In an interview with Hoy newspaper, American Chamber of Commerce president and electricity expert Kevin Manning said that the Superintendence should reduced the electricity rates. He described the cost of electricity in this country as “excessive and very negative for the competitiveness of business”.
“The Superintendence of Electricity needs to reduce the rate,” he said. “If we are concerned about the sustainability of the sector, if the distribution companies are the heart of the sector, if they keep these high prices then their commercial clients are going to find their own sources of power,” said Manning, who is an advisor to AES Dominicana, the country’s only private power distribution company. Manning said that self-generation would be very negative for the power sector.
He added that the authorities have to come to the same conclusion. “For better or for worse, they will have to reduce the rates,” he said. He acknowledged that this is difficult now because the government owns two distribution companies, and that will affect its decisions. “But when you focus on the sector as a whole, the government needs to reduce rates,” he emphasized.
When asked if the power generation companies should also drop their rates, he said that some companies have very high prices because of their contractual conditions. “I refer to the independent producers that still have contracts with the government, such as Cogentrix and Smith-Enron, and are authorized to charge per installed capacity, even if their generators are not producing power, according to clauses in their contracts,” he said.
Manning says that only the more efficient producers should be supplying power. Nevertheless he acknowledged that a large part of the installed capacity has been sold under the Madrid Accord scheme signed in August 2001 between the government and the generators and distributors.
“Upon the request of the Dominican Electricity Corporation (CDEEE) we renegotiated the distribution contracts and at that time the generators left lots of money on the table, because the costs of the original contracts under the capitalization process were lowered,” said Manning.