Alternative Sources of Energy and Effective Implementation Policy Roland Clarke, Ph. D. Project...

Alternative Sources of Energy and Effective Implementation

Policy

Roland Clarke, Ph. D.Roland Clarke, Ph. D.Project Manager, CREDP, CARICOM Secretariat, Project Manager, CREDP, CARICOM Secretariat,

Tel: 592 220 0002 ext. 2631, Tel: 592 220 0002 ext. 2631, [email protected]@caricom.org

Presented to Caribbean Connect – A High Level Presented to Caribbean Connect – A High Level Symposium on the CRICOM Single Market and Symposium on the CRICOM Single Market and

Economy, Sherbourne Conference Centre, Economy, Sherbourne Conference Centre, Barbados 28-30 June 2006 Barbados 28-30 June 2006

DisclaimerDisclaimer

All view points expressed herein All view points expressed herein are those of the author, and not are those of the author, and not the official view point of the the official view point of the CARICOM SecretariatCARICOM Secretariat

- Signed Roland R. Clarke- Signed Roland R. Clarke

ContentsContents

Section 1Section 1 Business EnvironmentBusiness Environment Electricity PricesElectricity Prices Government PolicyGovernment Policy Hemispheric Environmental CommitmentsHemispheric Environmental Commitments CREDP Project PipelineCREDP Project Pipeline CREDP National Energy Policy FrameworkCREDP National Energy Policy Framework

Section 2Section 2 Regional Energy Policy motivated by the CSME Regional Energy Policy motivated by the CSME

(for electric utilities)(for electric utilities) ConclusionsConclusions

ABSTRACTABSTRACT

This paper examines the Revised Treaty of This paper examines the Revised Treaty of Chaguaramus, Establishing the Caribbean Chaguaramus, Establishing the Caribbean Community, Including the Single Market and Community, Including the Single Market and Economy (CSME). The Treaty induces sectoral Economy (CSME). The Treaty induces sectoral implications that are peculiar to the electric implications that are peculiar to the electric utilities of Caribbean Community (CARICOM). utilities of Caribbean Community (CARICOM). These issues relate to: establishment or These issues relate to: establishment or continuation of government monopolies, cross continuation of government monopolies, cross border transactions; competition; regional border transactions; competition; regional economic enterprises; environmental economic enterprises; environmental sustainability; coordination of industrial policy, sustainability; coordination of industrial policy, harmonized legislation; incentive regulation; and harmonized legislation; incentive regulation; and regional trade. Generalised implications that are regional trade. Generalised implications that are applicable to a wide cross section of economic applicable to a wide cross section of economic sectors are not treated in this paper.sectors are not treated in this paper.

1.1. Business EnvironmentBusiness Environment

Changing Electric Utility Changing Electric Utility Business EnvironmentBusiness Environment

Privatisation (20 of 33 CARILEC members)Privatisation (20 of 33 CARILEC members) Liberalisation e.g competition in generationLiberalisation e.g competition in generation Regional Initiatives - e.g. Task Force on Regional Regional Initiatives - e.g. Task Force on Regional

Energy Policy, T&T Energy Plan for CARICOM, Energy Policy, T&T Energy Plan for CARICOM, PetroCaribe, GeoCaribesPetroCaribe, GeoCaribes

Regulatory Reform - Performance Based Regulatory Reform - Performance Based Regulation, PBR, rather than Rate of Return Regulation, PBR, rather than Rate of Return RegulationRegulation

Caribbean Single Market and Economy, CSME – Caribbean Single Market and Economy, CSME – Reviewed in this paperReviewed in this paper

National Energy Policy Framework – Proposed by National Energy Policy Framework – Proposed by CREDPCREDP

Utility Organisation – Public Utility Organisation – Public versus Private Ownershipversus Private Ownership

Public - Government owned and operated e.g SVG, Public - Government owned and operated e.g SVG, (and Guyana Power and Light, only because (and Guyana Power and Light, only because privatisation failed)privatisation failed)

Liberalisation - Investor owned - Vertically integrated Liberalisation - Investor owned - Vertically integrated - Jamaica Public Service Company, Lucelec, Domlec, - Jamaica Public Service Company, Lucelec, Domlec, Barbados Light and PowerBarbados Light and Power

LiberalisationLiberalisation - Trinidad and Tobago (Government - Trinidad and Tobago (Government owns transmission and distribution (T&D)) only. owns transmission and distribution (T&D)) only. Generation is private, and sold via PPA)Generation is private, and sold via PPA)

LiberalisationLiberalisation - Belize – T&D owned by Belco, procurement of generation via competitive bedding, bulk power purchased from regional power market (CFE with supplies from Mexico)

