What does the content of the Electric Pact say?

Since yesterday, the National Agreement for the Reform of the Electricity Sector in the Dominican Republic has returned to debate –or Electric Pact– after the announcement by President Luis Abinader that the Government will suspend the staggered increases to the electricity rate scheduled from now on, which have been taking place since last November. In addition, he requested the Economic and Social Council (CES) to convene the social, political and business sectors to review the aforementioned pact.

The Electric Pact It had been agreed upon by the governments of the Dominican Liberation Party (PLD), being one of the three of its kind mandated by Law 1-12 of the 2030 National Development Strategy. Although said legislation gave a term of no more than one year for the political, economic and social forces to agree on it, to solve the structural crisis of the electricity sector, it was in february 2021 when it was signed by political parties, businessmen and social entities.

Considering it of interest to our readers, Free Journal extracts some points from this pact, in order to remember its content.

Role of the State

• The State will maintain its monopolistic participation in hydroelectric generation greater than 5 MW and the transmission of energy from the National Interconnected Electric System (SENI).
• The State will promote the participation of the private and solidarity subsectors in electricity generation and distribution activities, whether through concession, authorization, joint venture, transfer of shareholding or other contractual modality, in accordance with the Constitution.

Institutional restructuring

• The Superintendence of Electricity It will be the institution responsible for the regulation and supervision of the electricity subsector, with total independence in its actions and with operational and budgetary autonomy, in order to guarantee the provision of the public electricity service in accordance with the provisions of the Constitution.
• The Dominican Corporation of State Electric Companies (CDEEE) will be restructured.

“The government has determined to stop the next increases in the electricity rate until the economic circumstances of the Dominican Republic change”Louis AbinaderRepublic President“

Protection of consumer rights

• It is agreed to develop by the Electricity Distribution Companies a field program, in a first stage, massive and intensive, and in subsequent stages continuous, aimed at facilitating the irregular user to proceed to sign the corresponding electricity supply contract with the electricity distribution company, taking into account the particular conditions of the user, to promote the responsible exercise of duties and rights.
• Modernize, improve and facilitate the access of customers or titular users to their invoice, consumption histories, relevant technical aspects of the service, bonds, cuts, claims, notifications and notices of scheduled suspensions of the service, according to the preference or request of the customer or owner user.
• It is agreed to guarantee the right to complaint and claim of the customers or titular users. Customers or titular users have the right to expeditious and simple complaint, claim and response procedures in the times and forms established in the regulations.

User education

• It is agreed to guarantee the right to education of users regarding electricity service through permanent education programs for users of electricity services to make them aware of their rights and duties in the use of electricity, the promotion of payment policies timely and responsible ethical use of electrical energy.

Technical and commercial aspects related to public lighting

• It is recognized that it is of national interest to have sufficient, efficient and environmentally friendly public lighting.

Adequate risk management

• Establish in the 911 Emergency System response capacities for events related to the electricity subsector that put life at risk, preparing and following the coordination protocols and procedures with the electricity companies.
• Raise citizen awareness to establish a culture of what to do and how to respond to cases of electrical risks and accidents to preserve lives.
• The Ministry of the Environment and Natural Resources must ensure proper environmental management during the period of construction, operation and useful life of the Punta Catalina Thermoelectric Power Plant.

Business and strategic plan for improving the management of electricity companies

• Design and implement a Comprehensive Electricity Loss Reduction Plan, with specific, measurable and auditable objectives and performance goals.
• It is agreed to initiate, within a period of no more than three months, counted from the signing of the agreement, the design and implementation in each of the companies of the state-owned electricity subsector, of a Strategic and Business Plan for the Improvement of Management for the period 2018-2022. The plan must contain specific actions that allow: raising the productivity of each company to place it at levels of similar companies that are efficiently managed; meet the quality levels of the service, materials and equipment in accordance with the provisions of the regulation.
• Within a period of no more than three months, counted from the signing of the agreement, initiate in each of the public electricity distribution companies the execution of a Comprehensive Loss Reduction Plan.
• As soon as the agreed loss level of 15% is achieved or the six-year term of the Loss Reduction Plan has ended, the Superintendence of Electricity will establish a new goal for this indicator consistent with international standards and the prevailing conditions at that time in the public Electricity Distribution Companies.

Tariff strategy

• Establish a rationalization scheme for the subsidy policy until it reaches moderate levels, consistent with the commitments and programs to reduce losses and improve the efficiency of the Electricity Distributing Companies.
• Based on the study and its recommendations, the Executive Power must define the new subsidy policy for the electricity subsector based on the quality of life index and the level of electricity consumption of a decent dwelling in conditions of household poverty, both in terms of cross and direct subsidy, such as through the Bonoluz program that will be in force as of July 1, 2018 and for a period of no less than four years, ending in 2022. In turn, the Superintendence of Electricitycomplying with the procedures established by law, will establish a reference tariff regime, which will incorporate a new tariff structure and the new subsidy policy approved by the Executive Branch.
• As of July 1, 2019, the rate to be applied to regulated users will be adjusted quarterly based on variations in the average purchase price, variations in the exchange rate, loss reduction and efficiency improvement.
• To ensure that the cross subsidy converges towards the moderate cross subsidy, the Superintendence of Electricityfor the application of the tariff reductions, as a result of the improvements in efficiency and reduction of losses, to the different tariff sections, it will proceed in such a way that the percentage of cross subsidy in force from the second quarter of 2018 is gradually reduced until it converges to the subsidy moderate cross-subsidy agreed for when the reference rate comes into force no later than 2023. At that time, said subsidy will be a maximum of 12% of the reference rate and the productive subsectors will be excluded from the payment of said cross-subsidy.
• As of July 1, 2018, the electricity service bill received by the user will transparently indicate the components that determine the level of the rate and the value of the subsidies applied.
• As of July 1, 2018, the Superintendence of Electricity will proceed to calculate the rate levels corresponding to the reference rate regime on a quarterly basis using the updated information available, in order to assess the advisability of moving to the early adoption of said regime or of maintaining the transition rate structure established for the period 2017- 2022 (as the pact was signed in 2021, these dates were adjusted).

Renewable and alternative energies

• It is agreed to study and promote projects for the production of manageable renewable energy, such as those from the use of biomass, biogas, solid waste, food, farms, seaweed or others that are feasible.
• It is agreed to promote and facilitate the use of renewable energies at home, commercial and industrial level.
• It is agreed to carry out studies to evaluate the use of hydrogen and in the long term the use of nuclear energy in electricity generation through a program of research, development and innovation.

Saving

• Within a period not exceeding 12 months from the signing of the agreement, the Ministry of Energy and Mines must have prepared and submitted to the Executive Branch, for subsequent submission to the National Congress, a bill to promote the rational use of energy, which will contain, by way of example and not limitation, construction standards that promote energy efficiency in public and private buildings, disincentives for the importation of low-efficiency electrical equipment, through the implementation of the selective tax on their consumption , incentives for the use of efficient electrical equipment.
• The Monitoring and Oversight Committee is responsible for following up on the execution of the actions derived for the fulfillment of the commitments of the National Agreement for the Reform of the Electricity Sector.