Expats underwhelmed by DEWA price freeze

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. From / Arabian Business News