Monday 5 December 2022

Residential electicity rates cannot subsidize lowering in other sectors

Regulating authority will evaluate the effects of COVID-19 next year to determine if a rate adjustment is necessary as a result of the pandemic.

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3 December 2022 - At The Banks - BCCR

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QCOSTARICA – Companies of electric generation and distribution are unable to adjust service rates to households, in search of compensation for the drop in consumption in other sectors.

Marco Cordero, Energy Intendant of the Public Services Regulatory Authority (Aresep), explained that the rate methodology does not allow one sector to subsidize another.

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“The definition of tariff income is for the entire distribution system and from there they are distributed by tariff based on the cost of provision,” Cordero explained.

The official did say that, next year, they will verify if a deficit in tariff income was generated during 2020 and, therefore, the need for a tariff adjustment to meet the obligations caused by COVID-19.

The pandemic has caused a reduction in the income for utilities like the Instituto Costarricense de Electricidad (ICE) and cooperatives that provide service in rural areas.

Others do report an increase in income, despite the drop in consumption. This is the case of the Public Services Company of Heredia (ESPH), the Administrative Board of the Municipal Electric Service of Cartago (Jasec) and the Compañía Nacional de Fuerza y Luz (CNFL), an ICE subsidiary.

ICE, confirmed the Regulatory Authority, does not allow overlapping of costs between sectors.

Meanwhile, Luis Fallas, leader of Tariff Studies at ESPH, explained that in the methodology there is no guideline that establishes compensation between sectors.

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For his part, Carlos Murillo, Manager of Coopelesca’s Associate Services, explained that the decrease in income due to the pandemic affects the income for development.

The spokesperson stressed that the cooperative has not received a rate increase for seven years, for which they have carried out redesigns of their services and their operation to optimize management.

“The fact of producing 90% of the electricity that our associates consume has allowed us to sustain these rates,” said Murillo.

The Coopelesca spokesperson stressed that they are the distribution company with the lowest rates, despite serving a rural area that represents 9% of the national territory.

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Meanwhile, Jasec explained that having a dependence of 70% on the energy delivered by ICE, its rates have a similar trend to those of the state company.

 

 

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Q Costa Rica
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