Power prices could drop now

Economist Jaime Aristy Escuder of the Economy and Development Foundation urges Dominicans to demand a decline in the price of power, in a contribution today to the Listin Diario. Aristy says there have been many unexplainable actions by the two representatives of the Dominican government in power negotiations – Cesar Sanchez, general manager of the Dominican Electricity Corporation, and Jose Ovalles, Superintendent of Electricity. Aristy said he does not understand why the government used 6.98 cents as the benchmark for generation, when the generators had offered 5.5 cents in negotiations leading to the Madrid Agreement. “It is inexplicable why the government accepted a 27% increase over what was offered,” he writes. He says this forces consumers to pay 1.48 cents more to the generators. Regarding distribution, he said consumers are paying 1.36 cents more to distributors, than they should. The distributors’ share is 6.42 cents on the dollar. He explained: “The more blackouts, the greater the income per kilowatt received by the distributors, because the per kilowatt average rate increases when many clients that consume less than 300 kilowatts per month and whose average rate is 8 cents are not factored in,” he explained. Since distributors are not penalized for the blackouts, they have an incentive to reduce the service to the low income barrios, he said, explaining that blackouts in the barrios make financial sense to the distributors. He urged the Dominican government to eliminate the unjustified extra charges to consumers. He estimates that the charges represent RD$3.7 billion more for the generators and distributors. He said consumers are paying US$0.14 cents per kilowatt when they should not be paying more than 10.48 cents. Moreover, he said that if the recent fuel reductions are taken into account, the kilowatt price should go down to 9.75 cents. He added said that if power consumption collections would increase to 75%, the average tariff should decline to 8.91 cents. Aristy urges consumers to demand an end to the abuse of the power companies in complicity with the CDE and the Superintendency of Electricity.