San José, Costa Rica, since 1956

Costa Rica slashes electricity rates 7.3 percent

The cost of electricity will be less expensive in Costa Rica during the final three months of 2009. The Administrative Contention Court ruled in favor of the Public Services Regulatory Authority (ARESEP) on Wednesday, meaning that electricity rates will be discounted an average of 7.3 percent for the remainder of the year.

The approval of the discounted rates concludes an ongoing dispute between ARESEP and the Costa Rican Electricity Institute (ICE), which opposed the drop.

In late August, ARESEP announced that electricity rates would be trimmed due to the large amount of savings earned by the lessened cost to produce thermal (fossil fuels-based) energy due to lower petroleum costs. According to ARESEP, the cost of producing thermal energy fell from $97.97 million in 2008 to $45.48 million in the first nine months of 2009. Because the savings for energy producers were so high, ARESEP said savings should be passed on the customers, and thus proposed the lowered rates, which were intended to go into effect on Sept. 1.

ICE, the primary electricity provider in the country, opposed the rate reduction, and the dispute was taken to court.

During court hearings, ARESEP asserted that by not cutting rates ICE was overcharging consumers. ICE contended that the money saved over the year was being redirected into investment plans and the discounting of the rates would put those plans at risk. On Wednesday afternoon, the court ruled in favor of ARESEP, ordering the discounted rates to take effect immediately.

“The court ruled that ICE didn´t have a strong enough argument to keep the rates from dropping,” Carolina Mora, a spokeswoman for ARESEP, told The Tico Times. “Therefore, the discounted rates begin immediately and will last until December 31 of this year.”

ARESEP estimates that a family in San José that uses 300kw/hours will save an average around ¢ 1,400 per month.

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