Controversy Over Electricity Tariffs

In Guatemala, the distribution company Energuate appealed the resolutions of the National Commission of Electric Energy, arguing that the losses because of social conflict were not considered in the authorized tariffs for the next five years.

Wednesday, July 10, 2019

The controversy began after the National Commission of Electric Energy (CNEE) approved the Non-Social Tariff and Social Tariff Sheets for the 2019-2024 period, which stipulate the final prices of electric energy service for users of Distribuidora de Electricidad de Occidente S.A. -DEOCSA- and Distribuidora de Electricidad de Oriente S.A. -DEORSA-. See CNEE newsletter.

For Energuate, the company to which Deorsa and Deocsa belong, the disagreement is based on regulatory and legal anomalies that they consider the CNEE committed, since in the company's opinion, the entity acted contrary to the General Law of Electricity and its regulations, by not considering the losses generated by the social conflicts that occurred in the areas where the electricity service is provided, something completely different from the operation of the distributor.

Energuate executives told that "... The company asked the CNEE for an average recognition of losses of 17% in total, but they are only recognizing 13% of losses (between technical and non-technical), the same as in the previous five-year period, and they are not recognizing losses from theft because of conflict. For example, the company's current energy losses are 20%, of which 7% are because of systematic theft by illegal groups and social conflict; that 7% is not recognized in the tariff."

Dimas Carranza, Energuate's manager of regulation and tariffs, explained that "... the losses recognized for them are equal to the previous five-year period but are not because of the costs of the conflict."

Regarding the issue, the CNEE explained in a statement that "... The percentages of maximum energy and power losses (Technical Losses + Non-Technical Losses) have been recognized and approved in the tariff sheets issued, and it is important to mention that the corresponding values of these losses have remained the same over the last 10 years. The Distributors in their tariff proposals sought the recognition of a higher percentage of losses, justified by social conflict; however, this request was not approved by CNEE."

The official document adds that "... In the recently approved tariffs, the National Commission of Electric Energy considered in the future a possible cost recognition for an investment program to prevent and combat non-technical losses. This program includes the necessary investments to continue the actions of prevention and reduction of unauthorized consumption of electricity, as well as the non-payment for the provision of distribution service, up to a maximum annual limit. The costs and investments made may be considered in the tariff calculation, provided that the Distributors reliably demonstrate the execution of the investments and the results obtained from such programs." See full CNEE statement.

Concerning future legal actions that could be taken by Energuate, it was explained that the legal team of the company is analyzing the situation, since it is still possible to present an appeal to the Ministry of Energy and Mines, but, if this is not favorable, it could lead to other instances, including international arbitration.

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