Consumers may see bills rise by as much as 300 percent

Wednesday, November 23, 2005; Posted: 1:36 p.m. EST (18:36 GMT)

HAVANA, Cuba (Reuters)—Cuba raised heavily subsidized electricity rates by as much as 333 percent Wednesday to save power and deal with chronic energy shortages.

A decree signed by President Fidel Castro increased the cost of electricity for small consumers from 20 to 30 cents of a Cuban peso ($0.01) per kilowatt-hour (kwh).

Cubans who consume more than 300 kwh a month will see their rate rise from 30 cents to 1.30 pesos ($0.06) next month.

“The lack of concern about electrical consumption is evident in our country due to the very low rates,” the decree published in the ruling Communist Party newspaper Granma said.

Power outages are frequent in Cuba whose thermoelectric generators built decades ago are obsolete and do not produce enough electricity to meet demand at peak consumption.

Castro warned last week that rates would have to go up in a speech in which he attacked private businesses, such as family restaurants, for benefiting from subsidized electricity and using up too much power.

Foreign companies, which pay a higher rate and will not be affected by the new increase, praised the move as realistic.

“It’s a step in the right direction, to get people who can afford it to pay for electricity, as opposed to everybody not having any,” said a foreign company executive.

“They cannot afford to subsidize everybody, and the fact is that everybody was getting very little electricity,” she said.

Cubans who earn meager wages of $15 a month on average were worried they would not be able pay their electricity bills.

In a separate announcement the government also announced Wednesday wage increases of between 75 and 200 pesos ($3.4 and $9) for 2.2 million workers, and a nine percent raise in pensions. In May Castro doubled Cuba’s minimum wage to 225 pesos ($10).

“Electricity prices had to go up. There is so much waste,” said a Havana housewife who asked not to be named. “But people are worried because salary increases are not enough.”

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