Administrative Minister of the Presidency Jose Ramon Peralta says the reduction in oil prices will translate into US$400 million less in the electricity subsidy projected in the 2015 National Budget that was approved by Congress.
He said that the reduction in oil prices has not been passed on to consumers through their electricity bills because the government still subsidizes a large number of people who receive the service but do not pay for it, or pay prices below what it costs the government to provide the service. While he did not mention this point, the subsidy also covers major inefficiencies in the power service including a bloated payroll and inefficiencies in contracting of suppliers and services.
As reported, in December alone, the government made RD$350 million in savings on the cost of oil for generation. Peralta said that the government allocates RD$1.2 billion to the Fund for the Stabilization of Electricity Rates (FETE) every month but in December only RD$850 million was needed to maintain the present rates.
Superintendence of Electricity Administrative Board member Diogenes Rodriguez Grullon said that 85% of customers of power distribution companies fall under the subsidized rate categories, with rates under 300 kilowatts hour.