Dubai: Thousands of residents using district cooling services from Palm Utilities are not likely to see any increase in rates and charges in the foreseeable future, a senior official said.
George Saad, Director of Customer Services and Billing at Palm Utilities, in an exclusive interview with XPRESS, said: “We are not looking to increase rates for our customers. None of our users will be affected by price increases if water and electricity charges remain the same.” Palm Utilities’ arm, Palm District Cooling (PDC), is one of five district cooling firms in Dubai. PDC cools 388 towers and serves around 14,000 customers. But the lack of regulation in the industry, coupled with recession, resulted in a massive spike in rates in certain communities. “Recession did affect many sectors in the UAE, including real estate and district cooling. But despite the recession we did not increase our rates,” he added.
District cooling was once touted as the panacea for cooling in the Gulf as it consumes 50 per cent less power and is much greener than traditional chillers or window-type ACs. But it has been dogged by problems as many customers complained about metering issues, opaque billing and the controversial high capacity and usage charges.
PDC has two broad classifications of charges — a mandatory capacity charge of Dh750 per tonne per annum, irrespective of whether the unit is occupied or not, and a consumption charge of Dh0.563 per tonne per year.
District cooling has been a sticky point for secondary owners where the original owners did not settle their cooling bills.
Saad said: “We do not register any new owner until all dues from the previous owners are settled. Legally, the old owner is contractually liable to settle any unpaid bills before we register new owners.”
The company also has a Facebook page that allows customers to get up-to-date information. Six months ago, PDC opened a branch in Jumeirah Lakes Towers (JLT) to cater to the properties they serve in the area. “We have a dedicated Relationship Manager to deal with customers 24 hours a day and there are no restrictions for anyone to call them.”
Regarding reimbursements to owners who are wrongly billed for a faulty sub-meter in their apartment, PDC clarified that they have a system in place which automatically calculates the owner’s average monthly consumption. “This amount is credited to the customer’s account and gets reflected in the next month’s bill.”
Standardise the structure of tariffs
According to a recent report titled Unlocking the Potential of District Cooling: The Need for GCC Governments to Take Action by legal think-tank Booz & Co, it’s high for time for GCC governments to consider market and governance reforms for the district cooling sector.
Simon-Pierre Monette of Booz & Company told XPRESS: “The sector needs better governance to ensure its optimal deployment. More planning is required to ensure that DC is deployed in areas of high cooling density, where it is beneficial economically and environmentally and to avoid it getting deployed in areas of low density. There is also a need for standardised and consistent approach to recover costs, especially with regards to capital costs [capacity charges].”
Monette said some DC users are unhappy because tariffs have been structured inappropriately or users feel that the rates are high.
“In particular, the recovery of capital costs through capacity charges is the major reason for upsetting the users because of misaligned expectations resulting from lack of information and transparency. A regulation needs to address and standardise the structure of tariffs and see how the various cost components are recovered from developers, owners and users.”
“For bankability reasons and to make demand risk acceptable, capacity charges cannot be dropped. However, depending on the development scheme, capacity charges should generally be borne upstream in the value chain, either by developers or building owners, rather than owners or tenants. Further, transparency is required to avoid units sold without future owners realising they will have to pay capacity charges, as this has the potential to lead to arbitrage on real estate prices.”
Palm district cooling charges
Meter set up fee: Dh1,500 (one time)
Refundable deposit: Dh1,000 for 1 bed; Dh2,000 for 2 bed; Dh3,000 for 3 bed and above; Dh3,000 for a retail/office (on transfer of ownership)
Quarterly Capacity Charge: Dh187.5 per tonne (allocated to the property)
Consumption rate: Dh0.563 per ton hour consumed
Meter Service Fee: Dh30 per month
Re-connection Charge: Dh1,000 (if disconnected due to non-payment)
Bounced cheque penalty: Dh150