GRENLEC wholeheartedly shares our Government’s goals of lowering Grenada’s energy costs and reducing our nation’s dependence on foreign fuel by increasing renewable energy generation. However, we believe that this draft Electricity Supply Bill, 2015 will not achieve these goals.
The Government intends to drastically restructure the electricity sector. The draft bill effectively takes us back to the pre-privatisation era, with the Government, through one Minister, in control of virtually every aspect of the electricity sector. In a purported attempt to lower electricity costs and encourage the use of renewable energy resources, the bill allows for multiple licensees to compete for the generation, transmission, distribution and sale of energy.
Stabilising costs, using greener technologies and increasing our nation’s energy security are critical goals that GRENLEC works toward continuously, and has tried to achieve collaboratively with our Government. However, without any discussion with GRENLEC, or the relevant facts and data, the Government has chosen a path for electricity sector reform that is likely to increase energy costs and threaten the reliability of electric service to our homes and businesses. Without a reliable, high quality, and stable electricity network, our economy is at stake.
The bill proposes to create a competitive energy marketplace by opening our energy sector to domestic and foreign investment in the generation, transmission, distribution, and sale of electricity. The bill allows for multiple independent power producers and network system operators. That means that instead of one integrated, reliable electric system there would be potentially numerous separate systems engaging in the generation of electricity, and replicating the transmission and distribution network needed to provide electricity to customers.
With just 44,000 customers and energy demand at 29 MW, Grenada is simply not large enough to support a competitive energy market as compared to other markets with a customer base and energy demand that’s far greater than ours. As with many other small island states, with relatively small power needs, analysis shows that there are insufficient economies of scale in Grenada to gain any benefits or lower costs from unbundling the utility for competition in generation, transmission and distribution. Instead, the cost of duplicating system operations, poles and wires, administration and management of electric service not only reduces reliability, but drives costs higher.
A recent industry report analysing the power industry structure and competitive procurement in Grenada concluded that: “The idea of separating GRENLEC into separate generation and transmission entities would not result in material benefits, and would instead be likely to result in cost increases that could be detrimental to Grenada’s electricity customers and its economy.”
Contrary to misinformation distributed recently, Grenada does not have the “highest electricity rates in the world.” Even with the Value Added Tax and environmental levy applied, GRENLEC’s rates are comparable with similar small island nations, as well as the U.S. Hawaiian Islands with a population more than ten times greater than Grenada. And, to further correct information released during the public consultation about the draft bill, GRENLEC is strictly regulated to control costs through the current legislation. Both the base tariff and the fuel charge are calculated using precise formulas. Non-fuel charge adjustments must be 2% below Grenada’s annual inflation rate. As a direct result of this legislated formula, over the last 20 years, the non-fuel base rate has actually decreased 23% when adjusted for inflation.
GRENLEC shares Government’s goal of generating more electricity from renewable resources to help stabilize electricity costs and reduce dependence on foreign oil. Transitioning from fossil-fuel generation to other energy resources to create a diverse, sustainable energy portfolio takes research and practical application to do it properly and cost-effectively.
Our exploration efforts started in 1996, and renewable energy initiatives accelerated after the economic shocks of the 2008 international oil price spikes drove electricity costs up to record levels.
Our initiatives to date include:
The Customer Renewable Energy Interconnection Programme—launched in 2008 and the first of its kind in the Caribbean—includes more than 75 customer sites, and is about to move into its third phase with an aggregate installed capacity approaching 800 kW.
The Petite Martinique Renewable Energy Project, 31.59 kW, is the first phase in our programme to convert Petite Martinique to virtually 100% renewable energy.
Our Grand Anse roof-top solar installation on three GRENLEC buildings, which total 150 kW. Plans are underway to expand capacity to other facilities.
And, there are other major geothermal, wind and solar initiatives that we have proposed to the Government over the last six years, as well as requests for support in securing suitable land for renewable energy projects. Unfortunately, no positive action resulted.
Rather than drastically disrupt our efficient integrated electric system, we believe in working cooperatively to build upon the reliable, well-run, well-performing utility we have now.
Over the last 20 years since privatization in 1994, more than $150 million dollars has been invested to modernize the nation’s electricity system and meet the increasing customer demand for high quality, affordable, reliable power, with emergency operations in place to recover expediently from devastating hurricanes.
We understand the need for regulatory change and reform, both nationally and regionally, to meet the challenges facing the sector, and we support making these changes collaboratively with our Government. In 2014, GRENLEC committed to discussions with the Grenadian and U.S. Governments through the United States Caribbean Energy Security Initiative (CESI).
The CESI initiative is focused on helping small island nations like Grenada develop effective energy sector reforms that would enhance their energy security and support sustainable economic growth. At an October 2014 meeting, all parties committed to undertake comprehensive efforts to achieve mutual goals.
The joint Vision Statement created at that meeting called for all parties to:
“Achieve a reduction in imported fossil fuels and energy prices through a comprehensive process led by Government of Grenada in collaboration with GRENLEC and involving all stakeholders as part of a transition towards a Green Grenada.”
Unfortunately, without explanation to GRENLEC, the Government did not proceed with the discussions and chose another path with the development of this draft bill.
We believe that the bill threatens Grenada’s energy security, and will cause undue risks to the reliability of electric service and unnecessary cost increases that could negatively impact the economy of Grenada and the livelihood of its people.
Reliable, affordable electric service is at the heart of Grenada’s economic development. Increasing the use of renewable energy plays an important role in stabilizing costs and lessening dependence on foreign oil for greater national security.
Again, we ask for collaboration with Government to address the problems to be solved, identify what we want to achieve and why, and then develop thoughtful solutions including appropriate legislative reform. Working together, we can accomplish our mutual goals to benefit the residents and businesses of Grenada for future prosperity.
(Murray Skeete is a Director of GRENLEC and Vice President of Engineering and Regulation, WRB Enterprises)