In focus: DEWA slab tariff

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If you are a commercial power consumer, the slab tariff is simple. Give or take the first few thousand kWh of your monthly bill, the introduction of the new tariff structure translated into a 66% increase in power costs. Water enjoyed a price spike too.

One of the aims of the tariff was to encourage conservation among residential and commercial consumers, but some among the latter feel unduly penalised by the tariff structure. For large manufacturing companies the slab is irrelevant, because they automatically end up on the top tier. As a result, many saw the new structure simply as a means of increasing the price.

As one industrial user put it ‘the introduction of these slabs has resulted in a big increase in electricity costs for Dubai-based businesses’. With operations in both Dubai and Abu Dhabi, this particular user currently sees Abu Dhabi as a cheaper place to operate.

Farnek Avireal, a facilities management company, recently published power cost estimates based on buildings in Dubai. Using an average individual electricity usage of 20 000 kWh per annum, the company calculates that a Dubai office tower of around 35 000 m2 on Sheikh Zayed Road, which had a previous annual electricity bill of AED 2.5 million, would have had an increase over the past year of 65% to AED 4.12 million. Similarly, a hotel of around 20 000 m2 in Dubai, which had previous annual energy costs of AED 1.5 million, could have seen a rise of 66% to AED 2.48 million under the slab tariff system.

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These estimates were confirmed by hotels in Dubai, which have felt the sharp increases have an impact. While the hotels UME spoke to are acting to mitigate the cost increases, the slab tariff does not appear to have been the main reason. Instead a general trend toward earning greater green credentials has been a bigger driver. However, the tariff has also provided some financial momentum to help justify ‘green’  measures on the bottom line.

“We just got a 65% increase,” said Philip Barnett, the Hyatt’s director of engineering. “It made us look more closely at our operations and how we can reduce consumption. However, Hyatt set a goal three years ago to reduce consumption by 5% a year. We changed a lot of our processes and make better use of our energy.”

As a result, the Hyatt has a number of measures in place that have seen a year-on-year reduction in power and water consumption. In February 2008 the hotel used 2.8 million kWh, in 2009 this monthly figure had dropped to 2.5 million kWh. The hotel’s achievements in water conservation were even greater, knocking a million gallons off monthly consumption, reducing it to 6.1 million gallons.

Low-power light bulbs, water conservation measures and a solar thermal system, for hot water, have all reduced utility costs. The hotel also uses its own effluent treatment plant to purify water, for use in its cooling towers, saving 120 000 gallons a day in summer.

At the Fairmont, Karuna Krishnan, the hotel’s chief engineer, has been working on ways to reduce energy consumption as a response to the cost increases and feels he has achieved demonstrable bottom line results.

“We have implemented different energy management initiatives to reduce energy costs,” he said. “One of the main utility consumers is the air conditioning. Efficient operation of chillers, strict monitoring of chilled water temperature and operation of the chillers, at the optimum chilled water temperature required for the building, have all helped.”

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