DOMINICAN REPUBLIC – Government Sets Date to Start Discussions About the National Accord for the Electricity Sector Reform and Presents Proposals

SUMMARY

The Dominican government has announced that formal discussions about the so-called “National Accord for the Reform of the Electricity Sector,” which President Medina formally called for by means of Decree 389-14, dated October 13, 2014, pursuant to the mandate contained in Law No. 1-12 (Organic Law of the National Strategy for Development of the Dominican Republic), will commence on January 19,... (see full summary)

 
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The Dominican government has announced that formal discussions about the so-called “National Accord for the Reform of the Electricity Sector,” which President Medina formally called for by means of Decree 389-14, dated October 13, 2014, pursuant to the mandate contained in Law No. 1-12 (Organic Law of the National Strategy for Development of the Dominican Republic), will commence on January 19, 2015. To that end, the Dominican government has made public a set of proposals representing the consensus of the relevant government agencies as to the matters that such accord should encompass in order to achieve the objectives for the electricity sector sought by said Organic Law, namely, resolution of the structural crisis affecting such sector and ensuring the necessary certainty required from the regulatory and institutional framework in order to facilitate investments in the energy sector required for the development of the country. It is expected that the accord will be signed within six months from the official launch of the aforementioned discussions.

The government’s proposal is organized around eight key subjects, namely:

  • Subject 1: Purpose of the accord;
  • Subject 2: Medium- and long-term planning of the electricity sector;
  • Subject 3: Institutional framework;
  • Subject 4: Legal framework;
  • Subject 5: Generation sector and expansion thereof;
  • Subject 6: Transmission sector;
  • Subject 7: Distribution and commercialization; and
  • Subject 8: Financial sustainability of the power sector, subsidies and technical tariff.

Some Relevant Aspects of the Government’s Proposal

Below are some of the relevant aspects included in the government’s proposal:

  1. As to Subject 1, purpose of the accord, the proposal contemplates the achieving of an electricity system that is reliable, efficient, transparent and sustainable and that supports the attainment of the vision of the nation and objectives contained in the National Development Strategy.
  2. As to Subject 2, medium- and long-term planning of the electricity sector, the proposal states that the government, through the Corporación Dominicana de Empresas Eléctricas Estatales (CDEEE), within a period not to exceed six months from the signing of the accord, would develop and make available a Comprehensive Development Plan for the Electricity Sector-2015-2030 containing the policies and actions agreed upon in order to achieve a comprehensive and sustainable development of the electricity sector (financially and environmentally), and that includes, among others, the following elements
    • Review, strengthening and adjustment of the public institutional and functional structure of the electricity sector;
    • Review and amendment of certain laws and regulations governing the electricity sector;
    • A generation expansion plan with a portfolio of diversified production sources, including renewable sources;
    • A plan containing the actions and policies to be implemented to ensure the expansion of the transmission infrastructure, consistent with the objectives of financial sustainability of the power activity and ensuring the stability and reliability of the service;
    • A plan containing the actions and policies to be implemented to ensure financial sustainability of the distribution activity, including, (i) an investment plan for the modernization of the distribution networks, (ii) a plan for improving management of the commercialization effort, and (iii) provision of sources to finance investments;
    • A plan for managing and monitoring the financial self-sustainability of the provision of electricity service; and
    • Monitoring, accountability and interim evaluation of the above-mentioned Comprehensive Development Plan for the Electricity Sector-2015-2030, contemplating, for such purpose, among other measures, an independent tripartite mechanism (public sector, business sector and civil society) to monitor compliance with the agreed-upon actions and goals, and to assess the results of the reform process.
  1. As to Subject 3, institutional framework, the government’s proposal contemplates the need to readjust the institutional framework under which the electricity sector operates. According to the government, the structural reform should cover two areas, namely, (i) a reformulation of the legal-regulatory regime to redefine and clarify the “rules of the game” in...

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