1. What is the main activity of EPM?
Empresas Publicas de Medellin E.S.P. (hereinafter, "EPM" or the "company") is the parent company of an economic group
consisting of 50 companies with presence in Colombia, Chile, El Salvador, Guatemala, Mexico and Panama.
EPM is an industrial and commercial government-owned company that was founded on August 6, 1955 in Medellin (Colombia´s second largest city).
EPM is the largest multi-utility company in Colombia, with market-leading businesses in the Power and Water sectors. EPM participates in the power sector through generation, transmission, distribution and commercialization of electricity and distribution and commercialization of natural gas. In the water sector, EPM participates through water and sewage businesses.
Since 2010, EPM started its international expansion and currently has presence in Central America, Mexico and Chile.
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2. What is the business infrastructure of the EPM Group?
The EPM Group has the following main business infrastructure by country:
o Power (Generation, Distribution, Transmission)
- 29 hydroelectric power plants (3,050 MW) - Ituango is the main hydroelectric generation project in Colombia under construction and will have an installed capacity of 2400MW.
- 3 thermal power plants (544 MW)
- 1 wind power park (19 MW)
- T&D Lines (185,636 km)
- 321 Power substations
- 250,604 Power distribution transformers
- Gas natural distribution network (7,152 km)
- 16 Gas service stations
- 29 potable water plants
- Potable water network (4,585 km)
- Sewage networks (4,983 km)
- 2 wastewater treatment plants: El Retiro and San Fernando (1,800 lps). Aguas Claras Park - Waste Water Treatment Plant under construction (located in the municipality of Bello).
Solid Waste Management
- Collection, transport and final disposal of waste (1,800 tons per day)
- 1 Landfill for solid waste final disposal
- 125 trucks
Power (Distribution, Transmission)
- T&D Lines (15,813 km)
- 76 Power substations
- 66,789 Power distribution transformers
o Power (Distribution, Transmission)
- T&D Lines (10,571 km)
- 27 Power substations
- 21,270 Power distribution transformers
Power (Generation, Distribution, Transmission):
- 1 hydroelectric power plant – Bonyic (32 MW)
- Distribution Lines (10,610 km)
- 15 power substations
- 28,777 power distribution transformers
- 2 residential water desalination plants (756 lps)
- Potable water network (300 km)
- 2 potable water plants (1235 lps)
- 1 wind power park – Los Cururos (110 MW)
3. Is EPM listed in the stock exchange?
Empresas Públicas de Medellin E.S.P., whose brand is EPM, is 100% property of the Municipality of Medellin. In that sense, the company is not listed in any local or international stock exchange. Since 1999 EPM has been recognized as a recurrent bond issuer in the local capital market and since 2009 in the international capital market.
See local and international bond issues
4. What is the EPM Risk Rating?
At local level, EPM and its current bond issuances are rated “AAA” by Fitch Ratings Colombia S.A. SCV with rating watch negative from stable Outlook.
At international level, the company and its international bond issues are rated “BBB” (Rating watch negative from stable outlook) by Fitch Ratings and “Baa3” by Moody´s (Negative outlook).
See Credit Ratings
5. What is the EPM Dividends Policy?
The Framework Relations Agreement of the Municipality of Medellin and EPM establishes the obligation of EPM in Chapter 2, paragraph 2.2.2 Transfers to the Municipality:
“If Article 13 of the Municipal Agreement No. 69 of 1997 of the Council of Medellin establishes that the percentage of Empresas Públicas de Medellín E.S.P.’s financial surpluses that may be transferred to the Municipality cannot exceed 30%, this Agreement establishes that additional transfers, defined and agreed to by both entities, may be made considering, on one hand, the Municipality’s financial requirements for specific investment programs and, on the other hand, EPM E.S.P.’s financial needs for its own operations, in such a way that the Company’s corporate viability or orderly expansion is not put at risk. In any case, additional transfers shall be authorized through an agreement with the Municipal Council, with the proper support of the Mayor expressly stating the effects said special transfers would have on the finances of EPM E.S.P.”
6. What is the regulatory framework that affects the industries where EPM operates?
Since EPM provides public utility services, its businesses are substantially regulated by:
- The SSPD (Superintendency of public utilities)
- The MME (Ministry of Mines and Energy)
- The CREG (energy and gas regulatory body)
- The UPME (Energy Mining Planning Unit of the Ministry of Mines and Energy)
- The MHCT (Ministry of Housing, City and Territory )
- The CRA (drinking water and basic sanitation regulatory body)
- The MTIC (Ministry of information and communication technologies)
The regulation and legislation affecting natural gas, electricity and water companies in Colombia relate to required licenses, permits and other approvals, the fees that EPM may charge for its services, the terms and conditions which apply to EPM’s services contracts, EPM’s ability to recover various categories of costs and the acquisition, construction and disposition of facilities. In particular, CREG and CRA regulate the fees EPM is permitted to charge to its customers in connection with the provision of electricity transmission and distribution and natural gas distribution services, and water and sewage services, respectively.
7. What is the limit of market participation in the power generation business in Colombia?
Pursuant to CREG regulations (Resolution CREG 060, 2007), power generation companies are subject to a 30.0% limit on any market participant’s share of Colombia’s total Firm Energy. If an power generation company’s share of Colombia’s total Firm Energy ranges from 25.0% to 30.0% and the market’s Herfindahl Hirschman Index, a measure of market concentration, is equal to or higher than 1,800, such company becomes subject to monitoring by the SSPD. If an power generation company’s share of Colombia’s total Firm Energy exceeds 30.0%, such company may be required to sell the electricity exceeding such threshold.