I don’t live in Dominica anymore and a new electricity supply act was passed in 2006 I think. I am not sure what the revisions were to the former 1996 Act.

Just some history:

The former Electricity Supply Act of 1996 maintained that Domlec had the sole right to generate and distribute power on the island. This act had also stipulated that anyone bringing in a generator had to apply for a license that was approved by government, but had to be first vetted by Domlec. Other concessions were also given to Domlec by the agreement. Therefore it would appear than any major generators of power would have had to be sanctioned by both Domlec and Government (in reality, the Government).

Before you wonder what the government was thinking about such an Act, it is instructive to understand that when the government sold out its majority holding to the once owners, British entity CDC in 1997, passage of its proposed Act was conditional to the sale agreement. In other words CDC crafted the Act that government passed. Clearly CDC considered that even the small business who only had the intention of keeping its refrigerators and lights on, as competitors to its power business!

So theoretically Domlec could have prevented a private person from self-generating (though in reality this harrdly happened). But here’s how the whole mentality at the time got more absurd. Over the much of its history Domlec has had problems simply meeting demand. So generator holders at some times actually did Domlec a favor, by being able to slf-generate! Indeed, there were times in recent years that Domlec asked large private generators to help doing their own generation in times where Domlec production was down.

At this time, however, I am not sure whats required as far as licensing. However it is worth noting that even when under the old act, most small private consumers never really botherered securing an actual license..either that or it was simply a rubber stamping process.. I know of only one public case where a an entity (a local hotel) was denied the right to self generate when Domlec cut off its power due to a failure to pay its bill! (I think the hotel already had its generator, but I am not sure it had a license or whether the license was rescinded). However I think in that case Domlec was just using its influence to recover its receivables from that hotel.

Ok, I am not living on the island now, and as I said there were some changes to the 1996 Act, aimed at some level of deregulation, so it is likely the former license requirement was softened by the act of 2006. I think however that Domlec’s sole rights to distribution still remain. For the history buffs, see an interesting article a few years ago, when Government was getting wary about Domlec (then owned largely by CDC):See how incensed the government was then.
http://www.thedominican.net/articles/domlectwo.htm

Also, see: http://www.da-academy.org/johnson14.html

On the whole question about small island challenges and renewable energy, here is a very relevant document:
http://www.inforse.dk/doc/renewable_energy_on_small_islands.pdf

pete

Sustainable Development Ideas for Dominica
Chris

Written by Chris in Ramblings

The whole idea of an oil refinery in Dominica was clearly a bad idea, that’s why my many Dominicans rallied against the idea – forcing Prime Minister Skerrit to put all plans of the oil refinery on hold. Hooray for that. But Dominica still faces an economic crisis, cost of living is on a steady rise, fuel is also taking its toil, and not forgetting the price of electricity.

Prime Minister publicizes that any Dominican wishing to share ideas on how to help develop Dominica can make an appointment to see him. We at Dominica Weekly made two attempts to setup an appointment with the PM, to share several ideas we came up with that can help Dominica develop and also help in the curbing the problem of high electricity bills. But our attempts were unsuccessful.

We decided to develop this website called Caribbean Investments, where everyone can read the different ideas. We offer an energy program on the basis of progress and sustainable development of Dominica. Dominica, following its image of the pristine island, can provide a power, which completely expelling the oil products from the island. Dominica people must implement these ideas; the government should not be only a trendsetter in the construction of new ideas and should not bear the monetary costs to realize this projects.

Caribbean Investment Website Consists of the Following Ideas:

1.The getting of electricity in the required quantities for domestic use of island residents and for production needs from the local raw materials and some part from the garbage or waste. And electricity will be received by the large towns or several adjacent buildings or individual homes.

2. Clever use of the electricity:
a. Traditional – for households with gas stoves will be replaced with more user-friendly electric ovens.
b. Transfer gradually some part of transport to use reserved electricity in batteries, another part of transportation – to use the energy of compressed air.

3. Establish the production of National Car for Dominicans on the island.

4. Attract interested scientists from developed countries for the scientific study: make Dominica to be the scientific research polygon of the future technology.

Other Ideas Worth Reading

* Dominica as a Model for a Green Energy Future
* Wood gas generator construction details
* Biogas: Energy from waste
* Storing electrical energy
* Ecotourism

In basis of our concept of development states the well tested and proven in the practice technical solutions. Many of them had been used widely and successfully in the past, but have been pushed out to please the oil giants, which has created the myth that humanity, which tens and thousand of years successfully avoided oil cannot longer do without it. This is not true, and we have to prove the opposite: we call on the front edge for technological progress that would allow humans to live in harmony with the nature, without poisoning it with ill-famed convulsions of modern atomic-oil civilization.

I agree that competition in general is good. But there can be only so many players in a small market like Dominica with about 20,000 consumers. Thats where econonomies of scale comes in. Its a relatively expensive undertaking and is more complex than that of telecom. Of course there has to be a guarantee that the players in the market can feed into the existing transmission grid, which is owned by Domlec. It would not be economically viable to have seperate distribution lines by those power producers. Therefore one assumes that Domlec will also agree to purchase the power. Of course Domlec would play hardball about the price it would pay to buy the power. In the end the negotiated price by Domlec and the other party may not be large enough to economically justify a substantial investment, unless that entity supplies for the other island (a feasibility with geothermal, in which case the exports may subsidize the local consumption).

