Electricity bills set to rise

The Abu Dhabi Government is considering increasing the price of electric in the emirate for the first time in 15 years.

April 28, 2010 / Abu Dhabi / (Rich-Joseph Facun / The National) An overview of the use of electricity in downtown Abu Dhabi, Wednesday, April 28, 2010.

Abu Dhabi plan Emirate aims to slow consumption rate to save billions of dollars Chris Stanton An expected increase in Abu Dhabi's electricity prices will rankle consumers but slow a rapid consumption growth rate that costs billions of dollars in investment, experts say. The proposed increase comes as the Abu Dhabi Government also presses forward with a range of other measures to cut domestic demand for power, water and oil.

Abu Dhabi will "do everything to rationalise the electricity consumption", said Mohammed al Bowardi, the Secretary General of the Abu Dhabi Executive Council. The council will come to a decision on a proposal to raise prices in "four to six weeks", he said. The proposed level of increase was not specified, making it difficult to estimate the effects but it will likely have some impact on reducing waste and consumption, said Douglas Caskie, an electricity economist and Gulf power expert at IPA Water and Economics.

"You would see people thinking twice about leaving the house with the aircon on," he said. "What it will do is shave incremental consumption and extend the time needed until the next 1,500 megawatt [private] power plant, if it's done effectively." Abu Dhabi's electricity rates of 15 fils per kilowatt-hour (kwh) for expatriates and 5 fils for Emiratis are among the lowest in the world. In the US, where the rate generally reflects the free market price, the average consumer pays the equivalent of 41 fils.

Consumers in Denmark pay as much as Dh1.32 per kwh, a rate that reflects the country's costly but politically successful support programmes for more expensive renewable power sources. Mr al Bowardi's comments underscore the Government's increasing concern about slowing an electricity consumption growth rate that is among the highest in the world and has required a new power station to be built almost every year for the past decade.

Officials are already adopting new efficiency standards for household appliances that will see wasteful units banned from the market. Other parts of the plan include the installation of an electronically monitored "smart" grid to better identify wasteful consumption patterns and a programme designed to get large users of airconditioning to switch off their coolers for 20 minutes at a time with minimal effect on performance.

The Government first indicated its new focus on reducing consumption, known as "demand side management", in a study last year by the Executive Affairs Authority (EAA). The study found that even without any increase in power prices, smart policies could reduce Abu Dhabi's expected consumption growth by 2,532mw by 2020, almost equivalent to the output of two large natural gas-fired power stations. The goal of reducing consumption is not limited to electricity: the use of petrol and water are also targeted in schemes that involve the Federal Government.

The Federal Government has approved two increases in the price of petrol that have seen the lowest grade rise by 28 per cent since April. A government price monitoring committee composed of representatives of fuel retailers now meets every other month to determine whether further price increases are needed. PFC Energy, a Washington-based energy consultancy, estimates that the combination of higher prices and slower economic growth have reduced UAE petrol consumption growth to between 6.5 and 7 per cent this year, down from 13.3 per cent last year.

For water, an EAA study identified theoretical savings in consumption growth of as much as 30 per cent in 10 years. Government policies have encouraged the adoption of more efficient household appliances and taps. Meanwhile, new government policies are expected to reduce the water use of farms and forestry programmes. cstanton@thenational.ae