Sunday, July 20, 2014

Chile: Country's Electricity Costs Rise 193% Over Past Ten Years, Among Highest in the World

According to The Latin American Tribune, Chile’s electricity costs, which have risen by 193% over the past 10 years, are among the highest in the world, the president of the Metallurgical and Metal-Mechanics Industries Association (ASIMET) said Friday (July 18).

Elsewhere in the world, electrical power costs rose by an average of 111% during that same period, Gaston Lewin said during a gathering attended by Energy Minister Maximo Pacheco.

The marginal cost of electricity for large companies connected to the SIC power grid, which serves most of Chile, has not fallen below $100 per megawatt-hour over the past three years, and it averaged $246/MWh in June 2013, Lewin said.

Chile’s manufacturing sector currently pays $175/MWh, “more than double that of some neighboring countries we compete with, like Perú,” he said.

COMMENT: It appears that like many leftist nations, it is President Bachelet’s position to keep electrical costs exorbitant in order to fund public policies.

Sadly, we are seeing the same escalation of electricity prices in the US for both residential and corporate customers.
The metallurgical sector’s electricity consumption currently accounts for between 10-50% of the companies’ total direct costs, according to the Asimet president.

He applauded the government for striving to lower the marginal cost of electricity by 30% over the next four years and reduce power consumption, but he criticized its policy of favoring LNG-fueled plants over hydroelectric dams or coal, “which are clearly cheaper.”

The energy minister, for his part, said the government will not provide subsidies to companies that opt to implement energy efficiency policies.

He said the government also was not looking to develop nuclear power, noting that President Michelle Bachelet “was elected on a platform that makes no mention” of that alternative energy source.

The minister recalled that a study conducted during Bachelet’s previous term in office, in 2006-2010, found that the country was not prepared to implement a nuclear energy program.