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Volume No. 1 Issue No. 84 - Friday August 04, 2006
Seeing Red Over Escalating Electricity Costs
Dominican.net News Desk


I don�t get really angry often or easily, but now I�m seeing red, and I�m hopping mad. Come too think of it, I have been angry since returning from Dominica about a week ago. No, it was not my return from Dominica that got me angry but rather it was what I heard during my stay that drove the blood to my head. It was all over the news, on the talk shows, the newspapers and on the streets. Even the Prime minister lost his cool over it, when he said he was not afraid of anyone and would �deal with DOMLEC.�

By now you must know that I am angry about the escalating costs of electricity in Dominica. Angry because it is wrong and could have been prevented, and mainly due to the fact that countless of my people are suffering great distress because of it.

I often count the days when I can get to visit my country. I love the Island like no other place on earth. For me going to Dominica is an opportunity to shut myself off from the careening madness of life in the world and recharge to face the world yet again.

On my most recent visit I knew it would be different soon after I landed. As I took my seat on the taxi for the excruciating ride to Roseau, the cab driver began to relate his recent surprise. He spoke of receiving an electricity bill for over EC $500; an almost hundred percent increase over the previous month.

That was just the beginning. Over the week that I spent on island it was to get worse. I listened as caller after caller to a local radio station complained about their bill jumping to levels never seen before, and many feared the worse was yet to come.

So I�m mad because I�m asking myself why it had to come to this. Where does the blame lie? Why should consumers have to pay in some cases more than thirty percent of their monthly income on one utility bill?

Here is what I know, and when I�m through explaining this, you too will be mad and like me demand answers and changes. Dominica has a sole electricity provider, the Dominica Electricity Services (DOMLEC). When Dominica was the colonial property of Britain, the Colonial Development Corporation (CDC) came to the island to set up shop and built the company.

At that time, oil was cheap and consequently generating electricity was also cheap. Then came the oil crisis of the seventies and with it escalating world oil prices. In response to the crisis, the management of CDC secured from government an agreement to impose a fuel surcharge on electricity consumption to recover increases in fuel cost between tariff reviews. This meant that quite simply the consumer would bear the total cost of the world oil price increases.

A great victory for CDC and a temporary burden for the consumer since the thinking at the time was that when oil prices returned to normal levels the surcharge would be removed. Thirty-two years later, it is still in place and in 2005 accounted for more than sixty percent of the revenues generated by DOMLEC. In the mid-eighties, the CDC was getting tired of running the operations and sold their controlling interests to the Eugenia Charles government. News of the sale was hailed as a victory for the country since it now meant that the local dollars would no longer flow to the coffers of the British treasury.

So it was for about 15 years, electricity rates never became an issue. Eugenia Charles had in place a Utilities Commission that would first have to approve all rate increases. Then came the 1995 elections and the new ruling United Workers party and its flamboyant Finance Minister Julius Timothy.

A year later DOMLEC was up for sale. Timothy was determined to return the company to private hands. To this day, the condition under which DOMLEC was sold remains a mystery and begs the obvious question, why?

What is known however is that the company was sold for an unstated sum to CDC. Some reports have indicated that the company was guaranteed a profit, but I have not been able to verify this information. Now there is where I begin to see red. Under the terms of the sale, Timothy and the UWP administration disbanded the Utilities Commission.

CDC was free to set any price without fear of contradiction. Further, the government imposed a tariff on consumers of 8 percent in 1997, 6 percent in 1998 and 4 percent in 1999 on their utility bills.

The money collected was to be used by DOMLEC/CDC to replace aging generators and improve overall efficiency to bring electricity costs to pre-1996 levels. The problem with the imposition of those tariffs is that it raises the base rate of electricity upon which the fuel surcharge is imposed thus contributing to the escalating costs.

With over EC $40 million additional in their coffers from the tariffs, DOMLEC have not undertaken any noticeable upgrades over the past ten years. Instead, the owners in one instance simply rented generators from their own business concerns and passed the costs on to the consumers through the now entrenched fuel surcharge.

This meant that there were no incentives to buy fuel efficient generators since the company passed on any and all increases in the costs of fuel to the consumers. To add insult to injury, line losses average about 20 percent of generated capacity, well over the industry standard of 10 -12 percent. Guess who pays for that?

In addition to Timothy allowing the company to have total control not only over the sale but the generation of electricity, it was illegal for individuals to have their own power generating capabilities. Currently, no other company can generate electricity on Dominica even though it could do so more cheaply.

The signing of this 1996 Consumer Electricity Supply Act is to my mind the most egregious contract ever signed in the history of Dominica. This clearly rivals the nearly signed contract between Pierson and Patrick John that was supposed to turn Portsmouth into a Freeport to the exclusion of locals.

In 2004 after failing to make any improvements or significant investments in new plants, and with chronic blackouts, CDC having made their investments many times over sold DOMLEC to the Dominica Private Power Ltd.(DPPL) for a mere EC$ 15 million.

Don�t be fooled by the named. The company is almost wholly owned by Miami businessmen with a spattering of shares held by the Dominica Social Security. The irony of the DOMLEC situation is that it is completely staffed by locals including the top engineers.

The manager is appointed by the company with the controlling interests. This begs another question. Why did the current government allow the sale of DOMLEC to a US private company? Why locals were denied the opportunity to attempt to raise the EC $15 million (US $6 million) to purchase DOMLEC?

In 2005 amidst continued blackouts and escalating fuel costs, the company reported profits of over EC $ 6 million. Monies that have already undoubtedly made its way out of Dominica. So why am I seeing red? I�m angry at government for not imposing stricter oversight on DOMLEC and for not paying closer attention to the calculation of the rates. I�m of course angry at DOMLEC for taking advantage of the loopholes to reap profits from the masses combined with minimum investments. Now I�m beyond seeing red; I can only see black.

Let me suggest in conclusion that this situation can be rectified. Government for its part should review the 1996 Consumer Electricity Act. Rather, it should be completely thrown out and a more robust act negotiated that would protect the consumer and ensure that DOMLEC sticks to its side of the bargain, or face massive fines. Finally, DOMLEC as a moral corporate citizen should increase efficiency, reduce line losses, and stop charging consumers for their own inefficiencies.

Comments about this article? Email:
editor@
thedominican.net
Telephone:
1-703-861-9411
Fax:
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Volume No. 1 Issue No. 81
Dominica V Switzerland
Lakschin- Dominica's Ambassador
The case against switzerland
Disneyfication of Caribbean
Life of Rb Douglas




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