Wednesday, March 29, 2023

The financial deficit of electricity distributors skyrockets to US$1.5 billion

The electricity distribution companies (EDE) under the administration of the State (Edenorte, Edesur and EdeEste) have seen their technical and operational losses increase in the last two years, with levels that in 2022 were the highest and most expensive in the last decade.

This is indicated by the official statistics of the Energy Sector Performance Report published by the Ministry of Energy and Mines, where it is noted that in 2022 the losses of the EDEs reached 39.2%, their highest level since 2012.

These high losses had to be covered by the State with a US$1.5 billion subsidy last year, the largest amount contributed to cover the electricity deficit in the history of this sector in the country.

According to a report from the Regional Center for Economic and Social Strategies (CREES), this indicator is the result of operating losses of 32.4%, corresponding to the proportion of energy purchased by the EDEs and placed in networks without billing users, which indicating that it is an irrecoverable loss.

At that level, a 6.8% loss is added, which is the proportion of energy that is billed, but is not collected. This indicator shows a greater deficiency in Edenorte, Edesur and EdeEste, because in 2019, before the pandemic, it was only 3.5%.

Before this report, the Minister of Energy and Mines, Antonio Almonte, declared in the program El Gobierno de la Tarde, of the Z-101, that it is due to an increase in the supply of electricity from the EDEs, since they are supplying 98% of the energy demanded.

Expert Opinion

Engineer Bernardo Castellanos, an electrical expert, told the money that Almonte’s argument about more electricity supply falls due to the fact that in 2022 the EDEs increased the energy purchased by 2.1% compared to 2021. While in 2018 the increase in energy purchased was 4% compared to 2017.

However, from 2021 to 2022 the losses went from 37.5% to 39.2%, while from 2017 to 2018 they dropped from 33.7% to 32.7%, respectively.

Castellanos recalled that this increase in losses occurs even though in 2022 increases were made to the electricity rate, which should translate into a higher collection for the amounts billed and not a reduction.

In 2021, the EDEs collected 95.1% of what they invoiced, while in 2022 they could only collect 93.2%, even with a higher rate.

The State pays it

The increase in losses in the electricity sector is not felt by the population, because, in order to avoid blackouts, the Government has decided to cover the additional costs with treasury resources, that is, with a subsidy.

For this reason, the budget item to cover the deficit of the EDEs, which in 2019 was US$597.1 million and in 2020 US$589.7 million, increased to US$959.1 million in 2021 and last year reached a record amount of US$1.5 billion.

For the current year 2023, US$1,291 million has been budgeted for a subsidy to the electricity sector, but the amount could increase if the administrative capacity of Edenorte, Edesur and EdeEste does not improve.

The CREES report

Before the publication of CREES about a level of losses of 39.2% in the EDEs, the Minister of Energy and Mines, Antonio Almonte, said that he does not know where these figures were obtained from, since the losses in 2022 were 32.4%.

However, CREES specifies that it obtained the figures from the Energy and Mines publications themselves.

The issue is that Minister Almonte, when saying that the losses are 32.4% and not 39.2%, leaves out the proportion of 6.8% corresponding to energy billed and not collected, which is apart from the losses cited by the head of Energy and mines.

When 32.4% of losses are added plus 6.8% of energy billed and not collected, in addition to losses, then the result is 39.2%. That same sum was applied by CREES for the previous years and even so, the last time that the losses of the EDEs were above that level was in 2012, when they marked 40.5%. In the following years they fell, but in 2022 they rebounded.


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