Government will review costs of ICE to lower electricity

ARESEP renegotiate plans financiamientode proposed megaprojects

Executive hopes to have the proposal in two weeks to lower rates

June 18, 2014

As part of measures to bring down electricity rates, President Luis Guillermo Solis pledged yesterday to put under a microscope and optimizing operating costs of the Instituto Costarricense de Electricidad (ICE).

That means that it will review all items that affect the rate: fuel purchases for thermal power generation, spending limits, loan conditions for lifting mega millionaires monthly disbursements and operating leases.

Solis said he still checks the draft that gave days ago Carlos Obregón, president of ICE, with a series of proposals to reduce short-term energy bills. He said the decision will be made within 15 days after closing meetings with several representatives of the energy sector.

This discussion comes just when it is approved up to 16% in electricity rates, which would apply from 1. July to respond to the lack of rain.

Today, the purchase of fuel represents 21% of the cost of generation of the Institute; 18% are private generators purchases and 17% of the depreciation of assets. The latter would lower spending, according ARESEP if ICE rid of old and useless assets.

Of the total expenditures per generation, 17% is for operating leases or leases. These debts are trusts that ICE has processed to finance the construction and operation of its energy projects.

While in 2006 spent ¢ 13.726 million in respect of operating leases, last year the company invested four times more in this category: ¢ 59.823 million.

The millionaire surcharge to fund ICE five plants (three hydro, thermal and geothermal) is the main triggers the rate increase paid by Costa Ricans, according to the Mayor's Energy Regulatory Authority of Public Services (Aresep) Juan Manuel Quesada.

One of the alternatives proposed by Quesada light to achieve reductions in the short term is that the ICE renegotiate with banks financing terms of its mega projects; pursuing lower rates to the current 13% and extend payment terms over 12 years.

ARESEP reviews the generation and distribution costs of the eight power distribution companies, in order to define which costs are transferred to the user.

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