Friday, October 19, 2007

New Thesis Title

I believe I have finally settled on a final title for my thesis.

Here is the new version___

Reshuffling democracy:
Exploring deliberative environmental governance in Costa Rica’s electric sector

And here is the old version it replaces___

Rediscovering Democracy:
Deliberating environmental insecurities in the Costa Rican power sector

----------------

Now, for my thinking about the change.

Change 1: Taking out Rediscovering / Replacing it with Reshuffling.

Granted, it's a weirder word, but it's a lot less pretentious. Mostly, I think it more accurately describes what this thesis intends to do in a number of ways:

BAREJEMELO?. This thesis addresses reflexive citizenship (drawing on the ideas of Ulrich Beck and Anthony Giddens) and deliberation (an emerging theme in environmental politics), as resources for nurturing environmental governance. A common Costa Rican colloquialism, between to people in conversation trying to understand each other, is "barajeme eso?", which means "come again"? or, can you restate what you're saying in a way that helps me better understand it?.... Thus, reshuffling entails an effort to make one's ideas (in this case about democracy) more accessible to the understanding of others. Similarly, the work of this thesis seeks to make the views about democracy held by some stakeholders more accessible for reflection by others with different views.

THE BIGGER PICTURE, THE WHOLE DECK. The central methodological resource of this thesis is the Q-Deck, a set of cards containign statements that are representative of the "Concourse" -- the domain of everything people might think about a topic. The process of completing a Q-Deck, while in some ways was just an intermediate step of this thesis, was a major intellectual production effort and a huge innovative leap of resourcefulness and creativity for the context of the research community (the University for Peace Department of Environment, Peace and Security) where this method was used. The shuffling aspect also relates to what the elaboration of this deck represents... taking all the cards (all the ideas), bringing them together, and integrating them into a new gestalt that is open for the analysis and the reconfiguration (through sorting) of each participant in the research.

THE REDISTRIBUTION OF POWER. Finally, the ultimate goal of the thesis is to foster the thinking about a model of governance where choice, responsibility and power are redistributed, into a reconfigured structure of civil society/State/private sector relations. In this sense, reshuffling democracy as a governance practice involves a redistributive action, like shuffling and dealing does with a deck of cards. Everything is brought back together and rearranged so as to meet everyone's needs more equitably.

In all these senses, the thesis is proposing a way of approaching democracy that attempt a different view of how the "different pieces of the elephant" in each stakeholder's vantage point fit together, and that can contribute to integrate the particular claims to legitimacy and justice that each side holds.

However, it is not really "rediscovering democracy" for anyone, since it is not seeking a higher claim to truth over the views of democracy that people already have, but instead it is just trying to "play" at combining them in new ways.

Change 2: Taking out Deliberating environmental insecurities / Replacing it with Exploring deliberative environmental governance

It's not really about vulnerabilities or securitization. The focus on the thesis is not on environmetnal insecurities (neither in the sense of identifying vulnerabilities nor in the sense of analyzing the securitizing discourse). The focus of the thesis is how the crisis of legitimation has collapsed environmental governance, how underlying views of democracy are keeping people entrenched in the polarization, and how discussing democracy can help overcome the stalemate. While environmental security undoubtedly deteriorates under conditions of a deadlock in environmental governance, that is not what this thesis is seeking to demonstrate.

But it IS about a "reframed" concept of governance. Deliberative Environmental Governance synthesizes a new approach to environmental governance... It synthesizes the willingness to be participatory, accountable, solution oriented and geared towards generating public judgment (which unlike public opinion, means that “people have struggled with the issue, thought about it in their own terms, and formed a judgment they are willing to stand by”. (O’Donnell, 1993, “Judgment defined and tested” paragraph 1). It is a synthesis that is not substantially in the existing literature (although some work on deliberative environmental policy is).

And it is an exploratory work. While this needs to be stressed a lot more in my writing, this thesis is a completely exploratory work... It isn't the definitive research on deliberative democracy and the environment simply because it is the first work done about it in this part of the world. So while I cannot expect to accomplish a specific outcome of deliberation, halfway through my research I'm loaded with charts of new territory I've explored.

So there, in a lot of words, is the explanation for the choice of my first words to describe my thesis... the title.

Saturday, October 13, 2007

Historical Background of Electricity Governance (Draft Chapter)

CHAPTER 2


historical background



Historical accounts, with different perspectives, are sometimes provided in studies of the electricity sector. Some documents only mention a few emblematic details, for example the fact that San Jose was the third city in the world to have electric public lighting, in 1884 (Fallas, n.d, “Inicio de los servicios electricos en 1884”). Others describe a historical progression, such as the consolidation of electricity services regulation since 1928 (Rodriguez, 2000), or the expansion of the national grid system since 1958 (Fallas & Alvarez, 1997). For the period prior to 1950, the available accounts have been published by State institutions; they generally reflect a strong nationalistic sentiment and portray a somewhat uniform view of public opinion (for example, national pride about early electricity innovators, and widespread support for electric nationalization).


Some of the accounts for the years following the creation of ICE in 1949 portray a greater social complexity in the governance of the electricity sector. For example, Alvarenga (2005) highlights the catalytic role played by the 1952 and 1958 protests against electricity rate increases in the “invention” of new traditions of social protest, given the loss of formal political spaces by the Costa Rican left after the 1948 Civil War, and the global context of the Cold War (p. 134). Alvarenga also points out that not all social movements have supported the idea of a centralized State monopoly (in the figure of ICE); for example, in 1963 massive electricity payment strikes pushed for the creation of a regional energy company in Cartago. (p. 187). A report by University of Costa Rica researchers outlines several legal reforms in the 1960’s and 70’s that consolidated the intrusion of partisan politics in the governance of ICE. (Marin, 2002, pp. 21-22). More recently, studies have looked at the social tensions sparked by policies for either privatizing or opening State-owned electric institutions to greater competition from the private sector. (Sojo, 2004, p. 28; Programa Estado de la Nacion, 2005, p. 218).



The intent of this chapter is to provide a contextual basis for understanding the social and organizational framework that relates to the governance of the power sector. It looks at the evolution of the electric sector stakeholders from a historical perspective, noting significant trends for four periods. Particular attention is paid to the social and political context and to the main collaborative and conflictive interactions.


From small enterprises to a regulated ‘de facto’ private monopoly (1880s to 1920s)



The Costa Rican electric sector first emerged in the 1880s under the initiative of small local entrepreneurs. Although the introduction of public lighting was strongly in alignment with the modernization policies of the liberal administrations of the late XIX Century, the role of the State was rather marginal over the first three decades of the power sector’s development.

The first concession to exploit hydraulic resources for electricity was granted in 1882 to the founders of the Costa Rica Electric Company1. Subsequently, the municipalities of other main urban centers Cartago (1888), Heredia and Alajuela (1897) became electrified by signing service contracts with private electric companies that required subsequent approval by the National Government. (Rodríguez, 2000, p. 32).


