DOMINICAN REPUBLIC – The Dominican Electricity Industry Association Issues Proposals for the National Accord for the Reform of the Electricity Sector

SUMMARY

As announced in our January 14, 2015 newsletter, on January 19, 2015, the Dominican government gave formal start to the discussions regarding the “National Accord for the Reform of the Electricity Sector,” which President Medina had previously 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... (see full summary)

 
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As announced in our January 14, 2015 newsletter, on January 19, 2015, the Dominican government gave formal start to the discussions regarding the “National Accord for the Reform of the Electricity Sector,” which President Medina had previously 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). As indicated in said newsletter, prior to the foregoing announcement the government had 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. Now the Asociación Dominicana de la Industria Eléctrica (Dominican Electricity Industry Association) (ADIE), an organization that groups the power companies owned by the private sector, has made public its proposals for purposes of the accord’s discussions. The ADIE’s proposals focus on institutional, financial, generation, distribution and transmission-related matters pertaining to the Dominican electricity sector. Notably among such proposals is the merger, into a single entity, of the three state-owned distribution companies.

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

1. As to the structural and institutional aspects of the electricity sector, the ADIE proposes, among other things, the following:

  • Supply all (100%) of the country’s electricity demand in the shortest possible time, as provided by the law.
  • Comply fully with the general electricity law, its amendment and supplementary rules with respect to the roles of the electricity subsector’s institutions and the planning and regulatory aspects of the industry.
  • Apply the technical tariff in accordance with the law, (i) complying with the provisions of the law regarding application of tariffs determined by regular studies conducted to that effect, (ii) updating on a monthly basis the tariff in accordance with the indexation parameters (fuel prices, inflation, exchange rate, etc.), as established by the law and its regulations, and (iii) updating on a regular basis the Valor Agregado de Distribución (Distribution Added Value), Valor Agregado de Transmisión (Transmission Added Value) (VAT), recognized losses, etc., and transfer same to the tariff.
  • Have a more focused approach to the tariff subsidy by (i) applying a social tariff only to customers consuming fewer...

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