Power contracts not sustainable

[NewsWhore]

Although yesterday's meeting between the energy sector and the government concluded with no re-negotiated contracts to speak of, President Leonel Fernandez urged the electrical companies that signed the Madrid Accord during the Mejia administration to employ enough flexibility when discussing re-negotiations, emphasizing that they needed to understand that the issue at hand is of national interest, and nothing can be above this. Radhames Segura, head of the state-run Electrical Companies (CDEEE) stressed the importance of these renegotiation talks and said that the government would use all legal resources available to them in order to make any proposals they submit to the energy providers worth it. Segura also said that the current system, under those same contracts, is unsustainable and that the government needs to find a way out. According to El Caribe newspaper, the government is proposing that energy providers Itabo and Haina discount for the over-indexation of prices, but if they refuse to do so the government will end the contracts with both companies in 2009, seven years before the actual expiration of the contracts. Also the government is proposing rescinding the contracts with Palamara-La Vega, Dominican Power Partner, the Electrical Company of Puerto Plata (CPP), and part of the AES Andres company in order to free up 500 MW of service that is included in those energy agreements, which the government says has created a distortion in the market. The government is calling for companies who operated in the spot market to make a bid for those existing 500 MW of power. This means that as from 2010, companies would need to bid for contracts to provide the 500 MW, increasing competition in the market. The government proposed reducing by 25-30% what they pay Cogentrix for their capacity of installed energy, but this would not be necessary if Cogentrix switches from fuel oil to natural gas as there would also be a 10% decrease in maintenance and operation costs. The government is also asking Smith & Enron for a 30-40% reduction in capacity installed costs. The energy providers said that they would answer in 21 days.

More... (http://www.dr1.com/index.html#4)