Osinergmin: 6 percent electricity price hike expected in May

Residential and industrial electricity prices are projected to rise by 6 and 6.5 percent respectively, reported Osingermin, Peru’s independent mine and energy regulatory agency.

The 6 percent price hike, to take effect on May 1, 2009, was approved by Osingermin this week. Peru’s Interconnected National Electrical System, or COES, had initially suggested a 12 percent price increase.

The price increase “is due, mainly, to additional costs established by emergency decrees last year, in order to ensure that the population benefit from Peru’s hydroelectric facilities,” said Osingermin President, Alfredo Dammert in comments to Radio Radio Programas, or RPP.

Emergency Decree N° 037, said Dammert, equipped state-owned companies or institutions – such as hospitals – with emergency generators in order to avoid power failures.

“The cost of this measure must now be included in the general cost of electricity,” added Dammert.

A Peruvian family consumes an average of 45 soles, or $14, worth of electricity per month. The May price hike should increase a family’s monthly bill by 2.70 soles, or $0,84.

In 1992 – as part of globalization and deregulation of economy – the Peruvian government enacted the Electric Power Concession Law, which allowed for the privatization of the electricity sector and promoted competition and efficiency within the industry.

The Peruvian government maintains, however, an important position within the sector.

The largest generating company in Peru is Electroperu, majority-owned by the Peruvian government, which operates the Mantaro hydroelectricity complex. However, around four-fifths of Peru’s electricity is generated by the private sector. The largest electricity distributor in Peru is Edelnor, a subsidiary of Endesa, which operates in Lima and the surrounding area.

Peru has two main power transmission grids: one covering the north and center parts of the country, the other serving the south. An interconnector runs between the two along the Pacific coast. The largest transmission company in Peru is the Colombia-based ISA Group, which controls over half of the transmission grid in the country through its subsidiaries Red de Energia del Peru and Interconexion Electrica ISA.

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