Anticipated discounts for Costa Rica electricity rates suspended

August 28, 2009

Eight days after the announcement of a decrease in nationwide electricity rates by the Public Services Regulatory Authority (ARESEP), the Administrative Contention Court ordered a suspension of the discounted rates, which were expected to begin Tuesday.

The suspension was granted in response to appeals made by the Costa Rican Electricity Institute (ICE), who were to see the prices for their electricity cut by an average of 7.4 percent. The decision was announced by the Administrative Contention Court late Friday afternoon.

According to a statement released by ARESEP, the Administrative Contention Court “as a provisional measure, will enact the immediate suspension of the effects of the administrative act (cutting rates).”

Representatives of ARESEP and ICE are scheduled to meet Friday, Sept. 4, in an attempt to come to an agreement on the rates.

On Aug. 20, ARESEP announced that a nationwide decrease in electricity rates was scheduled to begin on Sept. 1. The pricing agency reported that the drop in prices was justified due to a significant decrease in actual spending needed for hydrocarbons compared with ICE´s original projections. According to ARESEP, in 2008 ICE spent ¢ 97.67 million ($168,400) for thermal (petroleum-based) generation of electricity. The cost of thermal generation for 2009 is estimated to be ¢ 45.476 million ($78,406), which would indicate a savings of ¢ 52.49 million ($90,500). ARESEP felt that some of the savings should be felt by consumers.

“Our responsibility as regulators is to assure all Costa Ricans that the prices will be adjusted up or down, depending on the movement of the costs,” Regulator General Fernando Herrero said on Aug. 20. “We are not here only to raise (rates).”

The proposed discounted rates were to be applied to all companies that provide electricity service.

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