Trinidad and Tobago’s 1.4 million citizens are about to learn how decades of subsidized electric rates are going to cost them dearly. The twin-island republic’s once abundant supply of natural gas has been used to generate electricity for residential, business and industrial customers at far below market prices.
Beginning in the 1970’s, successive governments discounted Trinidad’s electricity costs to everyone. It proved incredibly popular among voters. Today, it is being sold to residential customers at a mere US$ 0.05 per kWh. That lowest tier price is among the cheapest rates in the world. There have been unwanted consequences as the subsidies distorted the markets.
