DOMINICAN REPUBLIC—Law that Authorizes the Dominican State, through the Corporación Dominicana de Empresas Eléctricas Estatales (CDEEE), to Participate in Power Generation

Author: Cristian Vallejo

On March 12, 2014, we advised that the Executive Power had introduced an important bill to the Senate (“Bill”) seeking primarily to (a) authorize the Dominican State, through the Corporación Dominicana de Empresas Eléctricas Estatales (“CDEEE”), to participate, on a temporary basis, in the development of power generation projects aimed at changing the national energy matrix and increasing the supply of power generation from low-cost and low-environmental impact sources, either as a developer or owner, directly or in partnership with the private sector (“State-owned Power Generation Projects”), and (b) exempt the development and implementation of State-owned Power Generation Projects from the procedures and terms established by Law No. 340-06 regarding Purchases and Procurement of Goods, Services, Works and Concessions of the State, essentially from the tender processes and associated timelines that, in the absence of such exemption, the CDEEE should carry out/comply with in order to develop and implement State-owned Power Generation Projects.

Recently, the National Congress passed a law as a result of the Bill, which remains subject to the President’s promulgation (“Law”). Among other things, the Law (a) authorizes the State, through the CDEEE, to develop State-owned Power Generation Projects, (b) requires that the State-owned Power Generation Projects be developed and implemented, at each stage, in strict compliance with the constitutional requirements and applicable laws, in particular the General Electricity Law and related regulations, and (c) exempts the distribution companies, while they are owned by the Dominican State, from complying with the tender process mandates required by the General Electricity Law in order for such companies to be able to enter into long-term contracts for the purchase and sale of electricity, to the extent the electricity that is the subject of such contracts is generated by State-owned Power Generation Projects that are wholly owned (100%) by the Dominican State, through the CDEEE, or any other member of the Bloc of State-owned Power Generation Companies.

Likewise, the Law, among other things:

1. Provides that the authorization granted to the Dominican State to develop State-owned Power Generation Projects, through the CDEEE, includes the granting of definitive concession to build and operate power generation projects in the Wholesale Electricity Market (MEM) of the National Interconnected Electric System (“SENI”), if such projects are wholly owned (100%) by the Dominican State.
2. Provides that the CDEEE must notify the National Energy Commission (“CNE”) and the Superintendency of Electricity (“SIE”) at least sixty (60) days prior to commencing construction of any State-owned Power Generation Project.
3. Provides that the CDEEE must deliver to the CNE and the SIE, within the sixty (60) day period referred to above, among other things, the following information/documentation with respect to any State-owned Power Generation Project:
   • Location information;
   • Description of the project’s civil works;
   • Technology to be used, particularly the type of fuel;
   • Lifetime and production capacity;
   • Description of the electrical transmission works and the party responsible for their construction;
   • Electrical study containing, at least, the short circuit analysis, load flow and stability of the Interconnected Grid, for approval by the SIE;
   • Timeline for execution of the project’s works and scheduled date for commissioning;
   • Environmental impact assessment; and
   • Certificate of no objection from the Ministry of Environment and Natural Resources.
4. Introduces the concept of "Representative of the State-owned Power Generation Companies" for purposes of participation in the Coordinating Board of the Coordinating Body of the National Interconnected Electric System (“SENI”).
5. Provides that when a State-owned Power Generation Project is connected to the SENI, the Bloc of State-owned Power Generation Companies of the Coordinating Body will consist of (i) the CDEEE, (ii) the Empresa de Generación Hidroeléctrica Dominicana (EGEHID) and (iii) any other company that is wholly owned (100%) by the Dominican State and carries out power generation activities of any kind.
6. Provides that it repeals any law, decree, resolution or provision that is contrary to it.
7. Provides that it will enter into effect after its promulgation and publication, as provided by the Constitution, and after expiration of the terms specified in the Dominican Civil Code.

To read the actual text of the Law, including a courtesy translation into English of same, please click here.