Regional Initiative – Task Regional Initiative – Task Force on Regional Energy Force on Regional Energy PolicyPolicy

CARICOM Heads established Task ForceCARICOM Heads established Task Force Objective – To develop regional energy Objective – To develop regional energy

policypolicy Includes pricing of petroleum and natural Includes pricing of petroleum and natural

gas, transportation of energy, renewable gas, transportation of energy, renewable energy, energy efficiency, environment, all energy, energy efficiency, environment, all within the context of access to resources within the context of access to resources under the CSME under the CSME

Members – Barbados, Grenada, Guyana, Members – Barbados, Grenada, Guyana, Jamaica, Suriname, Trinidad and Tobago, Jamaica, Suriname, Trinidad and Tobago, (and the Bahamas are also active) (and the Bahamas are also active)

Regional Initiative – T&T Regional Initiative – T&T Energy Plan for CARICOMEnergy Plan for CARICOM

Produce bulk electricity in T&T, and sell to Produce bulk electricity in T&T, and sell to Grenada and SVGGrenada and SVG

Supply natural gas via a pipeline to Barbados, Supply natural gas via a pipeline to Barbados, the Fr. West Indies, with a take-off to Lucelecthe Fr. West Indies, with a take-off to Lucelec

Supply compressed natural gas to Barbados in a Supply compressed natural gas to Barbados in a special tanker, yet to be developedspecial tanker, yet to be developed

Supply liquefied natural gas to Jamaica, using Supply liquefied natural gas to Jamaica, using existing tankers, at a negotiated contract priceexisting tankers, at a negotiated contract price

Collective purchasing of crude from Venezuela, Collective purchasing of crude from Venezuela, for refining at PetroTrin, and product sold at for refining at PetroTrin, and product sold at discountdiscount

Regional Initiatives – Regional Initiatives – CREDP and GeoCaribesCREDP and GeoCaribes

Caribbean Renewable Energy Development Caribbean Renewable Energy Development Programme, CREDPProgramme, CREDP• Remove the barriers to renewable energy I.e. Remove the barriers to renewable energy I.e.

policy, financing, information, and human capacity policy, financing, information, and human capacity • Executed by the CARICOM SecretariatExecuted by the CARICOM Secretariat• Investment projects only - Wind, Hydro, Biomass Investment projects only - Wind, Hydro, Biomass

(e.g. Bagasse, Landfills), Solar, and Geothermal(e.g. Bagasse, Landfills), Solar, and Geothermal GeoCaribesGeoCaribes

• Geothermal Early stage resource exploration and Geothermal Early stage resource exploration and policy – Executed by the OASpolicy – Executed by the OAS

Regional Initiative -Regional Initiative -PetroCaribePetroCaribe

A political allianceA political alliance Greater involvement of Governments in Greater involvement of Governments in

petroleum product supply chainpetroleum product supply chain Investment capital for infrastructure (e.g. Investment capital for infrastructure (e.g.

terminals, storage, refinery upgrade)terminals, storage, refinery upgrade) Payment arrangements only, no discountsPayment arrangements only, no discounts Implications for CARICOM common Implications for CARICOM common

external tariff (CET), as most products external tariff (CET), as most products already supplied by T&T to some countries, already supplied by T&T to some countries, as well as CSME Treaty proceduresas well as CSME Treaty procedures

2.2. PricesPrices

Average Electricity Prices Average Electricity Prices 20052005

Average Revenue/KWH

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

Caribbean Utilities

Cen

ts/K

WH

Wind

Why are Electric Utility Prices Why are Electric Utility Prices among the highest in the among the highest in the World?World?

Tiny utilities < 350 MW (except Jamaica and Tiny utilities < 350 MW (except Jamaica and Trinidad and Tobago) – i.e. no economies of Trinidad and Tobago) – i.e. no economies of scale in operations or regulationscale in operations or regulation

Reliability criteria – i.e the n-2 rule. That is if Reliability criteria – i.e the n-2 rule. That is if the largest plan in down on scheduled the largest plan in down on scheduled outage, and the next largest plant trips off in outage, and the next largest plant trips off in an unscheduled outage, then the remaining an unscheduled outage, then the remaining plants must be able to carry the full loadplants must be able to carry the full load• This results in significant over capacityThis results in significant over capacity

No regional transmission backbone, to No regional transmission backbone, to mitigate the need for the n-2 rulemitigate the need for the n-2 rule

3. 3. Government Policies Government Policies for Renewable Energyfor Renewable Energy

PoliciesPolicies

Policies

PoliciesPolicies

4.4. Hemispheric Hemispheric Environmental Environmental CommitmentsCommitments

Policy GoalsPolicy Goals

LAC commitment at Johannesburg LAC commitment at Johannesburg • 10% RE penetration by 201010% RE penetration by 2010

