MercoPress. South Atlantic News Agency

Chile hikes electricity rates 20%, highest since 2000

Energy experts and government officials expect household electricity bills will rise twenty percent between now and November. If this estimate turns out to be true, it will represent the most dramatic increase in electricity bills since 2000.

Currently, the average Chilean household pays 17,500 pesos (US$33) a month for 200 kilowatts (kw) of energy. By year's end, that monthly figure will reach 20,600 pesos (US$39). Electricity bills continue to rise because of elevated electricity generating costs. The increases are mainly due to companies' increased reliance on costly diesel fuel instead of cheaper natural gas coming from Argentina. Additionally, experts warn that electricity's "core cost", which traditionally accounts for about 60 percent of Chileans' electricity bills, will be revised significantly higher. The CNE sets electricity's "core cost," which is based on a variety of factors including costs of electricity generation and demand, every April and October. Still, the CNE will have to raise this amount in September due to drastically increased electricity-generation costs. "This upward trend should continue through the beginning of next year. Electricity's 'core cost' should increase to the tune of 40 to 50 percent during this time period," confirmed Vivianne Blanlot, the former secretary of Chile's National Energy Commission (CNE). "Some energy generating companies speculate that their 'core cost,' which is currently at US$60 per megawatt hour (Mwh), will most likely rise to US$100 by 2008," said an industry official who chose to remain anonymous. This news comes on the heels of energy experts' predictions that electricity bills will rise by an average of six percent in the month of September. Electricity prices across the country have risen sharply in recent months. In June, the average cost to generate one megawatt hour (MWh) of electricity reached US$255. This is a 420% increase from the same period in 2006 and a 50% increase since May. These costs are then passed onto the consumer in the form of higher electricity bills. (Santiago Times)