A tariff increase was announced on Wednesday, with some costs for expatriates doubling.
ABU DHABI // The energy and water price hikes that will come into effect in Abu Dhabi next year should lead to a reduction in consumption and an increase in efficiency, experts said yesterday.
The Regulation and Supervision Bureau announced the tariff increase on Wednesday, in collaboration with Abu Dhabi Distribution Company and Al Ain Distribution Company. It will come into effect on January 1.
“Overall, it is a really positive development,” said Alice Cowman, chief executive of the Clean Energy Business Council (CEBC). “It is part of a general move towards sustainability.”
Jesus Gutierrez, co-managing director of Dubai energy efficiency company Smart4Power, said the initiative would send the appropriate signal to consumers.
“It will help to reduce the Emirates’ carbon footprint and reduce the big burden that subsidies are posing in the Government’s finances,” he said.
The new tariff system has different rates, depending on consumption, with those consuming more energy and water charged more. Expatriates will face the biggest increases.
The current rate of Dh2.2 per 1,000 litres will more than double to Dh5.95 for expatriates living in flats who consume up to 700 litres a day. A higher, still unannounced tariff will be charged above that threshold.
Expatriates living in villas will be charged Dh5.95 per 1,000 litres for consumption of up to 5,000 litres per day.
While Emiratis in Abu Dhabi currently get their water free, from January they will be charged Dh1.7 per 1,000 litres if they live in apartments and consume up to 700 litres, with higher consumption charged at Dh1.89 per 1,000 litres.
Emiratis living in villas will be charged the lower tariff for consumption of up to 7,000 litres per day and the higher one for anything above that allocation.
Electricity prices for expatriates will increase from 15 fils per kilowatt-hour (kWh) to 21 fils per kWh for those with a daily consumption of up to 20kWh, regardless of whether they live in a flat or villa.
Emiratis currently pay 5 fils per kWh and will continue to pay the same if they live in an apartment and use no more than 30kWh, or in a villa and use no more than 400kWh. Those using more will be charged 5.5 fils per kWh.
Mr Gutierrez said price was a key factor in determining energy and water use.
“Experience from similar initiatives in other parts of the world shows that measures to increase water and electricity prices have had an immediate impact in overall consumption,” he said. “Other initiatives, like campaigns to raise awareness, are very important too, but the end driver is people’s pockets.”
While the full impact of the new rates will not be clear until the charges in the upper end of the tariff are announced, Mr Gutierrez said two factors would lead to a more efficient use of resources.
“Higher utility bills will change consumers’ behaviour, spurring them to make a more rational use of electricity and water: turning off lights, setting AC temperature to 24°C,” he said.
“It will also facilitate the introduction of energy-efficiency measures that before were not interesting for consumers since the cost savings were negligible.”
Ms Cowman said she expected that villa dwellers, especially expatriates, would probably be the most keen to save because they were facing the highest increases.
In addition, studies on water usage carried out in the country showed rates in apartments were comparable with the rest of the world, and much lower than those in villas.
Last year a CEBC study revealed that Abu Dhabi had the cheapest water tariffs in the country, and would continue to remain behind Dubai in terms of price, even with the increase.
As for electricity, Abu Dhabi would still be the cheapest in the country after the increases – three times cheaper than the rates paid by Federal Electricity & Water Authority customers, who pay 40 fils per kWh.