Regional CommitmentRegional Commitment• CREDP goal – 5% RE in the electric CREDP goal – 5% RE in the electric

sub-sector by 2015 sub-sector by 2015

Energy Supply Renewability Energy Supply Renewability Index Index Source: Renewable Energy Sources in Latin America and the Caribbean: Situation and Policy Source: Renewable Energy Sources in Latin America and the Caribbean: Situation and Policy Proposals by UNECLAC, GTZ 19 May 2004. (Caribbean 1 = Barbados, Grenada, Guyana, Proposals by UNECLAC, GTZ 19 May 2004. (Caribbean 1 = Barbados, Grenada, Guyana, Jamaica, Suriname, Trinidad and Tobago, Caribbean 2 = Dominican Republic, Haiti and Cuba)Jamaica, Suriname, Trinidad and Tobago, Caribbean 2 = Dominican Republic, Haiti and Cuba)

Energy Supply Renewability Index, RI

0%5%

10%15%20%25%30%35%40%

Region

Pe

rce

nt,

%

5.5. CREDP Project PipelineCREDP Project Pipeline

CREDP Project Pipeline - CREDP Project Pipeline - 20042004

Avoided Costs vs Min PPA Price at 15% ROE after tax

02468

101214161820

US c

ents

per

KW

h

Avoided Costs

Min PPA Price

6.6. CREDP National Energy CREDP National Energy Policy FrameworkPolicy Framework

Policy - VisionPolicy - Vision

II Vision and Strategic ObjectivesVision and Strategic Objectives• Use a multi-stakeholder process to develop Use a multi-stakeholder process to develop

the vision and strategic objectives for your the vision and strategic objectives for your country’s energy policycountry’s energy policy

• Typically the Vision and Strategic Objectives Typically the Vision and Strategic Objectives may look like the following –may look like the following –

VisionVision• Overall vision for the future (may be Overall vision for the future (may be

politically or philosophically motivated) politically or philosophically motivated) • e.g. St. Lucia committed at Joberg be the e.g. St. Lucia committed at Joberg be the

world’s first “Sustainable Energy Island.”world’s first “Sustainable Energy Island.”

Policy - Strategic Policy - Strategic Objectives (measurable Objectives (measurable and achievable)and achievable)

Energy SecurityEnergy Security• Minimise dependence on imported oilMinimise dependence on imported oil• Diversify energy resourcesDiversify energy resources• Ensure supply during disastersEnsure supply during disasters

Economic SecurityEconomic Security• Minimise foreign Exchange Minimise foreign Exchange

requirementsrequirements• Ensure (choose) least cost optionEnsure (choose) least cost option• Develop indigenous resources Develop indigenous resources

Policy - Strategic Policy - Strategic Objectives (cont’d)Objectives (cont’d)

Securing EfficiencySecuring Efficiency• Maximise energy conversion efficiencyMaximise energy conversion efficiency• Maximise end user demand efficiencyMaximise end user demand efficiency• Maximise energy conservationMaximise energy conservation

Environmental ProtectionEnvironmental Protection• Minimise local environmental health Minimise local environmental health

impactsimpacts• Maximise global environmental benefitsMaximise global environmental benefits

Policy - Strategic Policy - Strategic Objectives (cont’d)Objectives (cont’d)

Universal accessUniversal access• Ensure provision of energy to the poor and Ensure provision of energy to the poor and

disadvantageddisadvantaged• Ensure provision of energy to rural communitiesEnsure provision of energy to rural communities

Legislative and Regulatory ReformLegislative and Regulatory Reform• Deploy incentive based regulationDeploy incentive based regulation• Facilitate independent power producers, IPP, and Facilitate independent power producers, IPP, and

processes for power purchase agreements, PPAprocesses for power purchase agreements, PPA• Maximise renewable energyMaximise renewable energy• Maximise energy conservation and efficiencyMaximise energy conservation and efficiency

7.7. Regional Energy Policy Regional Energy Policy motivated by the CSMEmotivated by the CSME

With View Points by the authorWith View Points by the author

CSME definition of CSME definition of ElectricityElectricity

CARICOM Secretariat defines electricity as CARICOM Secretariat defines electricity as a a serviceservice, rather than a good (for now), rather than a good (for now)

Chapter 3 of the Treaty makes no mention Chapter 3 of the Treaty makes no mention of Electricity. Interpretive creativity of Electricity. Interpretive creativity recommendedrecommended

NB: The 2NB: The 2ndnd section of this paper below section of this paper below highlights particular Treaty Articles, and highlights particular Treaty Articles, and show their relevance to the electric sectorshow their relevance to the electric sector

