San José, Costa Rica, since 1956

Environment Concerns Slow Power Generation

Third in a Series on Energy in Costa Rica.


Costa Rica’s often overabundant water supply is far more than just the cause of floods and inconveniences. It is also the source of approximately 80 percent of the

country’s electricity needs.

The amount of rain that falls between May and November – more than 200 inches in some areas of the country – combined with steep terrain and a vast system of rivers and reservoirs make the “RichCoast” a perfect place to generate hydroelectric power.

But this renewable source doesn’t come without debate.

While most people agree that hydropower is an invaluable resource that must be exploited, the management of its plants and sale of its electricity splits the sentiments of the country’s water gurus.

Costa Rica is home to 14 large, publicly owned hydropower plants and several dozen small ones – also publicly owned. All of these plants are under the possession and management of the Costa Rican Electricity Institute (ICE).

Additionally, approximately 20 privately owned hydropower plants contribute to ICE’s overall electricity production every year.Because electricity production in Costa Rica is a government monopoly, owners of private hydropower plants are required by law to sell the energy they generate to ICE, which, in turn, sells it as electricity to consumers.

These private plants have a combined capacity to supply approximately 10 to 15 percent of the nation’s yearly hydroelectricity needs.

While rates for purchasing energy from private producers vary depending on the market, the price usually averages between 6 to 9 cents per kilowatt hour, a price which is fixed by the Public Services Regulatory Authority (ARESEP).

Since ICE has to recover the purchase cost when it sells energy from a private contractor to a customer, the price tends to be higher for the consumer.

Luís Gámez, director of investigation and development for the Public Services Company of Heredia (ESPH), a private utility company whose primary shareholder is the municipality of Heredia, believes that by eliminating the requirement for private plants to sell energy to ICE, consumers could enjoy a cheaper, more cost-efficient service.

“If a private party establishes a project and generates the electricity, it doesn’t make sense to sell it and resell it,” Gámez said. “We can provide the same energy at a much better price.”

Gámez also noted that competition among private energy producers would also help keep energy costs at affordable rates.

But Javier Orozco, director of integral expansion and electrical planning for ICE, doesn’t see the issue as merely a matter of costs.

“That’s an oversimplification,” he said. “It’s not like buying and selling oranges for orange juice. Electricity is complicated. It’s a very special case.”

Orozco said a single oversight body to manage electricity demands is needed.

For example, if a community relies only on the energy provided by a small, private hydroelectric plant, the possibility of overtaxing the electrical machinery is much higher since private companies often aren’t equipped to deal with peak-hour electricity needs, according to Orozco.

“There needs to be one interpreter of all the sources,” Orozco said. “ICE is able to monitor all the machines producing electricity to make sure we can meet demand. A separation of this machinery (among energy producers) would be much more costly than a few extra cents in the purchase of private energy.”

In addition to the economic debate that surrounds private and public hydropower production, the plants that create this energy are often submerged in environmental concerns.

Dams can disrupt river flows and disturb wildlife, and plant construction processes can cause pollution, all of which keep environmentalists on high alert.

In 2000, the Constitutional Chamber of the Supreme Court (Sala IV) prevented Producciones Antheus S.A., a Spanish company, from building a private hydroelectric plant in Costa Rica’s southern zone because of ecological concerns.

As a result of the case, the Sala IV issued resolution 10466, a document that subjects all proposed hydroelectric plants to more stringent environmental impact studies than had previously existed. The ruling cited various environmental laws and several articles in Costa Rica’s constitution.

Rafael González, dean of the University of Costa Rica’s School of Law, said that the resolution was “one of the best things to come out of the case… Costa Rica has an obligation to protect its environment. It’s in our laws and it’s in our Constitution. These are binding commitments.”

González noted that the resolution isn’t always enforced, but it does seem to have slowed the process for companies that want to build hydroelectric plants.

In 1998 ESPH submitted a proposal to the National Technical Secretariat of the Environment Ministry (SETENA) for the construction of a private hydroelectric plant.

In early 2000, it looked as though the company would receive an approval but, after the decision in the case of Producciones Antheus S.A, ESPH’s process was halted.

To date, the company hasn’t received a go-ahead from SETENA, a circumstance that frustrates ESPH’s Gámez.

“Look, I think we need to protect our environment, and I’m not against environmental impact studies, but we do need to think about our energy future,” Gámez said.

“Demand is growing, and recently we have been filling in energy gaps with fossil fuels. If we are to continue as a country with a green image, we need to be flexible with projects that are indeed strategic.”

Next Week: Solar Energy



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