Power interconnections in the Andean Community: what are the lessons in terms of price differences between Colombia–Ecuador and Colombia–Venezuela cross-border trading?

Abstract Power interconnection is the process by which two or more countries, or two or more power markets within a country, decide to connect their power system in order to develop a partial or full power market, for competition, security of supply, facilitating trading, environmental or efficiency reasons. It has been part of the Andean Community agenda since 2002, with the Decision 536 of 2002, as one of its 12 strategic areas; under its rules, Colombia and Ecuador developed their power interconnection, with a power price per GWh cheaper than the price on the Colombia–Venezuela power interconnection, which is based on a Power Purchase Agreement. In order to reduce power prices from Colombian to Venezuela, to the current levels of Colombia–Ecuador cross-border trade, Colombia and Venezuela would sign an International Treaty that allow them to develop a power interconnection legal framework, with similar rules that those established in Colombia–Ecuador interconnection. It is important to take into account that the price reduction is based on the current conditions between the analysed power interconnections. Perhaps under other conditions the conclusion would be different, but the path is not ready in the AC for a cross-border free market.