President orders utilities to put a lid on price hikes

The president Tuesday issued an order to public institutions and agencies that provide basic services telling them to reduce expenses.

President Laura Chinchilla was joined in the order by René Castro, minister of Ambiente y Energía.

The objective is to stop the abuse that some institutions have presented at the time of fixing the tariffs, said the president, according to Casa Presidencial. In the future there will be no changes in price except at the regular times that the institutions send requests to the Autoridad Reguladora de Servicios Públicos, she added.

When the directive is published in the official newspaper, the institutions will have to cut costs, said Casa Presidencial. They are the Instituto Costarricense de Electricidad, the Compañía Nacional de Fuerza y Luz, the Refinadora Costarricense de Petróleo, the Empresa de Servicios Públicos de Heredia, the Junta Administrativa de Servicios Eléctricos de Cartago and the Instituto Costarricense de Acueductos y Alcantarillados.

The public institutions and agencies were urged to refinance their debts at a lower interest rate and to be more rigorous in tracking expenses. Casa Presidencial said that future increases should not be more than one and a quarter times the increase in the consumer price index this year and more than 1.15 times the index next year.

The agencies and institutions were given 30 days to present plans to do this to the Autoridad and to the president. The Presidencia issued a similar directive that took
effect Jan. 1. At the time the president told the Instituto Costarricense de Electricidad that it should purchase clean energy at the lowest cost available in the marketplace, noted Casa Presidencial.

In addition, the president is said to be counting on the rainy season to provide water to produce more electricity in place of the petroleum that is used during the dry season.

The impact of the directive is hard to predict. Institutions like the Refinadora Costarricense de Petróleo and to a lesser extent the Instituto Costarricense de Electricidad are hostages to the world price of fuels. The Autoridad also has a legal obligation to arrange tariffs at a point where the agencies make a fair profit.

The president’s effort is linked to administration plans to make the country carbon neutral and promote renewable energies.

President Chinchilla continues to oppose exploratory drilling for petroleum or gas in the northern zone, so all such fuels have to be imported.

Increases in basic utilities and also in the price of motor fuels have caused considerable concern among members of the public. And at times the various agencies would approach the Autoridad for special surcharges because of changes in expenses. A lot of the expense is because of employee salaries and government-mandated pay hikes.

The decree does not seem to make any mention of reducing the taxes levied by the government on the various utitities.

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