Between 1890 and 1910, a “race for concessions” unfolded between three private electricity companies to provide electricity services in San Jose and the surrounding communities, with very little regulation by the State. The services handled by the private companies included street lighting, lighting of public buildings and parks and the San Jose trolley service (Rodríguez, 2000, p. 33). In 1910, at the start of the Ricardo Jiménez administration, a law was passed which established the regulation and nationalization of hydraulic forces by the State, and allowing for their exploitation to take place only under concessions for limited time. (Rodríguez, p. 37)


The issue of the nationalization of electricity became visible once more in the late 1920s. One of the most important social movements of that period, the Liga Cívica (Civic League) was founded in 1927 by a group of Costa Rican professionals who questioned the deficient quality of electricity services and the trend towards monopolization of the private electricity companies by a subsidiary of the Electric Bond & Share Company (EBASCO), which was also acquiring power companies in other Latin American and Caribbean countries.


In keeping with the Liga Cívica’s misgivings, EBASCO acquired the majority ownership of all three major private energy companies in San José and surrounding communities by 1928, thus becoming an actual electricity monopoly in the Central Valley2. The concerns of the Liga Civica found an echo in Congress, and a law was passed in 1928 which nationalized electric forces and created the National Electricity Service (SNE). (Rodríguez, 2000, p. 45).


Bilateral public-private negotiations for quality and pricing control (1930s – 1940s)


The new law provided the government new revenues through a tax on electricity generation, gave the SNE the competence to regulate electricity concessions and to stem the rise in electricity prices (which was vital since the country was facing economic hardship at the time), and mandated the SNE to build and operate new hydroelectric plants that could advance the provision of electricity to the periphery of the country. (Rodriguez, 2000, p 59). Through the 1930’s and until the late 1940’s, the SNE was the only government institution involved in the power sector’s governance. In the 1930’s, its main work entailed constant negotiation over end-user rates with the private electric companies, which kept individual legal entity status but had the same ownership.


In 1940, Costa Rican President Calderon requested U.S. President Roosevelt for technical assistance in assessing the problems of the Costa Rican electricity sector. President Roosevelt designated the chief engineer of the Tennessee Valley Authority, Julius. A. Krug, to carry out this assessment.


Some of Krug’s main findings were:

  • the laws on public services provision were inadequate for regulating private companies and ensuring the protection of end-users;

  • the country lacked sufficient generating capacity;

  • the government’s financial situation would not allow the state to acquire or expand the existing energy infrastructure; and

  • the profit margins of the private companies were within the range of the usual international standards for this industry. (Rodriguez, 2000, pp. 101-103).


Krug’s report also pointed to a problem that already concerned the SNE Board Members, the complexities generated by the management of the three nominally separate companies that comprised a ‘de-facto’ monopoly. In 1941, the SNE negotiated, through a new contract with the private electric companies, their unification into a single legal entity that could be regulated more transparently. (Rodríguez, 2000, p. 105). The new company was named Compañía Nacional de Fuerza y Luz (CNFL). Incidentally, although the company was later nationalized in 1968, it has retained its name to this date.


The other main effort of the SNE during the 1940s was the modernization of the electricity legislation. A new law passed in August of 1941 gave SNE new powers, including the capacity to regulate electricity rates, oversee the financial management of electric companies, and to impose penalties for electricity smuggling or speculation. (Rodriguez, 2000, p. 110) Two additional laws in 1942 also empowered SNE to regulate telephone services (also provided by CNFL) and to administer water resources and regulate water concessions. These reforms in the electricity sector and in the regulation of other public services reflect a broader political transition during the 1940’s from a liberal to an interventionist state. (Rodriguez, p. 20).


During the 1940s new stakeholders arose in the electricity sector, infusing greater complexity into a political landscape that had been dominated by bilateral EBASCO – SNE negotiations since the late 1920’s. Their influence would revive the thrust for the nationalization of electricity services. The first of these arose in response to the shortage of electricity services in the city of Heredia. Given that its demand exceeded the capacity of its municipally managed plant, this city had sought since 1939 to build additional generating capacity rather than purchase power from CNFL. (Torres, n.d., p. 24). In 1947, with the financial support of the central government, the Municipality appointed an Energy Services Advisory Board (JASEHM) and initiated the construction a hydroelectric plant near Carrillos de Poas with an estimated capacity of 2000 kilowatts. (Torres, p. 34). This instance represented the first effort to build a project of this magnitude by a team of Costa Rican engineers working for a public entity, and independently of the foreign-owned power company.3


In 1945, a civil organization advocating the nationalization of electric services, the Asociación para la Defensa del Consumidor Eléctrico (Association for the Defense of the Electricity Consumer), emerged. Like the Liga Cívica of the 1920s, it was also primarily made up of Costa Rican professionals. The main issue it raised was the poor electricity service provided by CNFL, which had not expanded its infrastructure since 1932. Some of the founders of the Asociación para la Defensa were also involved in the design and construction of the Carrillos hydroelectric plant for the Municipality of Heredia. (Instituto Costarricense de Electricidad, n.d.b, p. 3).



The birth of ICE, the Second Republic and the new

consumer rights’ social movements (1950s-1970s)


The creation of ICE was influenced by the elements of the electric sector historical background outlined above, but also by the political upheaval and institutional restructuring that took place before and after the Civil War of 19484.


The 1948 Civil War and the birth of ICE

The Civil War of 1948 was the result of an escalating conflict between the followers of Figueres and Ulate on one side, and those of the Catholic Church, the Calderonista and Vanguardia Popular parties on the other; it was sparked by charges of electoral fraud by the latter during the 1948 election. When the opposition forces, led by Figueres, won the Civil War, their block of the opposition was able to strengthen the social reforms that had been undertaken by the Calderonistas (against the thrust of their Ulatista allies who opposed them), and introduced new initiatives that enhance access to public education, universal suffrage and basic social infrastructure, as well as others like bank nationalization, which supported the emergence of a middle class. (Alvarenga, 2005, p. 6)


It was in this context that Costa Rican engineers, led by Jorge Manuel Dengo, prepared a National Electrification Plan in 1948, which involved the creation of a national electricity institute.5 They garnered the support of the Bank of Costa Rica’s Directors, and with their backing, promoted it to President Figueres. (Fallas & Alvarez, 1997, p. 11). Figueres had originally intended to sign a new contract with CNFL for an expanded generation capacity, but was persuaded by Dengo’s group to move towards a national monopoly. (Ramirez, “A la par de don Pepe”). ICE was created by a Decree of the provisional Junta in April of 1949. It is generally perceived as a keystone institution of the Costa Rican welfare state since the 1950s, particularly for its role in supporting the country’s economic strategy of industrialization and expanding electricity coverage to the rural areas. (Fallas & Hernandez, n.d., p. 18).


In addition to ICE, two other energy sector institutions were established in 1949, both of which were responsible for managing Municipal electricity services for major urban centers outside San Jose: Alajuela (JASEMA) and Heredia (JASEMH). (Rodriguez, 2000, p. 150). The foreign-owned company, CNFL, continued to operate, but primarily as a distribution company under the regulation of SNE.


