DUBAI // Jumeirah Islands villa owners have joined the chorus of landlords protesting against new district cooling fees of Dh15,000 a year by refusing to pay them. Palm Utilities notified homeowners of the new capacity charges on August 1. The company already levies these charges in other Dubai developments to recover the cost of the cooling plants, pipes and other equipment needed to run community-wide air conditioning systems, or "district cooling".
Over the summer, landlords at Jumeirah Lake Towers (JLT) refused to pay the fees and they, or their tenants, were left sweltering until they gave in and their air conditioning was reconnected. Palm Jumeirah owners fought the same battle in recent years and also lost. "It terms of negotiation tools, cutting off the air conditioning is a pretty good one to have," said a Jumeirah Islands resident who asked not to be named. "It was a little disingenuous to do this in the middle of summer."
In late August, several owners in Jumeirah Islands sent identical letters to Palm Utilities rejecting the charge. "I have not been provided with any valid reason or authority to justify the imposition of any additional charge," the letter read. Palm Utilities directed all queries from the owners and the media to Nakheel, saying the developer had levied the charge. "We are only the billing and collection agents," it said in a statement. "All decisions on implementation of tariffs are with Nakheel."
Palm Utilities and Nakheel are both owned by the conglomerate Dubai World. In an e-mail response to Jumeirah Islands residents dated September 20, Nakheel defended the charge by saying other communities in Dubai pay it too. The rate of the charge - Dh750 per tonne of refrigeration - is the same in other developments that use district cooling from Palm Utilities. Nakheel also said its rate was comparable with that of other district cooling firms, citing a KPMG study that estimated these at Dh750 to Dh1,200. To calculate the annual capacity charge, the Dh750 rate is multiplied by a tonnage amount estimated for each property.
It works out at about 20 tonnes for a four-bedroom villa in Jumeirah Islands, seven tonnes for a two-bedroom apartment in the Palm Shoreline, and five tonnes for a one-bedroom apartment in JLT. A per-villa fee of Dh15,000 for the nearly 750 villas in Jumeirah Islands would equal a total capacity charge revenue for Palm Utilities of more than Dh10 million a year. Nakheel referred further queries by the owners to the Real Estate Regulatory Authority. The owners have yet to organise a group complaint to the Government body. Nakheel and Rera did not respond to requests for comment.
Palm Utilities first tried to impose a capacity charge in Jumeirah Islands in 2006 by nearly doubling the rate of its consumption charge - from 0.34 per tonne of refrigeration to 0.60. However, after receiving angry protests from the owners, the firm relented. In a letter at the time, it said it had done so because the owners "had not been previously advised that the capital cost of the system was to be recovered through an annual or monthly tariff".
As a capital cost, capacity charges are traditionally borne by the owner of a property. In JLT and the Palm, many owners have passed these costs on to their tenants.