Monday 27 September 2021

Something Smells Fishy With Costa Rica’s Electricity

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From an editorial by Centralamericandata.com – Either the state run power company is trying to make excessively high charges

Image for illustrative purposes. From http://www.delapuravida.com
Image for illustrative purposes. From Delapuravida.com

or the tariff regulator is seriously wrong: in any case the loser is the country.

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When establishing electricity rates, differences between the state run electricity monopoly and the controlling entity for public services, are of a staggering magnitude.

The following table shows the upward adjustments requested by the state run and monopolistic Instituto Costarricense de Electricidad  (ICE) of the Regulatory Authority of Public Services (ARESEP), and the settings – ordered by the latter entity -, according to a communication dated December 12, 2016.

System
Adjustment requested by the ICE
Adjustment decreed by the ARESEP
Generation
9,75%
-3,28%
Transmisión
5,85%
-11,12%
 Distribution
9,75%
-6,69%
Public lighting
25,09%
-6,1%

How come two profesional teams- by the way professionals who are highly paid precisely to do a high quality work-, one in the ICE and the other in the ARESEP, analyze, add, subtract, calculate, and finally deliver results that are as dissimilar as these?

Of course, for a lot of reasons, we can not pretend that there are never any differences between the results of the two institutions, but why are they so different?

If the ICE has done its homework properly, the ARESEP ‘s decision when setting their rates would cause serious financial damage because the differences are in the double digits. If on the other hand, it is the ARESEP that is the institution that is doing its homework well, that would mean that the ICE is doing very badly, and that electricity in Costa Rica could be much cheaper than it is. In any case, the damage to the country’s economy is incalculable.

Such large differences between an enterprise and a regulatory body in prices for basic public services could be understandable if the company were private and logically enough would want to maximise its profits. But they are not acceptable if the company is a state run monopoly and when it is assumed that its aim is not to produce profit but to provide a service to the country.

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In its statement the ARESEP justifies its decision on electricity tariffs, as a “user protection mechanism”. If it is true that we must protect users from unconscionable prices of a monopolistic state run company, then it is clear that the monopoly is not justified. And if that is not true, then the cost involved in the ARESEP regulating their rates is absurd.

Source Centralamericandata.com

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Q24N
Q24N is an aggregator of news for Latin America. Reports from Mexico to the tip of Chile and Caribbean are sourced for our readers to find all their Latin America news in one place.

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