ICE first acquired seven powerplants from the Saxe Power Company, which had provided electricity to the communities of Limon, Cartago, Turrialba and Puntarenas. (Rodriguez, 2000, p. 141). The first hydroelectric plant build by ICE came online in 1958, nearly doubling the country’s total existing capacity. (Rodriguez, 2003, “Nace el ICE”, paragraph 4). SNE transferred to ICE its responsibility (and the scarce infrastructure it had developed) for providing electricity in rural areas, but continued to play a policy role and influence the move towards nationalization.6


The electricity service protests in San Jose and Cartago in the 1950’s and 1960’s

In the 1950’s two popular protests regarding electricity services were organized by the working class neighborhood associations (or ‘Juntas Progresistas’) in San Jose. The emergence of this form of organization was influenced by an unprecedented urban population growth in Costa Rica, as a result of the policies implemented by Figueres’s party (renamed the National Liberation Party – PLN), and by the search for new modes of organization by the left, which had been excluded from formal participation as a political party following the 1948 Civil War (Alvarenga, 2005, p. 133).7


While the movements in San Jose were reframed as both against rate increases and in support of electric nationalization and ICE, movements that arose in regions outside San Jose (and therefore outside CNFL’s service area), in cities like Alajuela, Puntarenas and, later, Cartago, advocated local control over public services and therefore opposed ICE and the government’s centralization strategy. (Alvarenga, 2005, p. 164). Alvarenga also observes that there were differences in the make up of the two types of movements; while the movements in San Jose were mostly comprised of community organizations from working-class neighborhoods (Juntas Progresistas) that were seeking at the time to reclaim a political space for the left, the movements outside San Jose constituted broader coalitions, including the local municipalities, chambers of commerce, labor unions and charitable organizations like the Rotaries. (p. 144).


Of the regional movements, the Cartago electric bill payment strike, in the early 1960’s, was the most significant one in the country’s history opposing the trend for the centralization of electricity services.8 It was unparalleled in how quickly it spread to the surrounding communities and how long it was sustained. According to Alvarenga (2005) the grievances of Cartago’s citizens involved their perception that they were being subjected to inferior quality and disproportionately higher rates than citizens of the Central Valley and other regions (p. 188). The same author points out that Cartago’s conservative protesters purposely distanced themselves from the discourse used by the left-wing organizations in San Jose during the previous decade, such as denouncing ICE’s international loans and calling for the nationalization of CNFL (p. 189). Ironically, the Cartago protest suffered the strongest episode of repression of any social movement in Costa Rica during the Cold War years, in November of 1962, with a death toll of two civilians and one police officer (Alvarenga, 2005, p. 172).9


The government also sought to crack down on the payment strike through massive disconnections of the delinquent end-users, but the community was able to organize itself into reconnection teams that followed ICE’s trucks and restored the electric connections of the striking homes and businesses.10 The protesters were able to sustain the strike from 1962 until October of 1964, when the Cartago Energy Services Management Board (JASEC) was created and ICE’s infrastructure for electric distribution was transferred to it. (Alvarenga, p. 208; Rodriguez, 2000, p. 136).


Despite its unique success, the movement’s strong anti-communist and regionalist sentiment caused it to reject linkages with other movements throughout the country, and the movement did not transcend the regional scope of Cartago. Also intriguing is the fact that this episode has been virtually erased from the memory of both the electricity institutions (including JASEC) and the social movements in the rest of the country. Even in Cartago, Alvarenga, in research efforts, found that even its past leaders discuss it rarely, and the younger generations have virtually no knowledge of it. (Alvarenga, 2005, pp. 209-210).


Increased central government intervention on ICE’s governance

Some analysts contend that ICE faced growing intervention from the “representatives from the main political forces in the country” since the early 1960’s, a situation that may have led to a reduction of its autonomy for sound technical decision making. (Marin, 2002, p. 21). They point as the start of this process the passing of a law in 1962 that required that a State Minister become a member of the board of every autonomous institution (including ICE). A second law, passed in 1968, limited the autonomy of governance and administration of all autonomous institutions (ICE included) to purely administrative matters. (Marin, p. 21; Sojo, 2004, p. 19).


The establishment of Rural Electrification Cooperatives

Bringing electricity to the rural areas remained a daunting task for ICE, with nearly 60% of Costa Rica’s territory having no access to electricity in 1963. Since financial limitations represented one of the greatest constraints, ICE and the National Bank of Costa Rica sought support from the United States Agency for International Development. At the time, in the context of the Alliance for Progress, the United States government supported different social welfare projects in Latin America to counteract the influence of left-wing political movements. One such initiative focused on the creation of cooperatives for rural electrification, replicating the model of the National Rural Electric Cooperatives Association (NRECA) in the United States, which had been successful in providing electricity services to many rural areas in that country. (Fallas, 2001, p. 16).


Three cooperatives were initially established with long term financing from USAID, to operate the electricity distribution systems for the regions of San Carlos (Coopelesca), Nicoya (Coopeguanacaste), and the southern area of San Jose Province (Coopesantos). A fourth cooperative was established in the early 1970’s in the Zarcero region of Alajuela (Coope Alfraro Ruiz). The first three Cooperatives were established in 1965, and by 1969 they were able to complete the infrastructure to begin delivering electricity to 9,800 members. The Cooperative’s members were both the clients and owners of the Cooperative and thus were entitled to elect and participate in its Board of Directors. (Fallas, 2001, p. 17; Monge, 2006, pp. 3, 9).


The nationalization of CNFL

The negotiations for the purchase of a majority ownership of CNFL’s shares by ICE took place between 1962 and 1968. At the time, CNFL was the largest private company in the country, and its acquisition was negotiated for $10.5 Million. The contract was signed in April of 1968 and passed as Law in September of that same year. CNFL retained its name, but the 40-year private monopoly on the distribution of electricity in the Central Valley came to an end. (Rodriguez, 2000, p. 144).




Efforts to interconnect the country amidst the international crises and government interventionism of the 1970’s

ICE’s greatest effort for rural electrification and consolidation of electric interconnection took place in the 1970’s. In that decade, it absorbed 27 small municipal and private grids and incorporated them into a National Grid (Fallas, 2001, p. 19). In 1979, it also acquired the assets of the Municipal Electricity Services Board of Alajuela (JASEMA), whereby the latter was dissolved. (Rodriguez, 2000, p. 173).


During the two consecutive PLN administrations - Figueres (1970-1974) and Oduber (1974-1978) - the State advanced in the creation of numerous government enterprises in the production of commodities like sugar, cotton, aluminum, and cement. The capacity of the public service utilities, including ICE, also needed to grow to sustain this industrial development and the sprawling urban population. The country resorted to international debt to finance this development. Furthermore, the costs of producing electricity were aggravated during the international oil crises of 1973 and 1978, and it became socially and politically unviable to raise the service rates proportionally to compensate the increased costs. As a result, the fiscal deficit increased thirty-fold between 1970 and 1980. (Rodriguez, 2000, p. 162).


Concurrently, the central government continued to pass legislation that increased the political inherence on the governance of autonomous institutions, including ICE. In 1970 a new law established that the Boards of autonomous institutions would be appointed according to a 4:3 formula, whereby 4 members would be appointed by the central government in power, and the remaining 3 members would be selected from a roster provided by the political party that had come in second in the last elections. In 1974 another law created the position of Executive President of all autonomous institutions, who would be a political appointee by the central government outranking the General Manager of the institution. This situation is perceived by some analysts as having a dual negative impact, placing these institutions in the role of providing financial stability to the rest of the government, and reducing the legitimacy of political leaders. (Sojo, 2004, p. 19; Marin, 2002, pp. 21-22).


