How do they justify and what is the impact of the new electricity price?

He manager of the National Administration of Public Services (ASEP), Armando Fuentes Rodríguezhe rated electricity price increase as an indirect issue resulting from a significant reduction in the production of hydropower, the cheapest, which affects the price of electricity.

Fuentes claims that water production has been reduced by up to 44% compared to 70% in previous years. To date, the energy matrix consists of 44% hydropower, 11% wind, 9% solar, with a dependence of 36% on thermal energy, mainly as a result El Niño phenomenon.

Who is affected?
ASEP explained this for clients of distribution companies Edemet and Edechi The rate will not increase for the next six months, which is equivalent to 74% of electric service customers located in the provinces of Panamá Oeste, Coclé, Herrera, Veraguas, Los Santos, Chiriquí and Bocas del Toro. There are also no variations in the price of fuel for those provinces, he indicated.

Bocas del Toro customers also benefit from the expansion The recently approved Western Tariff Fund (FTO), which affects the 0% rate increase.

Why are Edemet and Edechi not exposed to variations?
These companies are not exposed to occasional market variations or variable prices because they have 98% of contracted energy, which gives more stability to their prices, Fuentes said.

These companies also benefited from a reduction in the fixed rate of profitability that benefited both energy distribution and transmission. In this sense, Fuentes clarified that the increase in the price of electricity corresponds to the production component, which represents 70% of the price of electricity.

Last Friday, ASEP also issued instructions to Edemet and Edechi to implement a percentage reduction in the penalty imposed by the regulator as a result of service deficiencies. The fines for these companies amount to $6 million and must be reflected on their clients’ invoices.

Why ENSA Panama clients they will resent it to increase?
Administrator from National Administration of Public Services (ASEP), Armando Fuentes Rodríguezexplains that 31% of its market is uncontracted, leaving it mostly exposed to the casual market; however, ENSA customers with consumption from 0 to 300 kwh will not experience significant variation, he said.

Meanwhile, higher spending customers will have a progressive variation that can reach up to 2% and 15% for customers like those from Rate with maximum demand (MTD), Fuentes explained.

In case of ENSA Panama, the regulator states that in order to mitigate its exposure to the occasional market, short-term tenders were conducted with poor results due to the low supply of water production. The official announced that a short-term tender for wind and renewable energy sources is being prepared.

What happened to the subsidies?
ASEP reminded that the executive power eliminated Bottom of Stabilization Extraordinary rate (FET) due to Covid 19and currently only Customs Stabilization Fund (FET) Ordinary which for this semester was set at 45 million dollars reaching customers from 0 to 300 kwh, 74% of total clients.

Also, Western Tariff Fund (FTO) is about 40 million dollars, of which 99.9% of clients use Chiriquí and Bocas del Toro.

Why was this increase not announced earlier?
The cost of energy is not imposed by ASEP, it depends on the electricity market in which it is located distributors They prepare an energy cost projection on a monthly basis where they take into account production and transmission costs, insisted the head of the regulatory body of the electricity market in Panama.

In this sense, the representatives Ensa Panama They assure that for this period the estimated increase in production calculation is up to 29 percent.

Distribution weighs 26%, transmission weighs 3%, and production 71%. For the rate that came into effect in October 2023, the cost of the occasional market was $70, the one defined by Asep for rationing issues for this latest period is $150. specify Ensa Panama sources. “In total production costs, we have an increase of 29%, which weighs 71% of the rate,” he added.

Distribution companies were also ordered to suspend billing from January 1 to 10 pending extension of Western Tariff Fund (FTO).

Fuentes announced that together with National Assembly Changes to the law are being worked on in three aspects: quality of service, energy prices and modernization of the electric power system.

Regarding energy prices, Fuentes claims that exposure to periodic market prices, in this sense, State Secretariat for Energy already recommended on Electrical Transmission Company, SA (Etesa) prepares tender documentation for long-term procurement of energy, power and supporting energy.

This is the first long-term competition exclusively for renewable energy sources to be implemented in Panama in the last 10 years and the first in the Central American region to include battery storage systems, to give greater flexibility National electrical system.