Arguing that there is a risk that energy transactions in the region will become more expensive, Guatemalan businessmen are asking the outgoing government to refrain from approving or signing reforms to the Central American Electricity Market Framework Treaty.
Because on January 10 the discussion is programmed within the Director Council of the Regional Electric Market of Central America (CDMER), the subscription of the Third Protocol, which would reform the Framework Treaty of the Electric Market, the private sector of Guatemala has issued an alarm before any change in the regulations, since it could cause increases in the prices of energy transactions or generate negative effects in the Guatemalan market and its interconnection with Mexico.
The high energy tariffs paid in Costa Rica compared to other countries in the region and the effects of the monopoly that exists in electricity generation are threats to the local economy and future investments.
Between October this year and January 2019, the Instituto Costarricense de Electricidad expects to reduce tariffs by more than 10% in regions such as Limón, Zona Sur, Pacífico Central, sectors of Guanacaste and the Greater Metropolitan Area.
The first reduction, of 2.8%, has been in force since October 1 and is explained by the fall in thermal backup consumption.
The union of industrialists in Costa Rica claims to have detected an error in the electricity rates calculated by the state electricity company, the ICE, which presented their rates as being competitive with the US and Canada.
According to the information that the ICE presented on March 20, in all 14 consumption bands that it said were cheaper than the United States the opposite is true, the ICE's rate was cheaper because it used the exchange rate for the Canadian dollar the wrong way around.
While one candidate is willing to review the limits on private electricity cogeneration, and raise them from 15% to 30%, the other rejects the possibility of extracting natural gas due to its environmental implications.
In a meeting with companies in the Chamber of Industries of Costa Rica (ICRC), the two candidates who will go head to head in a second round of voting on April 1, shared their proposals to deal with issues of great importance to the industrial sector, such as electricity rates and the opening up of the electricity market, as well as the management of procedures in State institutions.
The high cost of energy and the fiscal deficit are two of the problems that worry companies in Costa Rica, who also face an uncertain political scenario, a few weeks to go before a second round of elections.
With a month and a half to go before a second round of elections, Costa Rican businessmen highlighted a difficult year in terms of job creation and attraction of new investments.
In 2016, the average cost of 1 kWh in Central America was 13.48 cents, while in Costa Rica, it was 18.47 cents.
A report from the CEPAL indicates that in 2016, the average cost of one kilowatt hour (kWh) in Central America was 13.48 cents, while in Costa Rica it was 18.47 cents; 37% more for industrial consumption of 100,000 kWh.In El Salvador and Guatemala, it was 11.03 and 11.54 cents respectively. In Panama, 10.92 cents.
The state-run National Power and Light Company (CNFL by its initials in Spanish) has requested an increase of 26% for the second half of this year and another 14% next year.
Arguing that the non-approval of increases would jeopardize the implementation of the investment plan and commercialization of energy, Compania Nacional de Fuerza y Luz (CNFL) asked ARESEP for two upward adjustments, one for the second half of this and the other for next year, 2018.
The industrial union is opposed to the 13% increase in generation and 8% for customers of the state run electricity company, ICE, which will apply from April 1.
"...The Regulatory Authority for Public Services (Aresep) has revoked a 6.7% reduction in electricity rates paid by subscribers of the Costa Rican Electricity Institute (ICE).Instead, the rate will increase 8% from April 1," reported Nacion.com.
The ARESEP is proposing including energy imports in the formula for calculating the expenditure incurred by the state run power company, in addition to spending on thermal generation, as provided for in the methodology.
From a statement issued by ARESEP:
The Regulatory Authority for Public Services (ARESEP) today submitted to public discussion, some modifications to the methodology used for calculating electricity tariffs, by way of thermal generation.
Either the state run power company is trying to make excessively high charges or the tariff regulator is seriously wrong: in any case the loser is the country.
EDITORIAL
When establishing electricity rates, differences between the state run electricity monopoly and the controlling entity for public services, are of a staggering magnitude.
High electricity and fuel costs, outdated and inefficient border posts, and an educational system which is not aligned with market needs, are some of the complaints made to the Government.
On the positive side the union points to the balanced FTA negotiations with South Korea, the adoption of the Strategy for Services to Entrepreneurship and Innovation in the Development Banking System and adoption of 4 laws for the rationalization of pension schemes.
Average prices for buying and selling on the spot market, quantities by contract and by spot price, amounts of predispatched MWh per hour, per day or for specific periods.
The regulator, Energía de la Autoridad Reguladora de los Servicios Públicos de Costa Rica (ARESEP), has published a comprehensive online information system for the Costa Rican electricity market, with a section dedicated to the Regional Electricity Market.
Starting from July 1 prices will rise by 5,49% for customers of the Instituto Costarricense de Electricidad, 4.45% for those of the CNFL, and 3.08% for the ESPH and 3.08% for the JASEC.
From a statement issued by the ARESEP:
Electricity rates will be adjusted due to the fact that in the last quarter reviewed more energy was produced using combustibles in order to cover an increase of 6.64% in electricity demand.This adjustment will be in effect between July and September.
The stubbornness of the Solis administration to award a highly technical job to a candidate rejected by employers confirms the importance that this specific person would have in the formulation of public tariffs.
Editor's note:
This review was written hours before the now newly appointed General Regulator of Costa Rica gave notice of his resignation from his position at the Instituto Costarricense de Electricidad (ICE).
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