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U. Fenosa Frustrations Growing

MANAGUA – Frank Rogers is a coffee guy. When he moved here from California three years ago, his goal was to roast Nicaragua’s best coffee beans and train local baristas to prepare a winning cup of joe to sell at his trendy downtown coffee shops.

Since then, El Coche Café, which will soon be opening its fourth coffee shop in Managua, has brewed success. Rogers has exclusive national rights to roast and sell the best coffee harvests produced each year in Nicaragua – the finalists of the annual Cup of Excellence competition – and his star barista, 22-year-old Rebecca Ramos, recently won the honors of top barista in Nicaragua. Ramos will be travelling to Atlanta next month to compete in the world championship barista competition, a point of emotional pride for Rogers.

But despite the accomplishments, it hasn’t been a smooth ride for El Coche. In fact, Rogers says, just doing business in  Nicaragua has become a struggle for survival against Unión Fenosa, Nicaragua’s broadly unpopular power-distribution company.

Though Rogers has three virtually identical coffee shops with similar equipment and the same business hours, his electrical bills vary wildly from one store to the next, and fluctuate unpredictably from one month to the next.

For example, in one of his coffee shops the electricity bill was $1,350 last September and then $600 in December, even though the store’s operating hours hadn’t changed. Meanwhile, on the other side of town, his nearly identical store had a power bill that was $750 more expensive.

Unión Fenosa’s seemingly arbitrary billing practices, which one user likened to a spin on the wheel-of-misfortune, have made running a business and calculating monthly overhead costs a very complicated prospect, Rogers says.

But when the coffee roaster tried to question the system and demand an explanation from Unión Fenosa and the Nicaraguan Energy Institute (INE), the state regulatory agency, he inadvertently opened a Pandora’s Box that he hasn’t been able to close since.

“I feel like I am already up to my eyeballs in this mess, and it’s starting to feel pretty lonely,” Rogers said of his battle with the power company.

What started as a civilized request last year to sit down with Unión Fenosa to discuss the apparent irregularities in his billing has since evolved into a maddening and endless bureaucratic quagmire of paperwork, letters of complaint and photocopies of unpaid contested bills. Amid the dispute, Unión Fenosa has cut the power to one of Rogers’ shops but still hasn’t responded to any of his complaints or request for a meeting.

“I am spending more time on Unión Fenosa that I am roasting coffee or training baristas,” said the exasperated businessman. “This is not what I came here to do.”

As a modest show of civil disobedience, Rogers posted a sign on the front door of his coffee shop two weeks ago protesting Unión Fenosa’s business practices. He stopped collecting signatures after 600 customers signed his petition in the first five days.

Now he’s afraid he has escalated the situation to new levels of hostility.

“Unión Fenosa’s attitude has been, ‘You’re complaining about the bills? Pay up or it’s going to get worse,” Rogers said. “Their attitude is, ‘Go along with it, or get out’.”

The Nica Times tried to get Unión Fenosa’s side of the story this week, but company spokesman Jorge Katín said he was unfamiliar with the case and wouldn’t comment.

‘Electricity Mob’

Gonzalo Salgado, head of Nicaragua’s Consumer Defense Network, pulls no punches when asked to qualify the business practices of the country’s electricity sector.

“They function like the mafia, or a cartel,” Salgado told The Nica Times this week. He says it’s not just Unión Fenosa, but also the government and the power generators. Unión Fenosa’s Katín wouldn’t respond to Salgado’s allegation, saying he hadn’t heard the criticism personally.

Worsening Situation?

Though President Daniel Ortega boasts that his government has resolved the country’s energy woes by buying new power plants and oil from Venezuela, Salgado says the quality of service in the energy sector has actually “gotten worse.”

In addition, he says, legal reforms over the past year have left consumers with fewer recourses and more vulnerable to unfair business practices than before.

Complaints filed against Unión Fenosa’s billing practices in the consumer defense office have jumped by 60 percent this year alone, Salgado said. During the height of the blackouts in 2006-2007, the consumer defense office was receiving an average of 600 consumer complaints each month. Now the number of monthly complaints against Unión Fenosa has jumped to 900, Salgado said.