ConclusionsConclusions

Legislative reform to permit the Legislative reform to permit the importation of electricityimportation of electricity

Competition in generation, Competition in generation, including renewable energy including renewable energy (and energy efficiency)(and energy efficiency)

Interconnection of States Interconnection of States should be undertakenshould be undertaken

Regulatory coordination Regulatory coordination introducedintroduced

Conclusions – Other Conclusions – Other notionsnotions

Coordination of investments through a Coordination of investments through a dedicated regional entitydedicated regional entity• e.g. CREDP has established the Caribbean e.g. CREDP has established the Caribbean

Renewable Energy Technical Assistance Facility, Renewable Energy Technical Assistance Facility, CRETAF, to prepare projects for bank financingCRETAF, to prepare projects for bank financing

• e.g. CREDP to develop business plan for the e.g. CREDP to develop business plan for the Caribbean Renewable Energy Facility, CREF, an Caribbean Renewable Energy Facility, CREF, an equity and/or debt facilityequity and/or debt facility

Proposal – Investments in RE and EE should Proposal – Investments in RE and EE should be consolidated into a new regional be consolidated into a new regional institute of CARICOMinstitute of CARICOM

CSME - CHAPTER 3 - Establishment, Services Capital, and Movement of Community Nationals - ARTICLE 30 – Scope

of Application

1. Save as otherwise provided in this Article 1. Save as otherwise provided in this Article and Article 30, the provisions of this Chapter and Article 30, the provisions of this Chapter shall apply to the right of establishment, the shall apply to the right of establishment, the right to provideright to provide servicesservices and the right to and the right to move capital in the Community.move capital in the Community.

2. Activities in a Member State involving the 2. Activities in a Member State involving the exercise of exercise of governmental authority shallgovernmental authority shall, in , in so far as that Member State is concerned, so far as that Member State is concerned, be be excluded from the operation of this Chapterexcluded from the operation of this Chapter..

Ch 3 - Article 30 cont’dCh 3 - Article 30 cont’d

3. For the purposes of this Chapter, 3. For the purposes of this Chapter, "activities involving the exercise of "activities involving the exercise of governmental authority" means activities governmental authority" means activities conducted neither on a commercial basis conducted neither on a commercial basis nor in competition with one or more nor in competition with one or more economic enterprises, and includes:economic enterprises, and includes:• (d) other activities conducted by a (d) other activities conducted by a

public entity for the account of or with public entity for the account of or with the guarantee or using financial the guarantee or using financial resources of the government.resources of the government.

View point – Is electric View point – Is electric sector “excluded” from sector “excluded” from Chapter 3?Chapter 3?

Some electric utilities are owned and Some electric utilities are owned and operated by government.operated by government.

Some electric utilities are Some electric utilities are monopolies, whether “natural monopolies, whether “natural monopolies” or otherwise. monopolies” or otherwise.

It’s debatable whether such utilities It’s debatable whether such utilities are conducted “on a commercial are conducted “on a commercial basis.”basis.”

For sure a monopoly is not “in For sure a monopoly is not “in competition with one or more competition with one or more economic enterprise”economic enterprise”

View point – Is electric View point – Is electric sector “excluded” from sector “excluded” from Chapter 3?Chapter 3?

National Regulatory processes may National Regulatory processes may be exemptbe exempt as this involves the as this involves the “exercise of government authority”“exercise of government authority”

Hence national regulatory Hence national regulatory authorities in Grenada and SVG, may authorities in Grenada and SVG, may not have jurisdiction over electricity not have jurisdiction over electricity generated in Trinidad and Tobagogenerated in Trinidad and Tobago

This may imply the need for cross This may imply the need for cross border regulation of electricityborder regulation of electricity

Ch 3 - ARTICLE 31Ch 3 - ARTICLE 31 Treatment of Treatment of MonopoliesMonopolies

1. Member States may determine that the public 1. Member States may determine that the public interest requires the interest requires the exclusion or restrictionexclusion or restriction of the of the right of establishment in any industry or in a right of establishment in any industry or in a particular sector of an industry.particular sector of an industry.

