With the governmental retaking the management of Union Fenosa property in the Dominican Republic, a partial vertical integration of the power sector has occurred, which could be positive. When privatization was being considered in the mid 90s, economists and businessmen had pointed out that the Dominican Republic was too small a territory to be split up into so many players, and called for vertical integration. A major Florida-based utility was one of the companies that would have been interested in bidding if the operation had been vertical when capitalization first occurred in 1998.
Power expert, Jose Luis Moreno San Juan, of the Power Institute of the state university, says that the semi vertical integration should favor the government putting it in a position to reduce power generation prices, as reported in Hoy. Economic editor Mario Mendez explains that now the government would be in control of 50% of the capital of Haina and Itabo power generation companies, it controls 100% of the hydroelectric companies, transmission of power, and two-thirds of power distribution. He says this would allow the government to transfer benefits of generation of power to the distribution sector, which could ideally mean rates need not go up. He estimated that residential consumers, for instance, are paying 40% more than they should.
He recommended the government establish cooperatives of power consumers in the barrios, to encourage the neighbors to pay up and increase collections.
He says what happens in the future will depend on whether matters are handled with a technical criteria or a political criteria.
As reported in El Caribe, the government will not call a tender for the power distribution operations for at least another year.