In the December 2024 edition of Energía e Hidrocarburos Plus (EH+) magazine, our partner Mirna J. Amiama Nielsen shares her article on the regulated electricity tariff. Below is the original article. Below is the original article:
The Regulated Electricity Tariff (Part 1)
The supply of electricity is a public service under Dominican law. It is considered an essential good, and in many cases, full access to electricity has been recognized as a fundamental right. It is impossible to conceive of a country’s economic development without a constant, universal, and reliable electricity supply.
The electricity tariff is the price assigned to the supply of electricity at all points of the Sistema Eléctrico Interconectado (Interconnected Electrical System), where energy is delivered—whether to households, businesses, or other users who, according to the law, qualify as customers or users of the public distribution service.
Electricity is an intangible good whose supply requires specific technical conditions and is subject to strict safety measures due to the physical risks it entails. Among these technical requirements, one must consider the conversion of high-voltage electricity—produced by generating companies—into medium voltage for transport and then into low voltage for delivery to public distribution service users.
Until 1998, the provision of electricity services was managed by a single monopoly, the Corporación Dominicana de Electricidad (“CDE”), created by Law 4115 of 1955 and granted autonomy by Law 6116 of 1962. After more than three decades, the Dominican Republic enacted the restructuring and reform of the CDE through the General Law on Public Enterprise Reform No. 141-97.
This restructuring led to the creation of what is now known as the Dominican Republic’s electricity market. As a result, the CDE was divided into five mixed-capital companies, corresponding to the business units previously concentrated in the CDE. These were transformed into sociedades anónimas (corporations) that would independently participate in the electricity market. This process resulted in the formation of three Electricity Distribution Companies (EDENORTE, EDESUR, and EDEESTE) and two Electricity Generation Companies (EGEHAINA and EGEITABO), with mixed ownership (state and private capital) and privatized through 51% private investments.
The restructuring was finalized through an international public bidding process before the existence of a general electricity law regulating the newly established market. The CDE continued to exist until the enactment of the General Electricity Law No. 125-01, serving as the State’s representative in the newly formed and privatized mixed-ownership companies. The CDE ceased to exist with the introduction of Law No. 125-01, which created the Empresa de Transmisión (Transmission Company) and the Empresa de Generación Hidroeléctrica (Hydroelectric Generation Company), both remaining state-owned. Additionally, it established a unique entity known as the Corporación de Empresas Eléctricas Estatales (“CDEEE”).
The premises of the electricity market were established by the Ministry of Industry and Commerce (formerly the Secretariat) through various resolutions. Resolution No. 45 of 1998 set the regulatory framework for the electricity subsector’s operations. Resolution No. 235 of 1998 established the regulatory framework for the electricity sector, while Resolution No. 236 defined the technical regulations for sector operations. Additionally, Resolution No. 237 outlined the tariff regime applied by distribution companies. Later, Resolution No. 111 of 1999 defined the main transmission network and set distribution tolls, and Resolution No. 112-99, among others, modified Resolution No. 235-98.
The above-mentioned resolutions were issued by the Ministry of Industry and Commerce and MSMEs (formerly the Secretariat) under Law No. 290 of June 30, 1966, which created the Ministry of Industry and Commerce. This law granted the Ministry the authority to establish and enforce national energy policies, regulate decentralized and autonomous electricity sector agencies, and set electricity tariffs. The Superintendencia de Electricidad (Electricity Superintendence) was initially created as a department within this Ministry.
The General Electricity Law No. 125-01 of July 26, 2001, published in Official Gazette No. 10095 on July 27, 2001, (“Law No. 125-01” or “General Electricity Law”) formally created the Superintendencia de Electricidad (Article 8) (“SIE”) and transferred to it the powers previously held by the Ministry of Industry and Commerce in electrical matters. These responsibilities mainly involve regulating the electricity sector.
Law No. 125-01 was later amended by Law No. 186-07 of August 6, 2007, published in Official Gazette No. 10429 on August 9, 2007, which remains in effect today. This law is regulated by Decree No. 555-02, the Regulation for the Implementation of the General Electricity Law No. 125-01, as well as modifications introduced by Decree No. 749-02 of September 19, 2002, Decree No. 306-03 of April 1, 2003, Decree No. 321-03 of April 3, 2003, and Decree No. 494-07 of August 30, 2007 (“Implementation Regulation”).
On December 7, 2022, Law No. 365-22 was enacted, ordering the dissolution of the Corporación Dominicana de Empresas Eléctricas Estatales (CDEEE) and the Unidad de Electrificación Rural y Suburbana (UERS), as well as the creation of the Empresa Generadora de Electricidad Punta Catalina (Punta Catalina Electricity Generation Company). Before this law, the CDEEE was already in the process of liquidation and elimination under Decree No. 342-20.
Author:
Mirna J. Amiama Nielsen