2. Where such a determination has been made:2. Where such a determination has been made: (a) if the determination results in the continuation (a) if the determination results in the continuation

or establishment of a or establishment of a government monopolygovernment monopoly, the , the Member State shall adopt appropriate measures to Member State shall adopt appropriate measures to ensure that the monopoly ensure that the monopoly does not discriminatedoes not discriminate between nationals of Member States, save as between nationals of Member States, save as otherwise provided in this Treaty, and is subject to otherwise provided in this Treaty, and is subject to the the agreed rules of competitionagreed rules of competition established for established for Community economic enterprises;Community economic enterprises;

Ch 3 - ARTICLE 31Ch 3 - ARTICLE 31 Treatment of Treatment of MonopoliesMonopolies

… … and similarly …and similarly … (b) … continuation or establishment (b) … continuation or establishment

of a of a private sector monopolyprivate sector monopoly, the , the Member State shall … adopt Member State shall … adopt appropriate measures to ensure that appropriate measures to ensure that national treatment is accorded to national treatment is accorded to nationals of other Member States in nationals of other Member States in terms of participating in its terms of participating in its operationsoperations

View PointView Point

This implies that an existing or continuing This implies that an existing or continuing government owned electric T&D utility government owned electric T&D utility (e.g. T&Tec) may not sell to another (e.g. T&Tec) may not sell to another member state at prices (i.e. tariffs) that member state at prices (i.e. tariffs) that “discriminate between nationals … save “discriminate between nationals … save as otherwise provided in this Treaty…”as otherwise provided in this Treaty…”

… … and is “subject to agreed rules of and is “subject to agreed rules of competitioncompetition””

However, the Treaty seems to be intended However, the Treaty seems to be intended for “non-national” customers located in for “non-national” customers located in Trinidad and Tobago, and not cross-border Trinidad and Tobago, and not cross-border customers in the case of Grenada and SVGcustomers in the case of Grenada and SVG

Ch 3 - ARTICLE 32Ch 3 - ARTICLE 32 - - Prohibition of New Prohibition of New Restrictions on the Right of Restrictions on the Right of

EstablishmentEstablishment 1. Member States shall not introduce in 1. Member States shall not introduce in

their territories any new restrictions their territories any new restrictions relating to the right of establishment of relating to the right of establishment of nationals of other Member States save as nationals of other Member States save as otherwise provided in this Treaty.otherwise provided in this Treaty.

3. (1) The right of establishment within 3. (1) The right of establishment within the meaning of this Chapter shall include the meaning of this Chapter shall include the right to:the right to: • (b) create and manage economic enterprises (b) create and manage economic enterprises

referred to in paragraph 5(b) of this Article.referred to in paragraph 5(b) of this Article.


Does this mean that a new electricity Does this mean that a new electricity generating company may be established generating company may be established in any member state, by an entity from in any member state, by an entity from another member state, to sell power to a another member state, to sell power to a neighbouring state, even though the local neighbouring state, even though the local electric utility has monopoly rights on electric utility has monopoly rights on generation, transmission, (distribution) generation, transmission, (distribution) and sale of electricity within that state?and sale of electricity within that state?

Would the new generating entity require Would the new generating entity require a license?a license?

It seems that a new regional regulatory It seems that a new regional regulatory framework may be prescribed with framework may be prescribed with motivations by the Revised Treatymotivations by the Revised Treaty

Chapter 4 - Article 51Chapter 4 - Article 51 - - Objectives of the Community Objectives of the Community

Industrial PolicyIndustrial Policy

1. The goal of the Community 1. The goal of the Community Industrial Policy shall be market-Industrial Policy shall be market-led, internationally competitive led, internationally competitive and sustainable production of and sustainable production of goods and goods and servicesservices for the for the promotion of the Region's promotion of the Region's economic and social development.economic and social development.


• This may imply “market led” This may imply “market led” production of electricity production of electricity “services.”“services.”

• ““Market led” may be interpreted Market led” may be interpreted to mean “competitive markets.”to mean “competitive markets.”

• Competitive markets should be Competitive markets should be restricted to generation, and not restricted to generation, and not transmission and distribution. transmission and distribution. T&D are “natural monopolies.”T&D are “natural monopolies.”


• Current practice to be Current practice to be encouraged include: encouraged include: – competitive bidding for new competitive bidding for new

generation by independent power generation by independent power producers (IPP’s) eg. Belize; producers (IPP’s) eg. Belize;

– Out-sourcing eg. Guyana; Out-sourcing eg. Guyana; – Inside-The-Fence generation by Inside-The-Fence generation by

customers e.g. Barbadoscustomers e.g. Barbados


The use of cheap natural gas from The use of cheap natural gas from Trinidad and Tobago, as a factor Trinidad and Tobago, as a factor input to the generation of electricity, input to the generation of electricity, may lead to “internationally may lead to “internationally competitive production of goods and competitive production of goods and servicesservices” in the Community. ” in the Community.

The use of renewable energy (RE) will The use of renewable energy (RE) will lead to the “sustainable” production lead to the “sustainable” production of electricity. RE is both of electricity. RE is both environmentally and economically environmentally and economically sustainable. sustainable.

