The reduction of the electric power tariff, announced by the previous Government, has not yet materialized. Despite the incorporation of new hydroelectric plants, the average cost of the kilowatt hour (kW / h) in this year will be USD 0.0926, when according to the 2013 Electricity Master Plan it was projected at USD 0.0619.
The average rate for this year is the same as that applied last year. The explanation of the Agency for Regulation and Control of Electricity (Arconel) is that the costs for the provision of the service did not vary significantly.
The above occurs despite the fact that five of the eight new hydroelectric plants, considered emblematic, are already working. Between December and January, Delsitanisagua and Minas-San Francisco were incorporated. Manduriacu, Sopladora, and Coca-Codo Sinclair started operating between 2015 and 2016. While Toachi-Pilatón, Mazar-Dudas and Quijos are pending.
With this infrastructure, Ecuador now has a greater capacity to generate this resource. According to the Vice Ministry of Electricity, a total effective power of 7,018 megawatts (MW) is available. But the greater supply of electricity has not influenced production costs nor has it been reflected in a reduction in tariffs.
Gabriel Salazar, director of the Arconel, explained that although hydroelectric plants do not consume fuels to generate this resource, other items must be covered. Among them, investment in civil works, roads, dykes, powerhouse. “Renewable energy has advantages, but it’s not free.”
In the construction of the new plants, the Treasury has so far invested USD 5.6 billion, according to the Vice Ministry. These investments are long-winded. Only in the case of Toachi-Pilatón, the Electricity Corporation of Ecuador (Celec) obtained from the Bank of the Affiliate (Biess) a credit for 20 years.
Other factors that have intervened to maintain the same rate in this year are demand and fixed costs. Between 2017 and 2018 there was an increase in the demand for energy, 4.1% and 5% in installed power. And for this year it is estimated that the growth is of the same order.
In this regard, the Arconel argued that the entry of hydroelectric power plants has allowed tariffs to not rise twice or triple. The entrance of the new plants also represents an increase in the fixed costs of the system, since the administration, operation and maintenance of these facilities must be covered.
Despite this, the Government emphasized that the country has one of the lowest residential rates in the region. For this sector it is 10 cents, slightly above the general average of nine cents, which includes industries and other sectors.
The Latin American Energy Organization (Olade) reported that after Ecuador, there are only Bolivia, Argentina, Venezuela and Suriname. On average, only the generation of energy with the different sources (hydroelectric, thermal, wind, solar) costs 3 cents per kilowatt-hour. This amount does not include the costs of transmission, distribution or the items corresponding to the investment made for the construction of hydroelectric power plants.
If all these aspects are taken into account, the average “real” rate of energy production would be USD 0.15 cents per kW / h, said Eduardo Rosero, president of the Ecuadorian Association of Renewable Energy and Energy Efficiency. Therefore, if the rates are lowered, the State should cover the deficit in the cost, the specialist considered.
The credits to finance these projects are not considered to establish the energy tariff. These are covered directly by the Ministry of Finance, through the General Budget of the State, according to current regulations, explained Ricardo Buitrón, consultant in hydroelectric projects.
For this reason, when compared to the 2005 energy tariff, which was USD 0.10 per kW / h, there is a reduction. However, Buitrón said that the previous government modified the legal and regulatory framework to define energy tariffs. That is, the same criteria are not used now. (I)