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Trabajador d eparque eólico-ingeniero inspeccionando.

Keeping the light on: How to ensure electric power services

March 30, 2020 por Mauricio Tolmasquim - Luis Carlos Perez - Michelle Hallack Leave a Comment


The spread of the Coronavirus (COVID-19) has led the countries of the region to implement different economic and social measures to reduce its impact. The uncertainty caused by the lack of a vaccine, the fast spread of the virus, or the uncertain time it may take to return to a normal routine causes more concern.

The immediate priority of governments is to guarantee health but also measures that secure access to public services. As the number of confirmed cases of COVID-19 grows and the closing of leisure amenities and online work being advised by governments, millions of jobs are also being lost worldwide.

This has also led governments to implement short-term measures in the energy sector. In countries like France, the government suspended the payment of electrical services. Whereas, in the United Kingdom, gas and electricity companies joined the Government in guaranteeing services to the most vulnerable citizens of the country.

The measures implemented, as best practices, are concentrated in three large groups:

a) Guarantee the occupational safety of workers for the operation and maintenance of companies in the electricity sector

In Europe, many countries are taking steps to ensure operation and maintenance. For example, in Germany they are building shelters to have additional work shifts at generation plants, especially nuclear ones.

Electricity companies are among the 16 industries labeled “critical infrastructure sectors” by the US Department of Homeland Security, which causes to have a higher level of cooperation and scrutiny of government agencies in charge of public security.

The US electrical industry is considering asking essential personnel to live on-site, in power plants and control centers, to keep operations running if the coronavirus outbreak worsens. The industry has also been storing beds, blankets, and food for their staff.

b) Establish mechanisms to support the affordability of energy services

The large electricity companies in Spain have already decided that they are not going to cut the power to their customers, despite the fact that the Government has only prohibited the cut for vulnerable consumers, with which the potential nonpayment would entail a loss of profits in the short term. This implies an impact on the liquidity of the companies and their vulnerability to not cover the costs of supply.

Another country that has taken measures in this regard is France, which has announced that the state will assume the cost of non-payment of basic services. The payment of taxes and social security, water, electricity and gas bills, as well as rents, will also be suspended.

c) Set a strategy to guarantee the economic sustainability of the sector

The financial strain to which electricity companies are subjected can be extreme for small traders, many of which cannot long endure a general reduction in profits. This situation is particularly complex for marketers whose customer base has a high composition of SMEs. Portugal has already anticipated this situation and has decreed that marketing companies can delay payment to distributors while the emergency situation continues, in order to face the health pandemic.

The French president announced that 300,000 million euros will be allocated to save companies. The State will assume the payment of the contracted bank credits.

Some countries in Latin America and the Caribbean have begun to implement some of these measures, perhaps isolated, but with the aim of guaranteeing access to electrical energy for their citizens. In particular, the IDB is supporting different actions with resources and technical assistance with up to US $ 12,000 million destined for the crisis and its consequences. Undoubtedly, ensuring electricity services will be necessary to keep the light on in the region.

This blog is part of a series that analyzes the regional effects caused by the Coronavirus.


Filed Under: covid-19, Energy Access, English Tagged With: Coronavirus, COVID-19, electricity

Mauricio Tolmasquim

Mauricio Tolmasquim is a Visiting Scholar for the Energy Division at the Inter-American Development Bank. Graduate in Production Engineering and Economics, with a Master's in Energy Planning and Doctorate in Economics. Professor at Federal University of Rio de Janeiro. Former Brazilian Vice-Minister of Mines and Energy. President of Empresa de Pesquisa Energética (EPE) – Brazil's energy research and planning authority. Has coordinated the work team that elaborated a new electricity sector for Brazil. Author of 20 books and dozens of articles published in national and international newspapers.

Luis Carlos Perez

Luis Carlos Perez is a Communications consultant for the Energy Division at the Inter-American Development Bank. In this position, Luis Carlos is responsible for managing the communication strategy and serves as the editor of the blog Energía para el Futuro. He worked for seven years for the IDB´s Nicaragua country office as responsible for the communication strategy and supporting the relationship with civil society. Luis Carlos has also worked with the IDB´s Vice-presidency for countries supporting the communication strategy. He has a master's degree in Information Science from the State University of Londrina, Brazil, and undergraduate studies in Philology and Communication.

Michelle Hallack

Michelle Hallack is a senior economist responsible for the Energy Division’s knowledge agenda at the Inter-American Development Bank and she is also an Energy Policy Advisor at the Florence School of Regulation. At the IADB she works on program and policy issues across Latin America and the Caribbean. She leads the research team and coordinates the research initiatives for the Energy Sector, such as the Green Hydrogen Initiative. She is leading and co-leading new initiatives and products such as the Energy HUB, the Electrorating, and the Regional Regulatory Data Base Initiative. At FSR she is involved in teaching/training activities, she has been especially interested in developing interactive learning tools and methodologies for academic courses and professional training. Before joining the IADB, Michelle has worked for both public and private sectors around the world (including Latin American, European, and Asian countries). She has more than 15 years of experience in research and consulting on regulatory and energy economics. Some of the main results of her work has been published in scientific, professional journals, books, and blogs. In particular, she has focused on network industries' institutional design and development of new services taking into account the intersection between innovation, public policies, and regulation (tools and design). Michelle holds a Ph.D. from the University of Paris Sud XI of Economics, a M.Res from Federal University of Rio de Janeiro, a European Master (EMIN), and a Diploma in Economics Sciences of the State University of Campinas.

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