Sep 17 2004

The International Forum
Dominican Republic to Establish First Electric Co-ops

By Hannah Kamenetsky

NRECA International is lending its knowledge and expertise to help establish the first two electric co-ops in the Dominican Republic.

Electric service in the Caribbean nation, which shares the island of Hispaniola with Haiti, has deteriorated dramatically in recent years, with frequent and prolonged blackouts the norm. While businesses and households struggle with daily power outages, 20 percent of Dominicans have no access to electricity at all.

NRECA International staff has been helping improve the nation’s electric infrastructure for about seven years, including working with private utilities and the Dominican government to rebuild after Hurricane Georges in 1998.

The government restructured the nation’s power generation, transmission and distribution in 1999, selling majority ownership in three distribution utilities to private companies. Two of them recently reverted back to the government.

“That created a historic opportunity to create electric co-ops here,” said David Kittelson, NRECA International director for Central America, and a key member of the co-op projects team.

NRECA International recommended the adoption of the cooperative model as a way to solve the growing electrification crisis. An agreement was reached to establish two pilot co-ops, one in an urban setting and one in a rural area.

The urban co-op will be located on the outskirts of the capital, Santo Domingo, in Cristo Rey, a densely populated neighborhood that is home to between 15,000 and 20,000 predominantly poor families. Community leaders are using the working title of Cooperativa Electrica Cristo Rey.

The rural co-op is in the southwestern region, bordering Haiti. When Cooperativa Electrica Fronteriza is fully functional it will serve eight municipalities and roughly 15,000 families in scattered communities and on isolated farms.

At its first meeting Aug. 1, the co-op elected a board of directors, as well as an internal audit committee and a member-education committee, three entities that are required of a cooperative by Dominican law.

NRECA International will guide the fledgling co-ops through the process of obtaining legal status and the rights to operate as electric co-ops. It already has helped organize the co-ops’ local communities.

Both co-ops aim to rebuild the electric distribution systems in their service territories.

“There are several years of work ahead as we help them rehabilitate the electric grid,” Kittelson said. “It needs several millions of dollars of investment to get it up to par.”

There are also several other issues they must tackle.

Historically, Dominican utilities have faced significant theft of electricity, as well as very low collection rates. In a chicken-and-egg scenario, the utilities have been reluctant to invest in infrastructure, which results in poor service, and, in turn, a reluctance to pay.

“There hasn’t been discipline on the part of the government or the private concessionaires to fix the problem of people not paying bills,” said Dan Waddle, NRECA International regional director for Latin America. “In some areas the infrastructure has deteriorated dramatically, conditions are unsafe and the quality of service is atrocious.”

The co-ops will seek ways to reduce losses, control theft and improve collection rates. Currently, theft and technical losses reduce revenue by between 40 percent and 50 percent, Kittelson said. The co-ops aim to lower that figure to between 10 percent and 12 percent.

The co-ops also seek to raise collection rates to 90 percent or even 100 percent from 70 percent, he said.

“A community-owned electric co-op would bring a community-based solution to the electric sector here,” he added.