business & economy

At the end of last year, an especially wet 2007 had the reservoirs behind the nation's hydroelectric dams topped off and the Panama Canal Authority (ACP) opening gates in the Gatun Spillway. We were told by the ACP that their meteoroligists were predicting an unusually wet dry season.

But not only was our dry season about as dry as usual, it was unusually prolonged. We started to get warnings of an energy crisis, but still, our hydroelectric dams were generating electricity in part to sell to Costa Rica through our power grid interconnection.

In April, when the rains that were overdue didn't come, alarms began to be heard. Restrictions were imposed on neon signs at night. Urgent appeals were made to the public to save energy. The fossil fuel thermoelectric plants were fired up more often, for longer periods, at great expense in these days of high oil prices, to replace much of the hydroelectric power that ordinarily accounts for almost all of Panama's electric generation.

On May 2 much of the country got a good rain, but in the days that followed there was only a sprinkle here or there in most places. The big exception to "most" was on the Atlantic side, where Colon seems to be having a more or less normal rainy season.

On May 16 Energy Secretary Dani Kuzniecky and Public Services Authority director Víctor Urrutia declared that the situation was "grave" and announced that an energy saving decree would be presented to the Cabinet Council.

The water level behind the Fortuna Dam in Chiriqui, Urrutia declared, "had gone down a meter and one-half in a few days." He warned of rolling energy blackouts throughout the country.

The decree was issued. The neon signs had to go off at 10 p.m. and most government workers had their days shortened by two hours.

AES Panama was cited as a source in alarming stories in La Estrella and La Prensa, which said that the La Fortuna reservoir was less that four meters above the minimum level needed to generate power and had gone offline because of the water shortage. But then corrections were issued. The dam hadn't stopped generating power, and was about nine meters above minimum generating level, or about a meter lower than usual at this time of the year.

Meanwhile, because Kuzniecky had authorized the use of the fuel-using plants to generate more of our power, consumers saw a jump in their electric bills, with an added fuel surcharge. With the price of gasoline over $4 a gallon and food prices skyrocketing, it was yet another cause for alarm in many a Panamanian household.

The country got a bit more rain. In Colon, there was so much that there was flooding --- in the city more because in certain low-lying neighborhoods the constant task of keeping the storm drains clean and flowing had been neglected, on the Costa Arriba because heavy rains made some streams overflow their banks and caused landslides. In Chiriqui there was enough to add a meter to the Fortuna reservoir in one day, and more than three meters in a few days.

Meanwhile, rain in Panama province continued to be well below seasonal norms, leaving the reservoir behind the Bayano Dam --- Panama's main source of electricity --- at less than three meters above the minimum needed to generate.

So what do to? The electric companies have asked for rate hikes of an average of 2¢ per kilowatt hour --- most of the country pays about 19¢ but it's 26¢ in Bocas. If approved, the rates would go up on July 1. There's nothing like an energy crisis to mute criticism of an electric rate increase.

Panama has electric rates substantially above those in most countries. Defenders of the rate structure argue that even though hydroelectric power accounts for nearly all of our electricity production at most times, in order to encourage multinational corporations to do business here and make up the power shortage during peak hours and in times of drought, we have to set our electric rates as if all of our power were generated by burning petroleum (in addition, of course, to the fuel surcharge that we pay for the added expense of actually generating electricity this way).

Critics point to the high electric bills and convoluted arguments proffered by the government and the power companies as proof that, notwithstanding the ideological reasoning and asserted claims, the 1990s privatization of the old state-owned IRHE power company has been a failure.

Nobody, however, is denying that if there is a bad enough drought, hydroelectric dams can't produce electricity.