Ch 4 - Article 51Ch 4 - Article 51 – cont’d – cont’d

2. In fulfillment of the goal set out 2. In fulfillment of the goal set out in paragraph 1 of this Article, the in paragraph 1 of this Article, the Community shall pursue the Community shall pursue the following objectives:following objectives:• (a) (a) cross-border employmentcross-border employment of of

natural resources, human resources, natural resources, human resources, capital, technology and management capital, technology and management capabilities for the production of capabilities for the production of goods and goods and servicesservices on a sustainable on a sustainable basis;basis;


Natural gas is a “natural Natural gas is a “natural resource” than may be resource” than may be employed “cross-border” for employed “cross-border” for the production of goods and the production of goods and servicesservices (e.g. electricity). (e.g. electricity).


(b) linkages among economic (b) linkages among economic sectors and enterprises within and sectors and enterprises within and among Member States of the among Member States of the Single Market and Economy;Single Market and Economy;

View PointView Point• Cross-border electricity will Cross-border electricity will

provide the linkagesprovide the linkages


(c) promotion of regional economic (c) promotion of regional economic enterprises capable of achieving scales of enterprises capable of achieving scales of production to facilitate successful production to facilitate successful competition in domestic and extra-regional competition in domestic and extra-regional markets;markets;

View PointView Point• 1.1. Cross-border electricity, organized as Cross-border electricity, organized as

regional enterprises, is more capable of regional enterprises, is more capable of achieving economies of scale. achieving economies of scale.

• 2.2. Fixed cost may be spread across all Fixed cost may be spread across all customers in all member states, thus customers in all member states, thus minimizing costs implications for all. minimizing costs implications for all.

Ch 4 - Article 51 – cont’dCh 4 - Article 51 – cont’d

(g) enhanced industrial production on an (g) enhanced industrial production on an environmentally sustainable basis;environmentally sustainable basis;

View PointView Point• Electricity production from renewable Electricity production from renewable

resources is environmentally sustainableresources is environmentally sustainable• However, decommissioning of RE However, decommissioning of RE

systems may result in hazardous waste systems may result in hazardous waste eg Photovoltaics – Recommendation – eg Photovoltaics – Recommendation – Develop a waste management plan at Develop a waste management plan at design or purchase stagedesign or purchase stage

Ch 4 - Article 52Ch 4 - Article 52 - - Implementation of Community Implementation of Community

Industrial PolicyIndustrial Policy

1. In order to achieve the objectives of its industrial 1. In order to achieve the objectives of its industrial policy, the Community shall promote, policy, the Community shall promote, inter aliainter alia::

(a) the co-ordination of national industrial policies (a) the co-ordination of national industrial policies of Member States;of Member States;

View PointView Point• The intent of the Caribbean Renewable The intent of the Caribbean Renewable

Energy Development Programme (CREDP) Energy Development Programme (CREDP) is to foster markets for electricity produced is to foster markets for electricity produced from renewable energy resources. from renewable energy resources.

• This includes the coordination of energy This includes the coordination of energy policy legislation, licenses, administrative policy legislation, licenses, administrative procedures and regulation.procedures and regulation.

View Point – cont’dView Point – cont’d

• The Task Force on Regional The Task Force on Regional Energy Policy is attempting to Energy Policy is attempting to coordinate energy policy.coordinate energy policy.

• There should be co-ordination in There should be co-ordination in the regulation of electricity.the regulation of electricity.

• There should be co-ordination or There should be co-ordination or harmonization of legislation and harmonization of legislation and licenses.licenses.


(b) the establishment and maintenance of (b) the establishment and maintenance of an investment-friendly environment, an investment-friendly environment, including a facilitative administrative including a facilitative administrative process;process;

View PointView Point• The coordination of energy policy, The coordination of energy policy,

legislation, licenses, administrative legislation, licenses, administrative procedures and regulation is intended to procedures and regulation is intended to enhance the investment environment, e.g. enhance the investment environment, e.g. renewable energyrenewable energy

• Coordination of processes for IPP’s and Coordination of processes for IPP’s and PPA’sPPA’s

Ch 4 - Article 52Ch 4 - Article 52

6. Member States shall undertake to 6. Member States shall undertake to establish and maintain appropriate establish and maintain appropriate macro-economic policies supportive macro-economic policies supportive of efficient production in the of efficient production in the Community. In addition, they shall Community. In addition, they shall undertake to put in place undertake to put in place arrangements for, arrangements for, inter aliainter alia::

(c) harmonised legislation in relevant (c) harmonised legislation in relevant areas;areas;


View PointView Point• 1.1. Electricity legislation, as well Electricity legislation, as well

as regulation, licensing, and as regulation, licensing, and administrative procedures should administrative procedures should be harmonisedbe harmonised

• Procedures for IPP’s, PPA’s and Procedures for IPP’s, PPA’s and procurement should be procurement should be harmonisedharmonised


7. In order to facilitate the 7. In order to facilitate the implementation of the Community implementation of the Community Industrial Policy, the COTED shall, in Industrial Policy, the COTED shall, in collaboration with competent organs collaboration with competent organs and agencies:and agencies:• (c) encourage Member States to establish (c) encourage Member States to establish

and develop and develop export marketsexport markets, especially in , especially in non-traditional sectors, through the non-traditional sectors, through the development of sector-specific incentives development of sector-specific incentives and appropriate policy instruments.and appropriate policy instruments.


