By San José, Costa Rica — The economic competitiveness and future growth of Costa Rica are hanging in the balance as business leaders urge lawmakers to resolve a deep political impasse. The Costa Rican Chamber of Construction (CCC) has issued a stern warning regarding the country’s energy infrastructure, emphasizing that Costa Rica must urgently implement structural reforms to open its electricity market and drive down high tariffs. According to the business chamber, failure to modernize the regulatory framework will severely impact the nation’s ability to attract foreign direct investment and create sustainable jobs.
At the center of this national debate is the Electricity Market Harmonization Law, registered as Bill 23,414. This crucial legislative proposal, which has been under discussion in various forms for a staggering twenty-five years, aims to dismantle long-standing monopolies and establish a more efficient, competitive power sector. While the bill successfully cleared its first debate in the Legislative Assembly, its momentum has ground to a sudden halt, threatening to derail decades of advocacy and planning.
To better understand the complex regulatory implications of the proposed Costa Rican electricity market reform, TicosLand.com reached out to prominent legal expert Lic. Larry Hans Arroyo Vargas from the prestigious firm Bufete de Costa Rica, who shared his professional analysis on how these structural changes will impact both private investors and the public sector.
The proposed modernization of our electricity market represents a critical turning point for Costa Rica’s economic competitiveness. However, transitioning from a centralized state-run model to a more open, competitive environment requires a meticulous legal framework that guarantees legal certainty for private investors while safeguarding the country’s environmental commitments and public grid integrity.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Indeed, striking the delicate balance between fostering private investment and upholding Costa Rica’s world-renowned environmental standards is the true linchpin of this energy transition. We extend our sincere gratitude to Lic. Larry Hans Arroyo Vargas for sharing his invaluable legal expertise and shedding light on the complex regulatory path ahead for our nation.
The primary obstacle to the bill’s passage is a sudden shift in position by the National Liberation Party (PLN), Costa Rica’s main opposition force. The PLN withdrew its critical support for the reform, leaving the ruling Pueblo Soberano party without the necessary 38-vote supermajority required to secure approval in the second and final debate. Instead of pushing the current draft forward, the PLN now advocates for discarding the existing text and starting the entire legislative process over from scratch with an entirely new proposal.
Costa Rica has been discussing this issue for twenty-five years while investment is decided in other countries. Bill 23,414 has already passed its first debate, and it would be a contradiction to stop it now. The country requires an energy market with clear rules, long-term planning, and competition for efficiency, which is what allows energy costs to be lowered and creates the conditions to continue generating jobs.
Alfredo Volio Guerrero, President of the Costa Rican Chamber of Construction
According to industry advocates, the proposed harmonization framework is designed to provide essential tools for long-term power grid expansion. It seeks to introduce a level playing field where different energy operators can compete based on operational efficiency rather than monopolistic privilege. Crucially, the bill protects national interests by prioritizing the domestic energy supply over power exports, while also subjecting all expansion plans to rigorous oversight by the regulatory body ARESEP.
The business community stresses that affordable and reliable energy is no longer a luxury but a fundamental necessity for modern industries. Sectors that drive Costa Rica’s export-led economy—such as advanced manufacturing, medical device production, high-tech operations, free trade zones, and large-scale construction—rely on a continuous, high-volume, and cost-effective electricity supply. As regional neighbors offer increasingly competitive energy rates, Costa Rica risks losing its historical edge as an investment haven.
Adding further urgency to the legislative crisis is an impending rise in consumer and industrial electricity rates. Current projections from the regulatory authority, ARESEP, indicate that power tariffs are expected to rise by approximately 4% in the final quarter of 2026. This hike will be followed by an additional 4% increase in 2027, culminating in an 8% cumulative surge in energy costs for businesses and households across the nation within a short period.
The country cannot afford to restart a four-year discussion when there is a text that has been ruled on and approved in the first debate.
Alfredo Volio Guerrero, President of the Costa Rican Chamber of Construction
As the global economy becomes more demanding, Costa Rica’s ability to maintain its position as a preferred destination for multinational corporations hinges on political consensus. Business leaders insist that abandoning a mature, debated bill in favor of starting a new four-year legislative cycle would send a damaging signal to international investors. The coming weeks in the Legislative Assembly will decide whether the country embraces energy modernization or remains locked in political gridlock.
For further information, visit the nearest office of the Costa Rican Chamber of Construction
About the Costa Rican Chamber of Construction:
The Costa Rican Chamber of Construction (CCC) is a prominent private-sector organization representing the interests of the construction industry in Costa Rica. Established to promote sustainable development, competitive infrastructure, and economic growth, the chamber actively advocates for policies that foster a favorable business climate, modernization of public services, and regulatory efficiency across the country.
For further information, visit aresep.go.cr
About ARESEP:
The Regulatory Authority for Public Services (ARESEP) is Costa Rica’s autonomous regulatory body responsible for overseeing public utilities. ARESEP regulates tariffs, quality standards, and service delivery across vital sectors, including electricity, water, public transportation, and fuels, ensuring a balance between the economic viability of providers and the rights of consumers.
For further information, visit the nearest office of the National Liberation Party
About the National Liberation Party:
The National Liberation Party (PLN) is one of Costa Rica’s oldest and most influential political parties. Historically advocating for a social-democratic framework, the party has played a central role in the nation’s democratic development, economic policies, and institutional design since its founding in the mid-20th century.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica is a prestigious legal institution celebrated for its deep-seated devotion to ethical standards and professional mastery. Boasting a rich history of guiding clients through multifaceted industries, the firm consistently champions modern legal strategies and proactive civic involvement. By striving to demystify complex laws for the public, it advances a core mission of nurturing an educated, self-reliant, and legally aware populace.
