QCOSTARICA — Costa Rica President Rodrigo Chaves, announced with great fanfare in July 2022: “we are going to lower the price of electricity at the end of this month, thanks to the efforts we have made, it is not the last.”
As an unbreakable promise, he issued instructions to take all necessary actions in order not to increase electricity rates and thus not affect his campaign promise, something that seems to have been fulfilled to the letter from the high hierarchies of the Instituto Costarricense de Electricidad (ICE) – the autonomous state company that provides electricity and telecommunications services in Costa Rica – even if that meant that, in less than two years, the country would be on the verge of electrical rationing.
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In the midst of a conjunction of unfortunate events, it seems that the lack of planning and interests could be the root of Costa Rica being on alert for power outages, after 17 years of energy efficiency, due to insufficient resources.
SemanrioUniversidad.com consulted with various experts and authorities to understand what led ICE and its high-level authorities to not take the necessary precautions and to arm themselves today in front of public opinion with a list of excuses and accusations of guilt against external factors and entities.
A common denominator in the criteria of those interviewed points out that campaign promises, and privatizing interests did have an impact and that there was definitely a lack of planning and investment.
Meanwhile, the executive president of ICE, Marco Acuña, points to the El Niño phenomenon as the main culprit for the shortage of water in hydroelectric plants, the non-compliance of thermal generating companies, the paralysis of the competition for private generation, the administrations passed by the Institute and even to the Administrative Contracting Law.
However, many people find the reasons he has provided to be inadequate and misleading. Legislators Katia Rivera, of the Partido Liberación Nacional (PLN), and Sofía Guillén of the Frente Amplio (FA), both members of the Special Commission of the National Energy Sector, in political control agreed that the climate situation was not a last-minute unforeseen event, as noted by the executive president of ICE, but an event that had been anticipated, but was ignored amid poor planning or the desire to prioritize an attempt to reduce electricity rates due to President Chaves’ campaign promises.
For her part, Rocío Retana Hidalgo, president of the Union of ICE Engineers and Professionals (SIICE), described as fallacious the promise made by the Government to lower electricity rates and, even worse, that the ICE administration would buy it.
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“ICE does not have the power to lower rates, to do so would require financial studies of the entire electrical production park; even Aresep (the regulatory authority) was clear that they should rather be increased. It is evident that they have brought politics into the administration of the ICE, which folded into the planning and control of the national electrical system to fall into the network of an Electrical Harmonization law—opening of the electrical market—that will only benefit the great businessmen,” said Hidalgo.
This union leader is convinced that the ICE administration has been married to an apparent optimization of spending so that finances appear healthy, at whatever cost. A direction that led them to failure, but that has the faithful conviction of removing the electrical service from ICE and transferring it to an autonomous entity established by the harmonization law, at a very high cost, and that would force them to hand over all the heritage that ICE has developed for energy generation.
And the Government’s attempt to lower rates would be reversed next year due to the enormous expense that ICE has had to incur, by generating and importing thermal energy in large quantities, as a result of the long drought. This increase in electrical bills will be seen next year, as confirmed by the general regulator, Eric Bogantes.
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“In January we approved an increase that includes the variable cost (spending on fuel and energy imports) from last year, since more than projected was used in fossil fuel and thermal generation and, now that we have this situation, the only way out Moving forward, the climate is benevolent and ICE manages to recover the reservoirs to be able to export. Otherwise, we will see an increase in rates, because we will have to resort more to thermal energy,” said Bogantes.
Coinciding with this criterion, Pedro Pablo Quirós, former executive president of ICE during the 2006-2010 Arias Sánchez administration, indicated that even Acuña’s announcement in a commission of the Legislative Assembly to sell the ICE thermal plants “because they were very expensive,” if it had materialized, it would have had an impact two or three times greater” in the crisis of the National Electrical System.
“(These plants)… are the ones that are saving us right now. In fact, thermal generation is so high that the rate increase set in January is insufficient and it is likely that the ICE will be in the red by December,” commented Quirós.
From his perspective, there is a fundamental problem that is that senior managers do not listen to the personnel “below”, those who have greater expertise in resource planning, who know how to predict the capacity required to generate electricity efficiently.
He argued that they do not enter into the rate issue so as not to lose status and avoid criticism, even when finances are not going well. “They wasted years looking for financing for new projects and the only large battery the country has (Lake Arenal) is almost in mud and takes more than a year to fill, they let cogenerators expire when their job was to review and adjust rates and they let the plants deteriorate.”