Cross-border electricity is an example Cross-border electricity is an example of an export market in a non-of an export market in a non-traditional sector.traditional sector.

A regional transmission network is also A regional transmission network is also an example.an example.

COTED is mandated to encourage COTED is mandated to encourage member States to establish and member States to establish and develop export marketsdevelop export markets

CARILEC should be proactive and CARILEC should be proactive and influence COTEDinfluence COTED


8. For the purpose of this Article, "production 8. For the purpose of this Article, "production integration" includes: integration" includes: • (a) the direct organisation of production in more (a) the direct organisation of production in more

than one Member State by a single economic than one Member State by a single economic enterprise; enterprise;

• (b) complementary production involving (b) complementary production involving collaboration among several economic collaboration among several economic enterprises operating in one or more Member enterprises operating in one or more Member States to produce and use required inputs in the States to produce and use required inputs in the production chain; andproduction chain; and

• (c) co-operation among economic enterprises in (c) co-operation among economic enterprises in areas such as purchasing, marketing, and areas such as purchasing, marketing, and research and development. research and development.


Caribbean electric utilities may Caribbean electric utilities may be integrated by be integrated by interconnecting states with a interconnecting states with a transmission network.transmission network.

Ch 4 - Article 54Ch 4 - Article 54 - - Development of the Services Development of the Services

SectorSector

1. The COTED shall, in collaboration with 1. The COTED shall, in collaboration with the appropriate Councils, promote the the appropriate Councils, promote the development of the development of the servicesservices sector in the sector in the Community in order to stimulate Community in order to stimulate economic complementarities among, and economic complementarities among, and accelerate economic development in, accelerate economic development in, Member States. In particular, the COTED Member States. In particular, the COTED shall promote measures to achieve: shall promote measures to achieve: • (a) increased investment in (a) increased investment in servicesservices;;


(b) increased volume, value and range of (b) increased volume, value and range of trade in trade in servicesservices within the Community and within the Community and with third States; with third States;

(d) enhanced enterprise and infrastructural (d) enhanced enterprise and infrastructural development, including that of micro and development, including that of micro and small service enterprises.small service enterprises.

View PointView Point• 1.1. The cross-border provision of electricity is an The cross-border provision of electricity is an

example of “increased investment in example of “increased investment in servicesservices”, ”, “increased volume, value and range of trade in “increased volume, value and range of trade in services”, and “infrastructural development.”services”, and “infrastructural development.”


2. In order to achieve the objectives set out in 2. In order to achieve the objectives set out in paragraph 1, Member States shall, through the paragraph 1, Member States shall, through the appropriate Councils, collaborate in: appropriate Councils, collaborate in:

(b) establishing a regime of (b) establishing a regime of incentivesincentives for the for the development of and trade in development of and trade in servicesservices; and ; and

(c) adopting measures to promote the (c) adopting measures to promote the establishment of an appropriate institutional establishment of an appropriate institutional and administrative framework and, in and administrative framework and, in collaboration with the Legal Affairs Committee, collaboration with the Legal Affairs Committee, promote the establishment of the appropriate promote the establishment of the appropriate legal frameworklegal framework to support the services sector to support the services sector in the Community. in the Community.


The regime of incentives may The regime of incentives may be captured in a regulatory be captured in a regulatory regime such as “performance regime such as “performance based regulation.”based regulation.”


3. In the establishment of programmes 3. In the establishment of programmes and policies of the Community for the and policies of the Community for the development of the development of the servicesservices sector, the sector, the relevant Councils shall give priority to: relevant Councils shall give priority to:

(a) the efficient provision of (a) the efficient provision of infrastructural services including infrastructural services including telecommunications, road, air, maritime telecommunications, road, air, maritime and air transportation, statistical data and air transportation, statistical data generation and financial services; generation and financial services;


(3) … the relevant Councils shall give (3) … the relevant Councils shall give priority to:priority to:

(a) The efficient provision of (a) The efficient provision of infrastructural services including infrastructural services including telecommunications, … transportation, … telecommunications, … transportation, … financial services (but electricity not financial services (but electricity not mentioned)mentioned)

(b) the development of services which (b) the development of services which enhance cross-sector competitivenessenhance cross-sector competitiveness


There is no mention of electricity an There is no mention of electricity an ”infrastructural service.””infrastructural service.”

