Costa Rica Blogs - Newsfeeds

by Rod Hughes

ARESEP, the government utilities watchdog, will gradually eliminate the subsidy that has cushioned homeowners’ electrical rates for years beyond counting. Instead, the burden has been shouldered by industry and retail commerce who have paid higher rates to offset the loss to ICE, the government electrical monopoly.

For example, a home using 500 kilowatts per month pays 21,500 colones (figure about 500 per dollar) while a store might pay 27,500 for the same electrical consumption, according to ARESEP figures. All in all, home use accounts for 40% of nationwide electrical consumption but pays only 37%. Commercial establishments pay 35% of the cost of generation and distribution while using only 30%.

The chief of ARESEP, called the Regulator General, Fernando Herrera said the attempt to benefit poor families by holding down their electrical rates backfires by adding to the cost of goods as store owners pass on their costs to the consumer. He added that forcing stores and industry to pay the tab is unfair to the 140,000 customers in this category, most of whom are small and medium businessmen.

This is an unusual step, taking into account that the Arias Administration is a National Liberation Party product. Traditionally, that party has been, since its founding in 1949, a socialist entity that nationalized such institutions as the government oil refinery during its early years under its icon, then-President Jose “Don Pepe” Figueres. Since President Oscar Arias ran for and won re’election in 2006, the party has slid, if not to the right, at least toward the center and closer to its old rival, Social Christian Unity.

This entry was posted on Saturday, February 23rd, 2008 at 10:36 am and is filed under Business and Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.