San José, Costa Rica, since 1956

Bill Aims to Spark Increased Energy Production

Opposition to the new general electricity bill has been a quiet roar at its very loudest.

Last year, when the bill was proposed in the Legislative Assembly, the most likely opponents barely managed a snort. And the Costa Rican Electricity Institute (ICE) has yet to take a position on the matter, ICE press officials said this week.

But the bill represents a fundamental shift in Costa Rica’s energy policy, opening up the market to competition and more private generation of electricity. Meanwhile, both the bill’s proponents and its challengers soon will have a stage from which they can sound their whistles.

The executive branch will push to have the bill debated for the first time in the Legislative Assembly during “extraordinary sessions” in the coming weeks.

The contest will carry over into the next government, and it appears that the bill will be at the top of the legislative agenda of President-elect Laura Chinchilla and her administration.

“This bill is a priority for us,” Chinchilla told The Tico Times in a recent interview.

“We will do all the work necessary to assurethat this bill passes.”

The “work” that Chinchilla must complete seems, on the surface, rather simple. Her party, the centrist National Liberation Party (PLN), holds 23 seats in the Legislative Assembly and the right-wing Libertarian Movement Party (ML) claims 10.

Both parties have expressed strong support for the bill, and, together – if all vote yea – they will have the majority needed to pass the legislation.

But the political left won’t let the bill slide through without making some noise. The bill, some fear, could give way to a slippery slope where foreign and private interests are placed above those of the majority of the country’s citizens.

While ICE still has not announced an official position on the issue, the institute’s unions have expressed discontent and fears that increased private participation in the generation of energy will diminish the rights of workers and citizens. This is an argument that parties on the left, such as the Broad Front Party, likely will make during debate.

In previous attempts to open the energy market to competition – such as the so-called Combo ICE legislation proposed in the late 1990s – traditionally left-wing institutions have condemned the ideas.

The Combo ICE legislation, based on the assumption that ICE was an inefficient state bureaucracy, proposed handing over control of generation, distribution, and commercialization of both energy and telecommunications to private companies.

Professors and students at the University of Costa Rica attacked the proposal as “neoliberal” and shouted that private companies would raise rates in an energy and telecom market that boasted the lowest consumer prices in Latin America. They said that if the state allowed ICE to use all of its profits – a 1998 independent study determined that the government retained 67 percent of ICE’s gains during that year – ICE would be able to continue to meet the country’s growing demands at low cost to consumers.

Opponents claimed that the proposed Combo ICE law would break up the ICE monopoly and weaken the institute’s ability to modernize and progress. Statements issued at that time said that opening the door to competition in the energy and telecom sectors would destroy the autonomy of the country and weaken its participative democracy. Throughout the country, union members and their supporters protested and blocked highways.

The Combo ICE legislation was withdrawn. Sources who worked on the new bill told The Tico Times that the new package was ready and could, in fact, have been presented one to two years before August 2009, when it finally was proposed in the Legislative Assembly, but lingering doubts and haunting nightmares from the Combo era delayed its submission.

“Fears surge when any degree of competition arises,” said Pablo Gueren, Casa Presidencial’s chief press official. “But these are fears that we have to transcend, and, if this legislation is explained sufficiently, these fears shouldn’t overcome the idea behind the bill.”

At its core, the general electricity bill aims to push Costa Rica toward a sole reliance on renewable energy sources, a goal of the Chinchilla administration.

Roughly 90 percent of Costa Rica’s electricity is generated via a combination of hydroelectric, wind, solar or geothermal energy sources. But, in recent years, ICE has struggled to meet rising electricity demands with these sources and has, thus, turned to bunker fuel plants – dirtier and more expensive because of their reliance on foreign oil – in order to provide electricity where gaps exist.

According to government research, the Costa Rican electricity market will require annual investments of more than $700 million to meet increased demand, and ICE is equipped to invest about half of that amount. The same research also says that the country will be required in the next decade to install the same production capacity and amount of infrastructure that it has built during the past 70 years. Many experts doubt that ICE could accomplish this colossal feat.

And proponents do not believe the new bill will weaken ICE. This time around, perhaps having learned a lesson from the Combo days, advocates are choosing their words carefully. The general electricity bill has been subtitled “Strengthening ICE,” and its authors believe that the legislation will build on and fortify the nation-building legacy that ICE earned long ago.

While the bill encourages establishment of a wholesale electricity market open to competition, ICE still would be in control of the distribution of electricity. Private generators would be limited to 50-megawatt plants, government officials said, while current laws limit private generators to 20 megawatts.

In the meantime, during the time of the bill’s short public history, PLN politicians have showered ICE with compliments, perhaps an attempt to garner support.

In a recent interview with The Tico Times, Vice president-elect Alfio Piva called ICE a “noble” and “technically sound” institution.

Even private energy generators in the country admire the advances made by ICE, such as electrifying nearly the entire country while charging relatively low rates and drawing power largely from the nation’s vast store of renewable resources.

But no giant, no matter how long-lived or powerful, can overcome all obstacles without a helping hand.

This truism has come to light in recent years, no matter how “noble” and “technically sound” ICE may be.

Still, reform is never easy.

The bill’s opponents know, in concrete and calculated terms, what they have to lose, while history, in the form of successful resistance to an earlier attempt to open the market for the production of energy, is on their side.

Its proponents, on the other hand, can only promise with uncertain, ambiguous words based on imperfect measurements of the future, what the country has to gain.

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