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Electricity Supply Bill 2016: Answers to Our Customers’ Questions

Electricity Supply Bill 2016: Answers to Our Customers’ Questions

Author: GRENLEC Blogger/Monday, June 27, 2016/Categories: Main, General

We are taking this opportunity to thank our customers for their interest in the Electricity Supply Bill and address the questions that are being asked of our team members about the new legislation.

 

Q1 “Are Grenada’s electricity prices the highest in the Caribbean or the world?” 

 

Answer: No.

·         Grenada’s domestic rates are comparable to or below other small islands, including Dominica, Grand Cayman, and Antigua, as well as islands with renewable energy generation of 20% or more, such as Aruba and U.S. Hawaiian Islands. 

 

·         Grenada’s domestic rates are marginally higher than St. Lucia’s because of the taxes (VAT) imposed by Government on electricity.

 

·         Grenada’s commercial rates are lower than all of the islands referenced above, except for Jamaica. In this case, this should be expected given that Jamaica’s electric system serves a population that is approximately 28 times greater than Grenada’s.

 

Q2  “Does Grenlec change rates when and how it wants?” 

 

Answer: No. Under the 1994 Electricity Supply Act, Grenlec’s rates are strictly regulated.  When the Company was privatised, rates were determined by a fixed price-cap formula that allows:

 

·        Monthly adjustments to the fuel charge, based on the cost of fuel.  

·        Annual adjustments to the non-fuel charge, strictly in accordance with a rate formula requiring Grenlec to absorb 2% of inflation. 

·        Government review and approval of non-fuel rate change applications as prescribed by law.

 

As shown below, Grenlec’s domestic electricity rates in 2016 are just EC$0.12 more than in 1996, with fuel costs being responsible for two-thirds of this increase. The non-fuel charge has decreased by 33.3% when adjusted for inflation.   

 

Period

Non-fuel Charge / kWh

or unit (EC$)

Fuel Charge / kWh or unit (EC$)

Total Charge / kWh or unit (EC$)

Total Charge / kWh or unit (US$)

June 2016

$0.41

$0.26

$0.67

$0.25

June 1996

$0.38

$0.17

$0.55

$0.20

1994 (before privatisation)

Rates averaged $0.55.

 

 

 

Q3   Will liberalising the electricity sector result in lower prices?”  

 

Answer: Not likely. For example, Jamaica with a population of 2.8 million opened its energy market to independent power producers in the early 1990’s. In 2006, Dominica with a population of 70,000 liberalised its energy market. To date, these countries have only benefitted from reduced electricity prices as a result of lower world fuel prices over the last 18 months, as Grenada has done.  

 

In addition, multiple generators and distributors on a small island nation that lacks economies of scale could lead to higher costs and reliability risks due to duplicative systems and additional administrative and regulatory oversight.

 

 

Q4    Will renewable energy necessarily lower electricity costs?” 

 

Answer: Renewable energy can help stabilise electricity prices in the medium to long term.  Even on islands with renewable energy generation of 20% or more, such as Aruba and the U.S. Hawaiian Islands, electricity prices are still higher than in Grenada. 

 

In Germany, electricity prices have actually increased due to the rapid acceleration of renewable energy and the use of a feed-in tariff.  Learning from Germany and other countries, Grenlec continues to urge a balanced and sustainable approach to renewable energy development to ensure that vulnerable customers are not unduly burdened by higher prices and reliability issues.

 

 

Q5       “Has Grenlec impeded Grenada’s efforts for increased renewable energy?”  

 

Answer: No. Since 2007, Grenlec has been an active proponent of increased renewable energy in Grenada. Currently, over 1MW of renewable energy is generated through Grenlec’s voluntary Customer Renewable Energy Interconnection Programme—the first of its kind in the Caribbean.  Over the last decade, Grenlec has invested more than EC$10 million in the research, development and deployment of renewable energy technologies, which will total 1.12MW with the imminent completion of Grenada’s largest renewable project. This is equivalent to approximately 4% of Grenada’s peak power demand. Plans for additional renewable energy installations are in development. 

 

To date, available suitable land has been the biggest impediment to increased renewable energy. Greater collaboration between the public and private sector can help alleviate the difficulty in attaining land for renewable energy installations. That’s why Grenlec will continue pursuing requests to Government for support in using Crown land for future renewable energy sites. 

 

Q6   Has privatisation of Grenlec depressed the economy and stifled Grenada’s economic activities?”

 

Answer: No. Grenlec has invested more than $250 million to help transform our service from inefficient and unreliable to the modern, world-class electric utility it is today. Over the last 22 years:

·         Grenlec’s installed capacity, peak load, energy generated, and customer connections have more than doubled.

·         Grenada’s GDP per capita has increased by more than 50% since 1995, according to the World Bank.

 

 

Grenlec is widely recognised as a good corporate citizen and one of the best performing utilities in the Caribbean for price, reliability, system performance, fuel efficiency, rapid restoration, and financial stability.  We are pleased to provide the excellent reliability and service that our customers rely on to power their lives. For more information, please visit www.grenlec.com/energise.

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