Did El Niño really surprise?
The executive president of ICE claimed that there are voices that accuse them of not having purchased enough electricity from private generators, of not awarding enough projects during 2023 and of not planning the management of resources in the face of a totally unusual El Niño phenomenon that would generate insufficient rainfall.
The truth is that there has been criticism of obvious errors in projecting electricity demand, there is proof where the authorities indicated that, by 2024, only an increase of demand of 2.7% was expected, while the Division of Operation and Control of the Electrical System (DOCSE) registered increases of more than 5%. But the alert fell short, as ICE data revealed increases of 8% in January and 9% in February, compared to the same month of the previous year.
The former director of Aresep, Jorge Blanco, was emphatic in pointing out that one of the problems is that the concept of thermal backup was abandoned for a renewable matrix and an expansion plan for thermal capacity was not efficiently established.
“For example, if an additional thermal plant had been built, the impact of the El Niño phenomenon would have been mitigated. It was necessary to have an electrical reserve backup and the rates have to consider these variable costs. Private generation was also abandoned to increase installed capacity, because the Government does not hold tenders and those that were in process were not carried out on time,” Blanco said.
Of course, the lack of rainfall caused by the arrival of the El Niño phenomenon in the country has been a determining element in the current crisis, but not because it was not known sufficiently in advance, as the ICE leader indicated, but because no measures were taken. the necessary actions to prevent shortages in the National Electrical System.
And this is confirmed by Karina Hernández, coordinator of the Climatological Unit of the National Meteorological Institute (IMN), who explained that the severity of El Niño had been discussed well in advance, even before the La Niña period ended at the beginning of the year. 2020. Subsequently, it was indicated that this phenomenon extended to 2021 and 2022, years classified as wet.
“At first it was difficult to guess how strong it would be, but as the days went by we realized its intensity, added to a deficit condition in the Caribbean, in which temperatures increased to record levels, a situation that remains the same. date,” he noted.
Despite these abnormal conditions, the IMN forecasts were clear and indicated that there will be a rainfall deficit for the Caribbean and a large part of the country for many months, even for June 2023 a very dry season was already expected, information that had been knowledge of ICE authorities and officials.
It is even likely that these deficit conditions will extend throughout 2024, although a rebound in rainfall is expected in the Caribbean in the coming months, this would be insufficient and the installed capacity for hydroelectric generation would be hanging by a thread.
“They knew how the weather was going to behave, ICE has always had forecasts of its reserves. I don’t think there was no planning, because a lot of electricity was even sold to balance the financial statements, how come they didn’t save for this moment? I think that what they want is to impose this Harmonization Law and, for that reason, they are promoting a referendum so that all those who do not know about electricity vote for the opening of electricity, protected by rationing problems,” questioned Rocío Retana of SIICE.
For her part, Irene Cañas, former president of ICE during the government of Carlos Alvarado, confirmed that the situation that the country is currently experiencing could be avoided with better management of available resources, since this is not the first time that a crisis has been experienced. strong El Niño phenomenon; She added that strategic operations could be established, take care of the reservoirs, import electricity so as not to generate with the water plants and recover their water levels.
He rejected that the current energy crisis is the fault of his administration and indicated that, during his term, the demand for electricity had remained repressed and indicated that, in fact, the system’s capacity grew by 700 megabytes.
He pointed out that the commission in charge of monitoring the El Niño phenomenon raised the alert last June and that there were ways to have better prepared and mitigated the impacts. Although they say that they had the restrictions of the Fiscal Rule, in September they were lifted, so they had months to work, even to have generated more thermal energy, but perhaps they only focused on financial issues.
“The current ICE administration suggests that this would not have happened if the Diquís hydroelectric project had been built, but it did not have environmental viability, the indigenous consultation, which is a mandatory consultation, had not been carried out, the financing had not been resolved and its construction required six years, so the situation would not have been resolved,” he argued.
Chaves took office on May 8, 2022. His promise in July 2022:
“We are going to lower the price of electricity at the end of this month of July, thanks to the efforts we have made, it is not the last blow that we want to give them. I have already reached an agreement with the president of ICE on the method to continue announcing similar reductions in the future. Fundamentally, ICE went to work as God intended, because the price of electricity in Costa Rica is very expensive. We invest too much in generating capacity and use too many imported fuels to generate.”
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