Expats underwhelmed by DEWA price freeze

Residents argue housing fee and fuel surcharge outweigh benefit of frozen tariff
Expats underwhelmed by DEWA price freeze
The UAE is one of the highest per capita consumers of water and electricity in the world
By Claire Ferris-Lay
Wed 17 Aug 2011 11:07 AM

A move by Dubai’s top energy council to freeze water and
electricity tariffs in the emirate has been met with muted enthusiasm by expat
residents, who say the standstill will have little impact on their bills.

Utility costs in the UAE are among the cheapest in the
world, but expats argue that additional charges such as housing fees and fuel
surcharges can comprise more than half of monthly bills.

An American expatriate living in Mirdiff, who asked not to
be named, said the price freeze would have minimal impact on the cost of his
utilities bill.

“Right now the housing fee and fuel surcharge make up more
than 50 percent of our total DEWA bill,” he said. “Our consumption of
electricity and water is low because we are conscious of turning off lights,
the air conditioning and so on, when we go out or when we leave a bedroom.”

Another resident said that efforts to cut back on
electricity and water usage had made little difference to his family’s monthly utility
costs, once additional charges were taken into account.

“The
housing fee and fuel surcharges typically account for more than 75 percent of
my DEWA bill. Bathroom fitting changes, which reduced my monthly water
consumption by around 40 percent, had a negligible impact on the billed amount.”

Another
Arabian Business reader said the move may help rein in rising electricity and
water costs during the hot summer months.

“We pay
about AED3000 during the summer for electricity for our six-year-old,
well-maintained villa. All our efforts to reduce electricity consumption have
actually not resulted in any visible energy saving.”

Dubai's Supreme Council of Energy said Sunday that it would put
a standstill on electricity and water tariffs in the emirate “during the few
coming years”.

The UAE is one of the highest per capita consumers of water
and electricity in the world. Rising demand for power in Dubai, where soaring
summer temperatures drive up air conditioning use, has forced the emirate to
buy more natural gas to feed its power stations.

Expat residents living in Dubai are already charged housing
fees – billed by Dubai Municipality but collected through the monthly utility
bills - that are calculated at five percent of the rental value of their home.

Dubai Electricity and Water Authority (DEWA) also introduced
a variable fuel surcharge in January that charges residents based on the amount
of energy they consume and the cost to the utility of the fuel at the time of
its purchase.

Housing fees, which are not applicable to Emiratis, have
been categorized as an “expat tax” by some residents, who argue they are being
unfairly targeted.

“If it
is only expats who are required to pay these charges then how can expats
consider these charges anything but an expat tax? As far as we know Salik
is charged to everyone but not the housing fee - this is a specific charge
targeting foreigners,” said the Mirdiff resident.  

Analysts
warned artificially low utility tariffs would make it difficult to persuade
residents to cut back on their electricity and water consumption, in a region
where increased demand for cooling is a major driver behind rising power use.

“The financial reward for those who conserve water is lower
than it otherwise would be if prices were cost-reflective,” said Robert Bryniak,
CEO of consultancy firm Golden Sands. “Any
economist will argue that low prices encourage higher usage everywhere… it is
easy to envision consumers in UAE taking the view that water can’t in fact be a
scarce or valuable resource because prices are low.”

Consumer prices in Dubai, the second-biggest member of the UAE, increased
an annual 0.62 percent compared with 0.75 percent in June, according to data
published Tuesday.

Housing, water and electricity costs fell 3.5 percent, the
most since May 2010.

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