Michelle Bachelet,
President of Chile
Santiago, Chile --- (METERING.COM) --- August 30, 2007 - Chile’s government has committed US$39 million to cushion the impact of the steadily increasing cost of electricity on low income households.

This amount includes a subsidy of US$33 million aimed at the more than one million households comprising the most vulnerable 40 percent of the population, whose electricity bills are expected to increase by 5 percent in the next two months.

The subsidy will be delivered in two parts in December 2007 and March 2008. Households associated with the Central Interconnected System (Sistema Interconectado Central, SIC) – between Tal Tal and Chiloé – will receive CL$9,000 (US$17) subsidy on each account. The households connected to the Norte Grande Interconnected System (Sistema Interconectado del Norte Grande, SING) – in Tarapacá, Arica Parinacota and part of Antofagasta – will receive a CL$6,000 (US$11) subsidy on each account.

The plan was announced Tuesday by the country’s president, Michelle Bachelet, with the support of the ministers of housing and energy, Andrés Velasco and Marcelo Tokman.

This funding is almost triple the amount provided in subsidies since 2005, which have included amounts of US$3.5 million in 2005 and US$7.2 million in 2006. The funding also includes the provision of energy efficient lights to these households in the first quarter of 2008 with the aim of bringing about a permanent saving of between 8 to 10 percent in their electricity bills.

The price increases are attributed to the increasing use of diesel fuel for power generation, in place of cheaper natural gas from Argentina, with generation costs in June 2007 reported at 420 percent up on the previous year. Some commentators have predicted an increase as much as 20 percent in electricity bills before year end, with the average Chilean household’s payment currently of CL$17,500 (US$33) per month for 200 kW of electricity rising to CL$20,600 (US$39), and further increases into 2008.

In a notice from the presidency, it was indicated that the possibility of establishing a permanent subsidy while electricity prices are high is under consideration.