Even more astounding, Salgado estimates the number of complaints his office receives represents less than 5 percent of the total users who seek some sort of recourse against Unión Fenosa each month. INE, for example, reportedly gets more than 4,000 complaints a month, and Unión Fenosa admits they get 8,000 monthly complaints.


When it comes to explaining Unión Fenosa’s erratic billing practices, Salgado is just as confused as El Coche’s Rogers and the thousands of other consumers who curse the seemingly random amount they’re charged each month.

Salgado says some of the problems seem to come from the company’s practice of “estimating” clients’ monthly consumption levels, rather than reading the meter. Bills that are estimated as opposed to read off the meter are marked “estimado.”

Salgado says the curious practice of estimating a client’s bill potentially invites all sorts of subjectivity and possible inaccuracies.

For example, Salgado said, a foreign client could be billed differently than a Nicaraguan client. Other unrelated factors – such as the appearance of wealth or the type of car parked in front of the house – could also influence the monthly bill, though Salgado admits his office can’t prove such prejudice is actually occurring.

Unión Fenosa insists the company “does not have a policy of estimating” user’s monthly consumption levels, and that such billing measures are only taken when the company’s agents can’t see a client’s meter to take an accurate reading.

“Sometimes a client will have their meter inside the porch or in an spot where it can’t be read,” Katín said.

He said that in those instances the bill is estimated based on historic consumption averages and other calculation tables approved by INE.

Improved Relations?

Katín says he thinks the relations between Unión Fenosa and its 695,000 users in Nicaragua have “improved notably” since the dark days of the blackouts.

The company spokesman said that since the immediate problem of power rationing has ended, the company has focused more on improving its customer-relation services and responding quicker to consumer complaints.

He noted that the company is in the process of investing $33 million in Nicaragua to improve and expand its services. Even the 8,000 complaints they receive each month is down from the previous average of 11,000, he notes.

“I think the relations have improved a lot,” Katín told The Nica Times.

Unlikely Partners

While the quality of the company’s customer relations is debatable, it’s indisputable that Unión Fenosa has dramatically improved relations with the ruling Sandinista Front. Before Daniel Ortega returned to the presidency in 2007, the Sandinista Front was the most vocal critic of Unión Fenosa. The former opposition party constantly railed against the privatization of the energy sector, convoked marches against the power company and threatened to throw Unión Fenosa out of the country when they returned to power.

Instead, the Sandinista government has become Unión Fenosa’s “business partner,” purchasing 16 percent of the company for $12 million and passing laws that benefit the Spanish transnational. As part of the accords, the government also agreed to authorize a new adjustment in electricity rates (resulting in a net price hike of 13 percent over the past year), subsidize part of the company’s losses and drop all pending legal disputes against the company. Unión Fenosa, too, has dropped its international complaints against the state of Nicaragua.

The most controversial aspect of the Sandinista-Unión Fenosa rapprochement was the government’s approval of Law 661, “The Law of Responsible Use of Electrical Energy Use,” which gives the power company the right to fine and even seek jail sentences for those who steal electricity. Less than six months after becoming law, the Consumer Defense Network has already received hundreds of complaints from users who claim Unión Fenosa is arbitrarily fining them for energy theft, Salgado said.

Katín, however, says the accords have led to “stable and coordinated relations” between the company and the Sandinista government. But Salgado worries that the unlikely partnership has made Unión Fenosa even stronger than before. Even INE, which receives part of its budget from the Unión Fenosa’s bill collection, has been incapable of providing any meaningful regulation or oversight to the Spanish company, the consumer-rights watchdog said.

“INE are employees of Unión Fenosa,” Salgado charged.

Percolating Protest

Back at El Coche, Rogers laments that his problems with Unión Fenosa couldn’t have been resolved the easy way, and that it had to come to this.

“Why couldn’t they just sit down like sane people and talk about this and put a reader on the meter and come to a reasonable conclusion?” he said. “Sooner or later I am going to get run out of business. How can I sell a cup of coffee when I don’t know if I’m being charged $20 or $200 a day for electricity?”



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