What Shapes Regulated Electricity Contract Prices in a Hydro-Thermal Power System? Evidence from Colombia Using Quantile Regression and Autoencoders

A. Oviedo-Gómez, J.D. Minotta Saenz, O. Joaqui-Barandica

Electricity Vol. 7, nº. 2, pp. 51

Summary:

This study examines the determinants of regulated electricity contract prices in Colombia during the period 2009–2021, with a particular focus on the role of electricity-market fundamentals and macroeconomic conditions. Although regulated contracts are designed to reduce exposure to short-term volatility, limited evidence exists on how their price formation behaves across different segments of the distribution. To address this issue, the analysis combines quantile regression with autoencoder-based dimensionality reduction, allowing the incorporation of a large set of macroeconomic variables without overparameterizing the model. The results show that regulated contract prices are more consistently associated with electricity-system factors than with broad macroeconomic conditions. In particular, the spot price becomes significant only in the upper quantiles, where it appears to operate as an indicator of operational stress, while hydropower and thermal generation exhibit localized effects across the distribution. By contrast, most macroeconomic factors display weak, uneven, or non-significant effects, with only the exchange-rate-related component becoming clearly relevant at relatively high price levels. A robustness analysis based on principal component analysis broadly supports these patterns. Overall, the evidence suggests that the Colombian regulated market behaves as a relatively stable contractual system, in which price formation is shaped mainly by electricity-sector conditions, indexation rules, and long-term risk-management mechanisms, while macroeconomic influences appear more limited and non-uniform across quantiles.

Spanish layman's summary:

La investigación evalúa los determinantes del precio de los contratos bilaterales del mercado regulado en Colombia. Usando una regresión por cuantiles y autoenconders, se halla que los factores del mercado eléctrico determinan los precios, mientras que los factores macroeconómicos tienen efectos limitados, exceptuando la tasa de cambio en condiciones de precios altos.

English layman's summary:

The study evaluates the determinants of regulated electricity contract prices in Colombia. Using quantile regression and autoencoders, it finds that electricity market fundamentals drive prices, while macroeconomic factors have limited effects, except exchange-rate conditions at high price levels.

Keywords: regulated contracts; electricity prices; quantile regression; autoencoders; Colombia

JCR-JIF Impact Factor and WoS quartile: 1,800 - Q3 (2024)

DOI reference: https://doi.org/10.3390/electricity7020051

Published on paper: June 2026.

Published on-line: June 2026.

Citation:
A. Oviedo-Gómez, J.D. Minotta Saenz, O. Joaqui-Barandica, "What Shapes Regulated Electricity Contract Prices in a Hydro-Thermal Power System? Evidence from Colombia Using Quantile Regression and Autoencoders", Electricity, Vol. 7, nº. 2, pp. 51, June 2026. [Online: June 2026] doi: 10.3390/electricity7020051