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November 26, 2009


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Is there a problem with people stealing electricity and/or the electric company not being very good at collecting its accounts?

Both of these are chronic problems in some places I'm familiar with, and they can have astonishing effects on the availability of electricity. It sounds like Venezuela has a different set of issues; I'm just wondering if these are present too.

Doug M.

It's a problem, but as you surmised, it's a second-order one.

Opsis has great statistics on electricity use and blackouts; if I had the time it would be possible to identify the location and length of all the outages. On the other hand, Corpoelec (the new state-run electricity retailer) has lousy statistics on revenues. While they must be there, they aren't easy to find.

In EDC's (Electricidad de Caracas) last year before it was nationalized, the company estimated that it lost about 18% of its electricity to theft. That varied between 10% in Caracas and as high as 60% in scattered locations to the east.

The situation, however, does not seem to have been getting any worse. Losses to theft are still estimated around 18%. (An English version of the article is here.) Since theft isn't worsening, it doesn't seem to have much to do with the onset of rolling outages. Of course, the country could prevent outages by simply cutting off the places that don't pay, but that is likely to have unpleasant political consequences.

One smart move that Chávez is considering is to impose a surcharge on households that use electricity above a threshold. That way he avoids the political problems inherent in cutting off very poor people (who may have just purchased their first consumer durables) while still getting a handle on demand. We'll see if the Bolivarian government can actually pull this off. They have been better at building stuff than their critics charge --- better than much of the United States, actually --- but implementation has usually been lacking, and management usually terrible. So I have my doubts.

This is upsetting. I posted a fairly detailed response to Doug, pretty carefully footnoted, and it seems to have disappeared. That has not happened before. Has anyone else had the problem?

To wit: Before nationalization, losses from theft ran ran around 18%. For EDC, right before its nationalization in 2006, losses ranged from a low of 10% in metro Caracas to 60% in some eastern regions. Since nationalization, the figure doesn't seem to have changed: Corpoelec reports losses from theft that run about 18%.

In other words, your intuition is correct: theft is a problem, but a second-order one. Since losses aren't increasing, then they aren't the cause of the recent outages.

The government is considering something fairly smart: imposing surcharges on households that use more than a certain threshold of electricity. That will curb usage, without causing a political outcry from the PSUV's base. The question, really, is whether the government can follow though and implement the surcharge effectively. The record isn't that good.

I wish I knew what happened to my longer post; I'm annoyed that it and the links have all gone up in smoke.

Wow. Has growth really been that dramatic? It doesn't square with a lot of what you read about Venezuela.


Very much so, thank you for your efforts, particularly from a sick bed. You did NOT have to go to all that trouble when you are feeling poorly. If you ever find yourself in the Richmond, Virginia area i will be happy to buy you at least one of whatever you are drinking.


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