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ICE Seeking Electricity Rate Increase To Offset Lower Sales And Higher Financing Costs

The Reventazón hydroelectric plant dam in Siquirres, Limón. According to ICE financial statements, the financing of the Reventazón represents 52% of the agency’s US$1.58 billion dollar debt. (DIANA MÉNDEZ)

When sales drop and financing costs go through the roof, in the real world this would mean financial disaster for a business, even bankruptcy. But not if you are a state power and former telecom monopoly like Instituto Costarricense de Electricidad (ICE), where you just raise the rates to cover the shortfall.

That is the plan by ICE who is seeking an increase of 18.82% in the electricity rates for 2018, citing declining energy sales and growth in debt payments, mostly in dollars.

The request was filed with the Autoridad Reguladora de los Servicios Públicos (Aresep), file ET-064 on September 28 past, a request that is still in the admissibility stage.

If approved, the increase would allow ICE to generate an additional ¢62.7 billion colones in income, allowing the utility to meet operating expenses and face its financial debt obligations.

The increase will also impact households across the country, given that residential customers constitute 87% of all customers to the national electrical grid. The remaining 13% are commercial, industrial and utility users.

According to Aresep statistics (December 2016), the 87% of residential users equal to 1,484,000 households, each on average consuming 120 kWh monthly, that would see their average monthly bill go from ¢9.400 currently to ¢10,600 for the same energy, an additional ¢1,200 monthly or ¢14,400 yearly.

More Debt And Falling Sales

In its filing, ICE says that it has posted an accounting loss of ¢65.6 billion colones in the second quarter of this year, 155% more as compared to the same period in 2016 when it reported a loss of ¢25.7 billion colones.

The ICE Group is made of up of ICE and its three subsidiaries. The state agency reports an improvement its telecommunications sector, but insufficient to offset the performance in the electricity sector, which represents 56% of the Group’s profit generation.