the Company is committed to provide clear and transparent information about its projects and operations.
  • With our clients and suppliers, we are committed to provide information and analyses to facilitate decision making.
  • And with our contractors and suppliers, we are committed to exchange best practices, and to promote high safety, quality, environmental and social standards.

Where are Colbún shares traded?

The Company’s shares are traded on the three Stock Exchanges of Chile: the Santiago Stock Exchange (CM account name: COLBUN), the Valparaíso Stock Exchange (CM account name: COLBUN) and the Electronic Stock Exchange (CM account name: COLBUN).

What is Colbún’s risk rating?

Colbún has a national risk rating A + by Fitch Ratings, AA- by S & P Chile and AA- by Humphrey’s, all with a stable outlook. At an international level, the Company has a BBB rating by S & P Global and BBB by Fitch Ratings, both with a stable outlook.

What is our current dividend distribution policy?

The general policy on dividend distribution is agreed every year at the Regular Shareholders’ Meeting. The distribution of dividends was established for the equivalent to 30% of the net profits obtained during the business period. This policy will materialize by the distribution of a provisional dividend decided by the Board of Directors during the last quarter of the year and a definite dividend that will be distributed after the Regular Shareholders’ Meeting of the following year. The above is notwithstanding the Board’s powers to propose to the Regular Shareholders’ Meeting the distribution of additional dividends, provided the Company has enough profits and liquidity to pay those dividends. The Management deems that this policy will be maintained over the coming years.

What is the Company’s insurance coverage level?

We have diverse insurance policies in place with deductible levels that are in agreement with industry standards, namely:

  • Full-risk coverage for physical assets including machinery breakdown and business interruption losses for all our plants and substations.
  • Civil liability coverage for Colbún S.A., for damages caused to third parties and third party property.
  • Civil liability coverage for the Company’s board members and top management.
  • Life and casualty insurance coverage for Company’s employees and full-risk insurance coverage for the Company’s vehicles, buildings, chattel property and electronic equipment.
  • Full-risk coverage for construction and assembly risks, including transportation, civil liability and start-up delays for investment projects under execution.