SANTIAGO--Amid legal delays and rising animosity against planned electricity projects in Chile, power companies are concerned the country's environmental permitting framework is falling behind and called on the government to take measures to ensure supply meets growing demand.

Chile's need to double its current 15,000-megawatt installed capacity over the next decade was put at risk after the Supreme Court recently halted the 2,100-megawatt, $5 billion Hacienda Castilla power project and modified the environmental approval timetable for the 640-megawatt Cuervo power plant, led by Origin Energy Ltd (ORG.AU) and Xstrata PLC's (XTA.LN) Energia Austral.

Speaking at an energy seminar, the chairman of power generator Colbun (COLBUN.SN), Bernardo Larrain, said that politics and the courts bypassed the governmental environmental authority, which usually had the final word on energy projects.

Some projects "got to the Supreme Court and we have to ask ourselves why those projects' problems weren't solved within the country's environmental permitting framework," Mr. Larrain said.

Environmental groups opposing larger projects have filed suits against them, leading to delays and even possible suspensions, which increase generation costs in the near-term and put energy supply at risk in the longer term.

Chile already has some of the highest power generation costs in the region as its energy matrix has had to turn to more expensive fuels, such as liquified gas, coal and diesel as drought conditions in recent years have curbed hydrogeneration.

"It's more of a political issue than a technical issue," Mr. Larrain said, adding that "non-market" issues have been clouding up the environmental permitting process.

"In the business environment, you can say that companies are still investing, but the problem is now in the non-market context," Mr. Larrain said.

Joaquin Galindo, chief executive of power producer Empresa Nacional de Electricidad SA (EOC, ENDESA.SN) added that power projects are now taking ten years to develop and the permitting process takes up half of that period.

French-Belgian energy company GDF Suez SA (GSZ.FR) country manager Juan Claveria, meanwhile, admitted difficulties in obtaining environmental authorities' approval.

"The projects' approval process is worsening and it is becoming more difficult and riskier for power companies to develop projects in Chile," Mr. Claveria said.

On top of the recent Supreme Court rulings, President Sebastian Pinera in 2010 halted a 540-megawatt thermal power project by GDF Suez by asking the company to relocate it because of its proximity to a nature reserve, even though the generator had already received environmental approval.

Chile's 2,750-megawatt HidroAysen energy project, meanwhile, is being delayed by shareholders Colbun and Endesa as they await an electricity transmission bill the government recently sent to Congress for approval.

Once the bill is approved, HidroAysen is expected to submit the environmental impact study for its $4-billion transmission line as it already received the environmental green light for its $3-billion generation project.

If the country fails to meet growing demand, its productivity and possibly its growth could be at risk in coming years, the governor of the central bank recently warned.

Moreover, several mining projects, such as the expansion at state copper giant Corporacion Nacional del Cobre de Chile's Salvador division, could be put on hold if power projects continue to see delays.

"It's very clear that if there's no energy, there's no development," Mr. Galindo said.

Write to Graciela Ibanez at graciela.ibanez@dowjones.com

--Carolina Pica contributed to this article.