Engineer Gustavo Bernal, former president of the Panamanian Society of Engineers and Architects (SPIA), warned that the increase in energy generation costs in the Panamanian electricity market could lead to an increase in electricity tariffs in the next semester. Bernal explained that the national energy system has begun to experience pressure on the marginal generation cost due to the rise in fuel prices used by thermal power plants, which is already affecting the price of energy in the occasional market. According to the specialist, this phenomenon could be reflected in consumers' electricity bills or, alternatively, be absorbed by the State through subsidies. Increase in the system's marginal cost According to Bernal, the marginal generation cost in the Panamanian electricity system —which in recent months was between 40 and 50 dollars per megawatt hour— has increased significantly due to the rise in prices offered by thermal plants that use natural gas. He explained that generating companies recently increased their costs, which ended up doubling the price in the system's occasional market. The engineer detailed that currently about 39% of the country's electricity generation capacity is thermal, that is, it depends on fuels such as natural gas or diesel, which makes the system vulnerable to changes in international energy prices. The impact would be reflected in the next semester Bernal recalled that the tariff structure in Panama is calculated taking into account the costs of the previous semester. In this sense, the current increase in generation prices could be passed on to the tariff that consumers pay in the next adjustment period. However, he noted that the State could opt to cushion the impact through subsidies, which would shift the cost to public finances. “If the system pays more today for energy, that cost will later be reflected in the tariff or in subsidies that the State ultimately pays,” he explained. Distortion in the electricity market The former president of SPIA also explained that in the occasional market a particular situation may arise: renewable energy plants without contracts, such as solar or wind, may end up receiving the same price as a more expensive thermal plant. This is because the market pays the price set by the system's marginal cost, regardless of the actual production cost of each plant. “A solar plant can end up charging the system's price even though its generation cost is much lower,” he detailed. Bernal also raised the need to strengthen energy planning processes and the bidding of new plants to ensure competitive prices in the long term. He warned that a minimal difference in the price offered by companies can translate into million-dollar costs for the country during the validity of the contracts. “A difference of just one cent in the price of the kilowatt hour can represent more than 130 million dollars in a 20-year contract,” he explained. The engineer also questioned the difficulties faced by some users who seek to install solar panel systems in their homes. In his opinion, procedures must be reviewed to guarantee that customers can exercise their right to generate their own energy without unnecessary obstacles from distribution companies. Pressure on the cost of living Bernal warned that the rise in energy costs could ultimately impact the cost of living for households, as electricity affects multiple economic activities. Therefore, he insisted on the importance of continuing to expand the participation of renewable sources and improve the planning of the energy system to avoid greater pressure on electricity tariffs in the future.