A period of crisis and restructuring (1980’s-1990’s)


The economic crisis of the early 1980’s

Between 1980 and 1983 Costa Rica faced a severe economic and social crisis. This was in part a consequence of an international recession that involved rising in oil prices and international interest rates as well as falling prices of export commodities (Vargas, 2003, p. 6).11 As a result, the socio economic indicators of the county were deeply impacted, for example Quesada et al. (2004) cite that between 1980 and 1982 the GDP dropped by 9.2%, the rate of open unemployment nearly doubled from 4.8% to 9.4%, the accumulated inflation reached 157.6% and real salaries dropped by nearly 30%. (p. 106)12.


The era of restructuring and the 1983 strike

President Carazo, during his presidential term (1978-1982), had rejected the proposals of the International Monetary Fund (IMF) and ousted its representatives from the country. (Sojo, 2004, p. 20). His successor, President Monge (1982-1986), reinitiated negotiations with the IMF and adopted its state restructuring guidelines including cuts in public investment and expenditures in education, health and poverty alleviation. (Alvarenga, 2005, p. 219; Vargas, 2003, p. 16). This restructuring was accompanied by a Social Compensation Plan, supported by United States development aid funds, given Costa Rica’s potential as a opposing model to the Sandinista revolutionary government in Nicaragua; the compensation plan included scaled salary increases, low-income housing, land distribution and food aid, but the effects of these compensation measures were only felt in subsequent years after their implementation in 1983 (Alvarenga, p. 219; Sojo, 2004, p. 21).


However, the compensation measures were contrasted with the use of public service institutions as the state’s primary revenue generating sources, thus overshadowing their customary role promoting socially equitable development (Sojo, 2004, p. 21). It was in particular the increases in electricity rates taking place in 1982 and 1983 that finally triggered a massive popular turmoil.13 It is noteworthy that the discourse of the 1983 protests was permeated with a high level of distrust towards the billing function of the distribution companies, (which would include CNFL, ICE, and the other regional companies), suggesting that rates higher than those published by the government were being applied, and that the company employees were recording higher than actual consumption (Alvarenga, 2005, p. 241).


The movement began in the working class neighborhood of Hatillo, and quickly sprouted into a country-wide coordinating committee (Comite Nacional de Lucha) that incorporated 52 labor organization and 140 local committees. A nationwide “no-payment” strike ensued in May and was sustained until June. As the government found itself hard pressed to contend with the outcry of a population hard hit by years of crisis, dissent built up within its own institutions. By the peak of the movement, the organizers had obtained the support of 29 members of Congress (only four of whom were from the left) and 50 municipalities. (Alvarenga, 2005, p. 228).


When the government tried to implement massive disconnections of striking homes and businesses, the protesters organized generalized road blocks on June 8 that spread throughout the country. In the face of the roadblocks, the government called off the disconnection and agreed with the National Coordinating Committee to return the electricity rates to the values of October 1982 (Alvarenga, p. 229), it also agreed to offer preferential rates to small producers and businesses, low-demand households, educational institutions and philanthropic institutions. (Sojo, 2004, p. 22).14


The thrust for privatization in the 1990’s

In the late 1980’s a significant degree of economic stabilization had been achieved through the implementation of policies that included the reduction of public expenditures and the adjustment of public service rates. According to Sojo (2004) the public sector’s fiscal deficit was reduced from 17% to approximately 4% between 1982 and 1988. Sojo also points out that a new focus was placed on the elimination of public monopolies and on the privatization of public service entities, as the stabilizing role of public utility rates decreased. (p. 23).15


The first government initiatives for privatizing ICE starting in the Arias administration (1986-1990) with bill contemplating the sale of 60% of ICE’S telecommunications operation to private capital. However, the political conditions were less favorable for privatization than in the early 1980’s and the bill was rejected. (Sojo, 2004, p. 23).16

However, while local support dwindled, international pressure for the privatization of public services, particularly electricity, was rapidly growing in the region. As Tomiak and Millan (2002) indicate:

The 1990s was the decade of privatization and deregulation. (…) As the decade progressed, the concept of energy market liberalization was embraced by governments, businesspersons, consultants and lending agencies across the world as a cornerstone of economic policy. Such was the enthusiasm for liberalization that the question of whether it was in fact an appropriate policy for all countries, whatever their circumstances, was sometimes overlooked or at least glossed over. (p. 1).

Unlike other countries in the region, where privatization was hailed as a solution for the inadequacies of the state-owned electric companies, in Costa Rica, the policy of greater private participation in electricity generation was related to macroeconomic commitments by the central government under the structural adjustment programs. The government needed ICE to generate a financial surplus as a way to balance the public budget deficit, which would not have been possible if ICE acquired loans to meet the projected future capacity needs of the electric system. (UN Economic Commission for Latin America and the Caribbean-ECLAC, 2003, p. 21).


Initially, Costa Rica broke away from the model of privatization and reform that had previously been applied in Chile, Argentina, Peru and Colombia (Dussan, 1996, p. 1) instead applying a different approach, commonly referred to as the “co-generation scheme”17 through Law #7200 of 1990 (Vargas, 2002, p. 86). As a result, an association of Private Electricity Producers (ACOPE) emerged and by 1998, 27 small private hydroelectric projects and 2 small private wind projects under 20 MW had been installed and generated a total of 155 MW of power that was sold under a Power Purchase Agreements (PPAs) with ICE. (Vargas, pp. 151, 161).


Other institutional shifts of the 1990s

Three other phenomena significantly shaped the electricity sector institutions for this period. The first concerns a new alignment of the energy and environment sectors, which were integrated into a single Ministry (originally the Ministry of Energy, Natural Resources and Mines, later named the Ministry of Environment and Energy), accompanied by the creation of a sub-sector planning agency called the Energy Sector Directorate (DSE). DSE became responsible for undertaking integrated energy sector planning, including promoting conservation and assessing alternative energy resource potentials, while ICE remained responsible for planning the capacity expansion of the national power system. (Sotela, 2000, p. 17).


Incidentally, SNE was also the subject of legal reform, in 1996, when it was renamed Public Services Regulatory Authority (ARESEP) and its oversight functions were expanded to additional areas like telecommunications, public transportation and municipal waste management (Rodriguez, 2000, p. 239)


A second relevant phenomenon was the development of a Central American initiative to enhance the integration of the regional electric system. The project of a Central American Electric Interconnection System (SIEPAC) was conceived by the Central American and Spanish governments in 1987, and a framework treaty was ratified by all six countries in the region in 1998.18 The project was later integrated into a broader initiative called the Plan Puebla Panama (PPP) to strengthen infrastructure initiatives between Mexico, Belize and the six SIEPAC countries. (Ruiz-Caro, 2006, p. 60).


The third significant phenomenon was the emergence of an organized,, contentious social movement opposing electric infrastructure projects, particularly hydroelectric ones. This phenomenon unfolded at two levels: opposition to large dam development by ICE, and contesting of smaller-scale hydroelectric projects19. (Barrantes, 2005, pp. 22-23; Duran, 2002). One of the earliest and most visible examples of the latter involves the opposition starting in 1998 against several (four private and one public) hydroelectric projects by the local communities in Perez Zeledon County, with the support of environmental groups and the local bishop (Barrantes, p. 23; see also Ureña, 2002).