Realistically there will be some savings in costs that Domlec can passed on, but then the Government can’t force Domlec to buy a certain quota from any new production facility and that new company will not run its own lines directly to the consumer. Its not as simple as that Chris.

With cable TV the other players could bring in their equipment and run their own lines to the consumer, with a relatively low capital undertaking. With Cellphone, there are no lines of course, so the offering can be made simple. Low distributions costs operating in the terrain offered by Dominica is a major challenge.

There are lessons to be learned from opening up markets with a small consumer base. Why do you think the other telephone land line players have or are dropping out? How long do you think Orange and Digicell telecom companies can compete for against Cable and wireless for cellphone service? Why is Marpin telecom in receivership? Why did AT&T drop out? Do you know that the current players are subsidized from other regional operations?

Introducing a new player in such a small market for electricity who can only generate power will only result in subsidies from somewhere, unless they market elsewhere. For example this seems to be the case with geothermal production proposal (mind you it still has to go through exploration). With Venezuela’s supposed interest in power production on the island, I am not even sure where this is going. It might be another big talk project like the refinerery, when the other accompanying deals on that surface and kills it. I am skepitical about that too. The promised lowerered fuel costs from Venezuela’s petroleum storage project in the island would have been more impactful on prices and tarrifs, but what happened to that big fat promise? See where I am going? Don’t be too excited.

A good option would be co-generation, whereby a company comes in with a factory say, and sells the excess power to Domlec. And even if it sells just a small amount, it still retains its substantial business. Again, Domlec has a substantial bargaining power, unless government changes the Electricity act and forces it to buy. But the negotiated price may not mean substantial decreases in rates unless Domlec becomes more efficient.

Even in the larger islands with substantial populations and stable systems, other players have not been able to come in. In Trinidad a generating company emerged (from the power supplier) and now sells power to T&Tec, which also buys power from other co-generating industries, but thats another issue. Besides Trinidad has 1 million consumers and numerous heavy industries that consume huge amounts of power. Read: Economies of scale.

Talking about the profit issue, why is that an issue? The company MUST make a profit (and areasonable and consistent one at that) to survive. Its a private company too, and shareholders demand returns on their investment. $6 million is alot of money? Really? This is EC dollars!! Do you know how much it costs to go into any significant power expansion (even just one generator)? Do you know how much it would cost the company to come back from a serious hurricane disaster that could happen tommorrow (the costs that insurance does not cover, ask Grenada)?

One more thing, $6million profit is not cash in the bank. Although it looks like a huge sum for Joe Blow, struggling to pay his bill, it is just accounting profit. Some of it is tied up in receivables (including the bills governemnt does not pay). Furthermore, lenders are seriously concerned about not just revenues but more significantly: leverage, liquidity, solvency, profitability! Chris, do me a favor, please and download a copy online of the company’s annual report to get better insights, if you want to really anlayze this. If you can, pause and look at the financial report too..
http://www.domlec.dm/index.php?option=com_content&task=view&id=21&Itemid=51

Domlec is also playing its role, in terms of community involvent, sponsorship etc., spending substantial sums. We need also to give credit where credit is due. So while we look forward to lower costs and demand better service, my aim was to give a reality check so we appreciate the broader picture. The issues are more complex than most people think. All parties have a responsible role, and PR (or lack of it) is very relevant. But in the end, we need to keep it real!

Pete

I agree with you totally. Of course its electricity is an essential commodity and is of concern to all. But people can play their part to conserve. You are right.

Expectations are made worst when the political parties make pronounements and promises but can do very little in reality. Government is supposed to fix everything wrong right? Or so they think. Its not even about the free market. But the `government did own the company (at least most of it) once. I suppose this prolongs the misconceptions too, about the extent of its power. T

There was a huge outcry too, when hospital user fees were introduced years ago. The avearge user could not understand why they had to pay, even though it was tame by global standards. The outcry would be that this is a poor country. People don’t understand the economics of it. Again, thats where education and PR comes in.

One thing is certain however. The service offered by the company in terms of reliability of power and outage rates is unacceptable. The technical and non-technical losses are attrocious. Management decisions or indecisions as well as the company’s numerous change of ownership and the governments perecieved hostility have negatively affected major plans. This contributes to higher costs in operations that are passed on to the consumer and that also contributes to the rate structure. There is no question about that. You can not take away the right of the consumer to get better service for what he pays. If the consumer is not being served adequately, then the better argument for protest action (which is being contemplated) is that the tarrif is an unfair burden and too high.

Pete

I remember when Cable and Wireless was the only Telecommunication Provider in Dominica – Dominicans were paying some absorbent rates for local and international call – but since Digicel and Orange enter the market. Dominicans no have a choice and they enjoy much lower calling rates. Right now, I can call my mom every evening for free – this would never happen 5 years ago.

So though I understand that there is nothing much the government can do in reducing consumers electricity bills, but they’ve the power to open the market, and remove this monopoly Domlec have been operating for years on the backs of Dominicans.

Joel

Almost as soon as I sent in the comment I realized the error of my ways, I have been questioned too often about why I would choose to help someone to ever judge anyone or any entity that decides to help. When and if they have an ulterior motive, that will be revealed. My general distrust of government is what prompted the response but of course that is no excuse. You are correct in that it is only natural for Cuba and Venezuela to support the countries in its region – better to make friends then enemies. I have not doubt that one day Dominica will find itself in the position of providing that support.

Suki K Tranqille