When Costa Rica’s Alternative Power Isn’t Enough, ICE Wants Customers to Foot the Bill.

Even though Costa Ricans are already feeling the pressure of rising costs of fuel, food, and other goods, last week, the government-run Costa Rican Electricity Institute (ICE) announced plans to increase electricity costs by an astonishing 30-80 percent. ICE cites rising gasoline prices as culprit for the increase, since the institute uses crude oil to produce energy for consumption. Last Friday, September 19, the government entity asked Aresep to approve their new rates.

Per ICE’s policies, increase percentages will depend on a home or business’s personal consumption. The more consumed, the higher the percentage (and total) increase. For example, a family that consumes 250 kilowatt hours per month currently pays ¢14,000 ($25.50) monthly. If ICE’s increases are approved, that same family will pay ¢20,000 ($36.43) monthly after January 1 – an increase of 42.9 percent. However, a high-consumption family that uses 1,000 kilowatt hours monthly will see their bill increase from ¢107,000 ($194.90) to ¢187,000 ($340.62) monthly – an increase of 74.8 percent.

Businesses will be given a break, relatively speaking, as ICE hopes to charge them 42 percent extra across the board. In this case, a business that currently consumes 2,000 kilowatt hours monthly will see their electricity bill increase from ¢194,000 ($353.37) to ¢275,000 ($500.91). ICE also plans to charge Costa Rica’s electricity distributors an additional 56 percent, which will prompt further national electricity increases.

Though these rate increases may seem unbelievable, ICE is, unfortunately, serious. This is the second rate increase that ICE has solicited in the past month. In August, the electricity monopoly asked for a temporary rates increase of 15 percent for the October 2008-May 2009 period. Their stated reason for the necessary increase was to pay for increased fuel costs. If their new, permanent increase is approved, it will already include the 15 percent temporary increase. If approved, it would take effect on January 1, 2009. ICE told Aresep that, if this increase is approved, it will only need a 36 percent average rates increase in 2009. In the first 9 months of 2008, the institute already raised rates 11-72 percent.

ICE’s rate increases are attributed to huge increases in the cost of gas during 2008. The electricity company uses diesel plants to prevent blackouts during hours when hydro-power and wind power are not sufficient to cover the country’s electricity consumption. With increasing consumption and gas prices, ICE estimates that their gasoline consumption will increase from ¢105 billion ($191.3 million) to ¢176 billion ($320.6 million) in 2009. In this case, gasoline costs will represent 40 percent of ICE’s costs, even though only 10 percent of Costa Rica’s energy comes from this resource.

The Electricity Institute has threatened that they will not be able to prevent blackouts throughout the country in 2009 if this rate increase is not approved to cover the increase in production costs. Since ICE is the only electricity company in the country, no one can do much about this threat. Aresep has not been twiddling its thumbs since receiving ICE’s first increase request, but has instead strongly suggested that ICE take out a loan to cover the increased costs instead of passing them on the general population that is already the victim of global economic problems.

ICE’s anticipated costs for 2009 are ¢429 billion ($781.4 million); if the increase is not approved, their net will only reach ¢329 billion ($599.3 million). If the increase is approved, ICE will net about ¢513 billion (923.6 million). “Without introducing an important increase, the financial situation will be unsustainable… [we must] minimize the risk of shortage,” read ICE’s official petition. The new rates could become just another increase to the overall cost of Living in Costa Rica.

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Filed under: Costa Rica News on September 23rd, 2008