Regarding large-scale dams being developed by ICE, the opposition often involved local communities and environmental groups, but it generally also included two actors that were gaining increasing leverage for protecting their interests: indigenous peoples, and whitewater rafting companies. Indigenous peoples had gained increased protection through the ratification of International Labor Organization Convention 169 by Costa Rica in 1992. This rendered them a fundamental stakeholder in the consultation and participation process for the large-scale Boruca and Pacuare projets, which substantially affected their communal lands. (Duran, 2004, p. 11).


Whitewater rafting companies emerged in Costa Rica in the mid-1980’s and have since played a crucial role, particularly in the Reventazon and Pacuare rivers, in promoting to the local populations the idea that there are economic and development opportunities – associated to river conservation – which pose much less impact on river ecosystems than large dams. They represented a major source of opposition to the Angostura project in the Reventazon River, although they were unable to stop its construction. Consequentially, when ICE’s promised boom of lakeside tourism did not materialize in the Angostura reservoir, while rafting tourism dropped, this became a major public relations setback for ICE and bolstered opposition to its subsequent large-scale projects. (Gallo, 2005, p. 11; Duran, 2005, p. 22).





Contextualizing the “Combo” conflict and its repercussions on

formal democracy and electricity sector governance (2000-2005)


Social mobilization in response to the Combo Law

The Rodriguez administration (1998-2002) formulated a new proposal for the reform of ICE, it involved separating the telecommunications and electricity operations of ICE, an opening of the telecommunications market, and an institutional modernization plan for ICE; for the electricity sector, it also contemplated expanding the role of private “co-generation” and involving other actors in electric distribution. In order to accelerate the legislative review and approval, all of the initiatives were fused into a single bill, which came to be commonly known as the “Combo ICE”. The bill was debated and received preliminary legislative approval on March 20, 2000. (Sojo, 2004, pp. 27-28).


Sojo (2004) identified three different groups of stakeholders in relation to the Combo conflict, each associated to a different political discourse and a preferred policy deliberation approach.. He identifies the first of these as the “corporate” group, comprised of ICE’s labor unions, sectors of ICE’s management, and other trade unions and associations from public institutions. The second group he designates the “nationalistic” group, made up of groups ideologically opposed to neo-liberal reforms, as well as environmentalist and student organizations. The final group, which Sojo labels the “pro-privatization” group, is comprised of the members from political parties and of corporate groups that ideologically favor the opening of public monopolies and greater privatization. (pp. 33-36).


The “corporate” group favored certain aspects of modernizing ICE, primarily those concerning the removal of limitations that prevented ICE from reinvesting its own surplus to strengthen its capacity and upgrade its technology and infrastructure, but they opposed increased private participation and the opening of ICE’s monopoly. Therefore they were also opposed to the combined project. They had therefore established alliances with the “nationalistic” groups. (Sojo, 2004, p. 35).


The nationalistic groups included environmentalists, sectors of the Catholic Church, community groups and organizations of students and academics from public universities. They were also supported by farmer organizations that were clashing with the government over the elimination of tariffs on agricultural imports. However, it was also a salient feature of this movement that the different organizations were able to retain their individual identities, while at the same time acting as a strong coordinated caucus, unlike the protests of the 1950’s, 60’s and 80’s where a single collective identity permeated each of those movements (Alvarenga, 2005, p. 282). Several of these communal, environmental and church organizations were already opposing certain hydroelectric projects (mostly private ones being developed under Law #7200 or instances of multiple projects located within the same river basins). This served as an opportune point of intersection that facilitated alliances with the “corporate” groups opposing ICE’s reform. (Rojas, 2001, p. 22).


The discourse of nationalistic organizations included ideological elements such as “national sovereignty; the demand for transparency and a halt to corruption; coverage driven by criteria of territorial and social equity; and the prevalence of public interests.” (Sojo, 2005, p. 37). A central issue was the emergence of ICE as a symbol of national identity, sovereignty and the welfare state. (Alvarenga, 2005, p. 279). ICE is depicted as an enduring source of national pride (Asamblea Legislativa de la República de Costa Rica, 2003, p. 5; Acevedo, 2002, p. 42), a uniquely Costa Rican and even ‘heroic’ instrument for both development and solidarity (Alvarenga, p. 280; Amador, 2000, p.2), and its defense is tied to a historic struggle for national sovereignty and for supporting the poor and middle classes against the abuses of the oligarchy (Alvarenga, p.281; Solis, 2002, p. 43). While this imagery resonates with the nationalization movements of the 1930s, 1940’s and 1950’s, ironically it overlooks some of the features of the energy protests of later decades (particularly the 1963-64 and 1983 protests) where in the first case, the zeal to replace ICE with a regional body had even led to instances of sabotage, and in the latter, generalized accusations of falsified meter readings suggest widespread distrust in the State electric companies (Alvarenga, pp. 197, 242).


The third group defined by Sojo (2002), the “pro-privatization” group, focused on fiscal elements which it considers determinant for defining the necessary institutional reform. Three related elements were essential to its financial perspective: concern for the fiscal balance of ICE as an integral part of the public sector’s overall financial health indicators; concern that ICE can only become competitive in a context of openness of the market to other private enterprises; and the view that only privatization can attract additional private capital which will bring about needed social benefits. (p. 36).

The bill’s preliminary approval set off a large number of protests all across the country, which were sustained just over two weeks until a jointly designated facilitation commission was able to bring representatives from both sides together for negotiations20. During the protests, the alliance of “nationalistic” and “corporate” groups identified as their nemesis those domestic stakeholders they saw as gaining the most from privatization, whom they referred to as “the political class”21 and accused of “corruption, voraciousness, autism and sterility” (Solis, p. 34). While maintaining their diverse identities and agendas (job security, defending a socially-oriented public service model, preventing private investment in activities that threatened to cause environmental damage and forced relocation, etc), anti-Combo organizations were able to articulate their work around a common discourse regarding what they saw as an attempt by the political class to execute a privatization, disguised as a modernization, of one of the most valuable public companies.


Conversely, the “pro-privatization” group argued that the bill’s opponents were mistaken or ignorant about the real issues, citing as example the substantial number of high school students who participate in road blocks and demonstrations, but had only superficial information about the bill.22 Furthermore, they interpreted the reasons of the different interest groups opposing the bill as having little in common with each other, thus suggesting that the united opposition was articulated on dogmatic grounds instead of reflecting actual deficiencies of the modernization project. (Sojo, 2004, p. 28).


The negotiation process that ensued after the sixteen days of protests led to agreements on three levels: to establish a special commission with multi sector representation that would suggest revisions to the bill23; to withdraw the existing bill from the Congressional Agenda for 150 days (extendable) and to hear instead upon its conclusion the initiatives generated by the multi-sector commission; and finally a mutual agreement that the demonstrators would cease their direct actions and that the government would not take any reprisals. However, two weeks after the agreements had been reached, the Constitutional Court declared the bill unconstitutional due to the violation of constitutional norms, principles and values in its approval process. This situation left the Commission without legal footing, since they had been mandated to provide revisions to the existing bill. (Rojas, 2001, p. 30).


