Petro Says He Will Set Colombian Electricity Bills, Not Regulator

President Gustavo Petro has announced that he will take responsibility for setting Colombia's household utility bills, in order to cut electricity tariffs at a time of soaring inflation. This temporary measure will help to ease the burden on families struggling to keep up with rising costs.

In a speech on Thursday, Petro said that he would be taking over the management of residential public services himself, citing an article of the constitution that he says gives him this power.

Electricity prices are set by a regulator.

On Friday, Petro took to Twitter to question why hydroelectric power companies are charging 900 pesos ($0.20) per kilowatt hour if dams are full. He also said that electricity tariffs have increased by 40% on the nation's Caribbean coast, without specifying over what period of time.

According to Alejandro Lucio, who heads Bogota-based energy consultancy Optima Consultores, Petro's decision to cut returns to power providers puts investment at risk in the sector.

New infrastructure is needed for a sustainable long-term reduction of tariffs, which Petro's decision imperils, Lucio said. He added that this decision could have a negative impact on the economy in the long run.

Heavy rains have caused crop damage, the phasing out of gasoline subsidies has increased costs, and a 16% minimum wage rise has contributed to inflation in Brazil, Mexico, Peru and Chile. In Colombia, inflation has continued to accelerate away from its 3% target.

Colombians' energy bills are linked to inflation, and are also a key component of the consumption basket. This has created a feedback loop whereby a rise in energy costs can cause inflation to jump, which then pushes up energy bills even further.

Jorge Restrepo, an economics professor at Javeriana University in Bogota, said that the government should have unlinked energy bills from consumer price rises a long time ago to avoid the current situation.

Consumer prices rose at a faster pace last year than at any time in nearly a quarter of a century, and experts believe they will continue to rise rapidly in the first quarter of this year.

The Colombian government has been looking for ways to ease inflation, which hurts poorer Colombians. Earlier this year, the government announced it was freezing diesel prices and road tolls.