The creation under the post-Combo negotiations of the multi-sector commission signaled the increased relevance of a new approach to deliberation and decision making. Previously, two approaches had predominated: the technocratic decision-making approach was dominant prior to the 1980’s, when public institution labor sectors had significant leverage with the Central Government as both technical experts and special interest groups; and the bipartisan approach, which became dominant following the restructuring processes after the 1980’s, once deals between the major political parties overrode the importance of central government negotiations with the public institution labor sectors. (Sojo, 2004, p. 37).


Although congressional rules already contemplated the figure of ad-hoc multi-sector – or “mixed - legislative commissions (in which non-congressional members participated as ‘advisors’ with voice but without vote), their prevalence and visibility greatly increased after the Combo incident, as a short-term solution to the declining citizen trust in a Congress controlled by traditional parties. However, there is still uncertainty about their effectiveness in addressing the need for stronger pluralistic representation and more participatory and legitimate governance processes. (Rivera, Rojas, Zeledon & Guzman, 2006, p. 100)24.


Civil society responses to other electricity issues

Other social movement actions, in addition to those of the anti-Combo block, also affected the governance of the electric sector in the current decade. One of the most relevant involved the creation of new modes of protest which employed the very institutions created by the Costa Rican State for its own control and the protection of citizen’s rights.


For example, the organizations leading the grassroots opposition to the hydroelectric projects in Perez Zeledon used different methods, from road blocks to town meetings, and finally succeeding in preventing the construction of the projects by filing a writ before the Constitutional Court, who ruled that under the existing legal framework the Environment Ministry was not empowered to issue water concessions. This situation created a legal vacuum, still presently unresolved, that prevented any more private generators from obtaining water concessions to develop hydroelectric projects. (Ureña, p. 155). However, developers already holding concession and non-private generators (regional and cooperative distributors) were still able to participate as small power generators under the existing laws.


Other communities opposing projects in different parts of the country also turned to creative new approaches for contention, for example, three municipalities: Guacimo, Sarapiqui and Turrialba, held plebiscites where the majority of voters either directly opposed a project or declared a special protection status for rivers where projects were being planned. Other communities denounced projects before the Environmental Court for instances of environmental degradation. (Barrantes, 2005, p. 23, Duran, 2005, p. 22). Furthermore, activists also raised the issue of disproportionate benefits under certain Power Purchase Agreements (PPAs) between ICE and private generators. 25


In the case of the large-scale dams, which ICE considers essential to meet the long term base demand of the country, the issues of indigenous sovereignty and the protection of conservation areas have become crucial, since approximately one third of the hydroelectric potential currently identified and untapped is located fully or partly within Indigenous Reserves, and another 14% is located within National Parks. (Instituto Costarricense de Electricidad, 2006, p. 12). This has led to opposition from indigenous and environmental groups, which has pressured ICE to desist from its two highest capacity dams and seek alternatives.26


The opposition to both ICE’s dams and private generation projects has not been uniform in all cases. Some groups, like private rafting operators, have been more open to small-scale run-of-the-river or low-volume reservoir hydroelectric projects (Liddell, 2007, paragraph 14). Other organizations have been supportive of ICE as part of the welfare state and primarily oppose private generation from an anti-neoliberalism stance (Jiménez, Flores, Rivas & Quesada, 2003, p. 6). Nonetheless, there is a significant generalized anti-hydroelectricity movement in the country, which has even played a major role in establishing a regional anti-hydroelectricity network of organization in Central America. (Castro, 2006, “Dar respuesta al reto require valor” paragraph 3).


Changes within electricity enterprises

Meanwhile, there has also been a diverse response from both public and private groups involved in electricity generation. In ICE’s case, it has sought to strengthen its image as an institution with a mandate of sustainability and solidarity. It has developed a watershed management program, specifically targeting four regions, where its projects have faced social movement opposition (Porras & Neves, 2006, p. 2). Some private generators have also sought a stronger environmental image, either by seeking green certification (such as ISO 14000) or by supporting watershed conservation through payment for environmental services (Granados, 2006, pp. 25; Anderson, Pringle & Rojas, 2006, p. 684). Finally, given the freeze of new concessions for private generators, the municipal and cooperative electricity distribution companies (ESPH, JASEC, and the four Cooperatives) have become the only entities, beside ICE and CNFL, with a viable alternative to develop of small hydroelectric projects. The legal capacity of these distributors to generate electricity could potentially be exapanded (allowing the development of projects up to 60 MW and up to 30% of the total national grid’s capacity) under a new bill, commonly known as the Conelectricas Law. (Infopress Centroamericana, 2003, paragraph 2).


Thus, for several private developers the only viable alternative has establishing a joint venture with these distributors whereby the latter obtain the water concession and buy the electricity generated by the project, while the private developers contribute other assets, such as the land and capital (Infopress Centroamericana, 2003, paragraph 11). Yet other private developers see the Costa Rica private electricity market as unviable and have taken on a strategy of “exporting” Costa Rican expertise to other Central American countries where the market is open to private investment. (Vega, 2005, p. 30).


Looking ahead: Facing polarization, intractability and uncertainty

over the energy model in a shifting global context


A recent participative multi-stakeholder process for drafting the new Water Resources Bill, hailed as one of the most promising examples of collaborative natural resource governance, is a revealing indicator of the current level of intractability of the hydroelectricity issue. Over 21 months of multi-stakeholder country-wide dialogue, the process overcame a prolonged Congressional impasse between three different versions of the Bill, each of which had been rigidly defended by interest groups. A new draft reaching consensus over most disputed issues was produced. However, the inclusion of concessions for private hydroelectric generators in the new law remained a highly polarized issue, since “many of the social actors tend to firmly oppose the current energy model, while the entities responsible for it defend it tooth and nail” (Aguilar, Alvarado, Astorga, Avendaño, Blanco, Mora-Portuguez, et. al., 2004, p. 68).


In the broader regional and international context, there is a growing split in the sustainability discourse. One outlook hails hydroelectricity as an essential element in climate change mitigation and regional development, while a contrasting viewpoint denounces dams as a source of social and ecological harm, disproportionately imposed on disenfranchised populations (Cevallos, 2006, paragraph 2; Conca, 2006, p. 378).


The current administration (Oscar Arias, 2006-2010), would seem to resonate more strongly with the camp in favor of hydroelectricity and concerned over climate change mitigation. A central aim of this administration’s electricity policy is to steer the country to generate 100% of its electricity from renewable sources by 2021. Given the country’s resource matrix and technical know-how, this means that most of the 370 MW projected renewable resource electric capacity increase by 2010, will need to come from hydroelectricity. (Ministerio de Planificación Nacional y Política Económica –MIDEPLAN, 2007, pp. 81, 83).


However, ICE’s expansion plan, drafted at the end of the previous administration (Abel Pacheco, 2002-2006), makes an assessment more in line with the recent challenges of electricity infrastructure development, and forecast that under current trends greater dependence on fossil fuel-based thermal generation is expected by 2012 (ICE, 2006, p. 50). The same report attributes this projected increase in fossil-fuel dependence to several factors including: the shortage of viable new sites for large dams, the high early-stage investment costs of hydroelectricity relative to thermal plants, the decreasing costs of combined-cycle natural gas technologies, and the growing opposition by neighbor and conservationist groups to hydropower (p. 31).


Whereas ICE’s expansion plan attempted to convey a somewhat balanced outlook of the motivation of opposing groups, who in its view “assign greater importance to local impacts, sometimes transitory and not as relevant, than to global benefits” (ICE, 2006, p. 31); the new administration, despite its heightened commitment to renewable electricity projects, has shown little interest in exploring the underlying concerns of the environmental and community groups, despite their considerable effectiveness during the last decade in preventing new hydroelectric projects from being constructed.


Between April 18 and May 4 of 2007, ICE’s contingency plan failed to meet the country’s demand27, consequently, daily nationwide power cuts of up to five hours had to be implemented (Avalos, 2007, paragraph 14). A few days after the crisis passed, President Arias presented before Congress his first annual report on his administration. In his address, he attributed the crisis to four major causes: unpredictable rain regimes due to global warming; wear-down of the country’s older generating plants (he referenced particularly the thermal plants, presumably because these are peak demand units which had been overstressed to meet base demand); longstanding limitations to ICE’s in making investments in generation; and ideological prejudice which had ‘clouded the understanding of some very important sectors in ICE’s decision making’, and which resulted in their opposition to private participation in electricity generation. (Arias, 2007, p. 11).


The President’s speech overlooked the fact, outlined in the previous two sections of this Chapter, that not only private generation projects, but ICE’s own generation projects had been stopped by civil society opposition. Furthermore, it dismissed the concerns of those opposing electric infrastructure development as an “indefensible ideological prejudice”. (Arias, 2007, p. 12). On the opposing camp, the discourse of environmental activist groups and labor organizations framed the President’s emphasis on private electricity generation as evidence that the situation leading to the power cuts had been caused by the political classes themselves (either through gradual strangling of ICE’s technical capacity or by outright sabotage). These groups further asserted that the power cuts had been provoked in order to exploit them politically to make public opinion more favorable to neoliberal privatization policies, like the ratification of the Free Trade Agreement between Central America, the Dominican Republic and the United States (CAFTA) and others involving greater private sector participation in ICE’s commercial niches of telecommunications and electricity. (Red Latinoamericana contra represas y por los rios, sus comunidades y el agua, 2007, paragraph 1).


The scenario described in this section suggests that Costa Rica has reached a point where, despite its challenges, the construction of mutual understanding between the different stakeholders of the electric sector has become urgent. The country’s historic reliance on hydroelectricity as the backbone of its power system has increasingly become a divisive issue and this has also become linked to a broader confrontation between competing international worldviews about sustainability. A reciprocal dismissive and distrustful attitude permeates the discourse of the groups having the strongest influence on public opinion. Possible alternative solutions, addressing alternate technologies or conservation measures have been mostly absent from the agendas of the main stakeholders. Finally, the country seems to be reaching an highly volatile juncture where decision making is becoming inevitably influenced by controversy over overarching policy issues (like CAFTA) and by crisis levels in the national electric system, resulting from years of inaction in either demand reduction or capacity expansion.


The following chapters will present….



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1 The Company signed a contract with the Municipality of San Jose in 1883 to provide public lighting to the city of San Jose. The public lighting service, powering 25 street lamps, came online on August 1884, making San Jose the third city in the world (after New York and Paris) to have this service.

2 In a few communities, like the Municipality of Heredia and the Turrialba area, small power plants continued to be operated either by the Municipality or by small enterprises under contract with the Municipality (Rodriguez, 2000, p. 141).

3 Mr. Jorge M. Dengo, who would later be the founder of the Costa Rican public power company ICE, underscored how relevant the experience of constructing this hydroelectric plant was for the genesis of a national electricity institute, since “it overcame the idea fostered by the electric company that only they were capable (…) allowed young engineers to have the experience of building a large project (…) [provided] experience in organization and financing, (…) and [allowed the study] of the basic problem of electricity in Costa Rica.” (Rodriguez, 2003, “Nace el Ice” Paragraph 5).

4 The Costa Rican welfare state had begun to consolidate in the early 1940s under the initiatives by the National Republican Party (or “Calderonista” Party), including “the promulgation of the Labor Code, the inclusion of the chapter on Social Guarantees into the Constitution and social security for workers through the creation of the Caja Costarricense del Seguro Social (CCSS)” (Alvarenga, 2005, p. 4). These initiatives led to a political alliance between the Social-Christian-reformist “Calderonista” party, the Catholic Church and the communist Vanguardia Popular Party. On the opposing side were the conservatives of the National Union Party (led by Leon Cortés and Otilio Ulate) and an emerging social movement of intellectuals and professionals who made up the Center for the Study of Social Problems and later the Social Democratic Party (led by Jose Figueres). (Cortés, 2001, p. 238). While the conservatives tended to oppose the social reforms of the Calderonistas and their allies, the political action of the Social-Democrats centered on their distrust of the growing control by the Calderonistas of the electoral machinery. (Alvarenga, p. 5).

5 This group was led by Jorge Manuel Dengo, the former head engineer of the municipal Carrillos plant in Heredia and a leader of the Asociación para la Defensa del Consumidor Eléctrico, as well as a member of Figueres’ forces during the Civil War.

6 For example, it refused CNFL a concession for a new powerplant in 1954, and issued a similar concession to ICE instead. (Rodriguez, 2000, p. 129).

7 Both protests arose in reaction to electricity rate increases announced by CNFL, but were soon reframed as movements against the foreign electric trust company and calling for nationalization of the electricity distribution network. (Alvarenga, 2005, p. 140). Alvarenga points out the importance of these episodes in the development of new skills (like door-to-door canvassing and organizing meetings and demonstrations) and the trying out of new modes of protest (like voluntary “lights out” campaigns as a show of strength) by the burgeoning social movements (pp. 133, 136).

8 It had been preceded by similar movements in Alajuela and Puntarenas in the late 1950’s, which also protested the inadequate service and higher electricity rates suffered by the communities outside San Jose during the ICE’s early expansion years, and was later followed by a similar movement in Guanacaste. (Alvarenga, 2005, p. 164).

9 Although the government of President Orlich sought to blame communist infiltrators for the protests and the escalation into violence (going as far as to deport two students from the United States on the premise that they were left wing provocateurs) there was ample evidence that the protest organizers were anti-communists and that they had in fact rejected all offers of organizational support form the left-wing groups from San Jose. The resulting national outcry and the central government’s failed attempt to use the cold war discourse justify itself limited its capacity to repress the movement (Alvarenga, 2005, pp. 180-183).

10 This effort was supported by local businesses, including donations of wood and nails for ladders by local sawmills and hardware stores, and by local electricians, some of them former employees of the Saxe Power Company, who headed the reconnection teams (Alvarenga, 2005, pp. 196-197). Some stoning incidents against ICE’s disconnection trucks occurred throughout Cartago, and bombings of ICE’s infrastructure in San Jose were also recorded during that period, although the perpetrators of the bombings were never identified. (Alvarenga, p. 197).

11 Some authors also point to “an exhaustion” of the style of development adopted since the 1950’s due to a failure to expand the production system into raw materials production and agricultural industrialization (Quesada, Masis, Barahona, Meza, Cuevas & Rhenan, 2004, p. 107). Other studies suggest additional internal factors. Vargas (2003) formulates the stern opposition by large businesses to the entrepreneurial state model as a cause for its failure (p. 5). Vargas also indicates that liberalization of the currency exchange gave way to rising inflation, economic uncertainty, diminished investment and capital flight. (p. 8).

12 During the Carazo administration, Costa Rica, as many other developing Latin American countries “found itself immersed in the problem of foreign debt, which acquired uncontrollable dimensions, to such an extent that the government had to declare a moratorium on debt payment. In 1982, the balance of the foreign debt as a percentage of GDP rose to 120.8%, while debt service, as a percent of exports, represented 45.1% in 1983.” (Quesada et al., 2004, p. 106).

13 SNE had approved an 11% increase in April of 1982, and a scaled 70% increase between November of 1982 and April of 1983. (Alvarenga, 2005, p. 222). Sojo (2004) notes that between November 1979 and April 1983 the electricity rates had increased by 481% (p. 22). While there had been other incidents of strikes (health professionals, teachers, ICE’s technicians and banana workers) during the first semester of 1983, the protests about the electricity rates were the only one of these that consolidated into a massive country-wide movement at the time (Alvarenga, p. 220).

14 Some of the other demands of the movement, originally agreed to by the government, like the drafting of a law whereby Congress, not SNE, would establish the electricity rates, a one-year grace period to the strikers for paying the overdue bills, and the provision of “meter reading control cards” to the end users so they could verify the consumption being billed, were not implemented. (Alvarenga, pp. 256-257).

15 As part of this process, the budget policies of public institutions were brought under stringent control by the central government through the Law of the Budget Authority, passed in October of 1982; for some analysts this has limited the potential of public entities, including ICE, to invest in the fulfillment of their own mission and redirected them to generate surplus revenues for the central government. (Marin, 2002, p. 35).

16 According to Sojo (2004) the success of earlier state enterprise privatization had relied on substantial United States aid funds for social compensation schemes; however, after the 1990 electoral loss of the Sandinista party in Nicaragua, the United States strategic interest, and its aid funds, diminished, leading to a reduction in generalized political support for privatization within the country. (p. 24).

17 Under Law #7200, private sector participation was allowed only in renewable energy generation projects with capacity under 20 MW; the Law also established a cap on foreign ownership of 35% of the project capital and a cap on total private participation of 15% of the country’s overall power generation capacity (Colegio Federado de Ingenieros y Arquitectos de Costa Rica –CFIA, n.d., p. 25). In 1995, additional private sector lobbying led to a new Law #7508 being passed. The new law increased the allowed foreign participation from 35% to 65% of the project capital, and increased the cap from 15% to 30% of the country’s overall generating capacity. The second 15% would be developed under a new scheme for projects under 50 MW, which had to bid competitively under a BOT (Build-Operate-Transfer) scheme; this meant that ownership of the project would be transferred to ICE after 20 years. (CFIA, p. 25; Vargas, 2002, p. 87).

18 The project involves approximately 1,800 km. of 230 kV transmission lines connecting Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Panama, enabling the countries to exchange up to 300 MW, and its estimated cost will be $ 320 Million. The project also contemplates a regional legal and regulatory framework for energy trade between the member countries.

19 The latter was most commonly associated with the outcry against private generation companies and their alleged ties to high level politicians, although some projects by public utilities and regional cooperatives also faced opposition.

20 According to the 2001 State of the Nation Report, one local newspaper reported 244 social movement actions, distributed throughout the country, over 16 days (between the day when the bill was first debated and approved in Congress and the start of talks convened by the facilitation commission). The commission was made up of public university authorities, the Ombudsman, and the Bishop of Limon). (Rojas, 2001, pp. 27-28).


21 The term “political class” was used to refer to an elite group controlling political and financial power, both in corporations and in the main political parties, who “… distanced from civil society, utilize the State’s assets for their personal benefit. ” (Alvarenga, 2005, p. 274; see also Solis, 2002, p. 34). It was first used during the 1995 teachers’ strike, but at the time it only permeated the discourse of that special interest group (Alvarenga, p. 276). The anti-Combo movement was the first broad-based social movement to adopt the term.

22 According to Alvarenga (2005) both President Rodríguez and the conservative media, alluded to the high participation of high-school students in order to discredit the movement. Rodriguez had implied that the demonstrations were made up of the same people who had been protesting all along, only they looked more massive because of the participation of high-school students; La Nacion stated that the high-school students were totally ignorant of what the bill was about, and only joined demonstrations because their teachers had induced them to. In contrast, Alvarenga suggested that it was an ‘initial intuition’ that prompted the students to oppose the bill, and that even if they had little information about the project a ‘common sense rooted in their political culture’ indicated to them that it was a struggle worthy of undertaking. (p. 280).

23 The Commission was made up of representatives from: Congress (9), ICE’s trade unions (3), university students (1), environmentalists (1), grassroots Catholic Church groups (2), private enterprise (1) and the Central Government (1).

24 In the specific case of ICE’s Institutional Reform, a second multi-sector Commission for ICE’s legal reform was established in 2003 but its mandate expired in 2005 without an approved draft. Subsequently, the bill’s drafting process reverted to an exclusively congressional Commission, which agreed to consider incorporating elements from alternate texts by private sector and civil society organizations. After the 2006 elections, President-elect Arias announced that his administration would scrap the bill under parliamentary review due to conflicts with the Free Trade Agreement signed between Central American, the United States and the Dominican Republic (DR-CAFTA). Thus yet another version of the bill’s text was drafted; discussion of this text has been suspended pending the resolution of a referendum that will determine whether the CAFTA ratification will move forward. (CITATION)

25 This led to a report by the National Comptroller finding certain clauses in fifteen PPAs illegal, and instructing ICE to initiate legal procedures to rescind those clauses. (Granados, 2006, p.14). However, the Costa Rican government, under pressured from the Overseas Private Investment Corporation (OPIC), a United States agency that insures US corporations against overseas investment political risks, did not follow the Comptroller’s directive. (Romero, 2004, p. 28).

26 Indigenous groups have opposed relocation and flooding of communal lands which they value culturally, socially and spiritually, and have accused ICE of failing to consult and address community concerns before initiating fieldwork on the projects, and of trying to manipulate communities when consultation processes were initiated later. (BORUCA) Environmental groups, in addition to criticizing the social impacts of large dams, have questioned the environmental impacts on riparian ecosystems, the potential for encroachment on National Parks, and the merit of the projects themselves in relation to the country’s own needs, since the planned expansion will exceed the country’s total demand for the initial years, and will therefore be significantly destined for export through the SIEPAC grid (Duran, 2005, p. 22)

27 The primary immediate causes reported by ICE were equipment failures in two thermal plants and one hydroelectric plant, as well as the electric crisis in Panama which made it impossible to import electricity from that country, as had been originally forecasted for that season in ICE’s expansion plan. (Loaiza, 2007, paragraph 17).