Is this an error of omission?Is this an error of omission?


(c) the development of (c) the development of servicesservices which which enhance cross-sector competitiveness; enhance cross-sector competitiveness;

(d) the facilitation of (d) the facilitation of cross-bordercross-border provision of services which enhance the provision of services which enhance the competitiveness of the services sector;competitiveness of the services sector;

View PointView Point• 1.1. Electricity is a factor input to all Electricity is a factor input to all

industries. Hence the enhanced industries. Hence the enhanced competitiveness of the electric sector competitiveness of the electric sector will enhance cross-sector will enhance cross-sector competitiveness.competitiveness.

Ch 4 – Article 74 - Legal Ch 4 – Article 74 - Legal InfrastructureInfrastructure

1. The Legal Affairs Committee shall co-1. The Legal Affairs Committee shall co-operate with competent organs of the operate with competent organs of the Community to advise Member States on Community to advise Member States on the legal infrastructure required to the legal infrastructure required to promote investments in the Member promote investments in the Member States, including cross-border States, including cross-border investments, bearing in mind the investments, bearing in mind the provisions of Article 68. provisions of Article 68.

2. Member States shall harmonise their 2. Member States shall harmonise their laws and administrative practices in laws and administrative practices in respect of,respect of, inter alia inter alia: :

CSME - Article 74CSME - Article 74

(a) companies or other legal entities; (a) companies or other legal entities; (c) standards and technical regulations;(c) standards and technical regulations; (f) restrictive business practices; (f) restrictive business practices; (h) subsidies and countervailing measures;(h) subsidies and countervailing measures; View PointView Point

• 1.1. The legal infrastructure for The legal infrastructure for electricity should include legislation, electricity should include legislation, licenses, regulations, administrative licenses, regulations, administrative procedures. procedures.

Ch 4 - Article 76Ch 4 - Article 76Role of Public Role of Public AuthoritiesAuthorities

The COTED shall promote the The COTED shall promote the modernisation of government modernisation of government bureaucracies by, bureaucracies by, inter aliainter alia::

(b) removing impediments and (b) removing impediments and improving the regulatory improving the regulatory framework for economic framework for economic enterprises at national and enterprises at national and regional levels; regional levels;


1.1. Cross-border electricity will Cross-border electricity will require significant regulatory require significant regulatory oversight. Many member states do oversight. Many member states do not have autonomous regulatory not have autonomous regulatory “commissions.” “commissions.” 2.2. Instead they have regulatory Instead they have regulatory “agencies” that have significant “agencies” that have significant government involvement. government involvement. 3.3. In some instances, Government In some instances, Government regulates itself, which is a conflict of regulates itself, which is a conflict of interest.interest.

Ch 5 - Article 78 - Ch 5 - Article 78 - Objectives of the Objectives of the Community Trade PolicyCommunity Trade Policy

1. The goal of the Community Trade 1. The goal of the Community Trade Policy shall be the sustained growth of Policy shall be the sustained growth of intra-community and international trade intra-community and international trade and mutually beneficial exchange of and mutually beneficial exchange of goods and goods and servicesservices among Member among Member States and between the Community and States and between the Community and third States.third States.

2. In fulfillment of the goal set out in 2. In fulfillment of the goal set out in paragraph 1 of this Article the Community paragraph 1 of this Article the Community shall pursue the following objectives:shall pursue the following objectives:


(a) full integration of the national markets (a) full integration of the national markets of all Member States of the Community of all Member States of the Community into a single unified and open market into a single unified and open market area;area;

(b) the widening of the market area of the (b) the widening of the market area of the CommunityCommunity

View PointView Point • 1.1. The regions electricity market may The regions electricity market may

be fully integrated by creating a single be fully integrated by creating a single transmission network.transmission network.


3. In order to achieve the objectives 3. In order to achieve the objectives of its Trade Policy, the Community of its Trade Policy, the Community shall:shall:• (a) undertake:(a) undertake:• (i) the establishment of common (i) the establishment of common

instruments, common services and the instruments, common services and the joint regulationjoint regulation, operation and efficient , operation and efficient administration of the internal and administration of the internal and external commerce of the CARICOM external commerce of the CARICOM Single Market and Economy;Single Market and Economy;


1.1. This suggests “joint” This suggests “joint” regulation, which is deeper regulation, which is deeper than “coordinated” regulation. than “coordinated” regulation. Should there be a regional Should there be a regional regulatory commission for regulatory commission for electricity, electricity, cfcf ECTEL. ECTEL.

Ch 5 - Article 79 - General Ch 5 - Article 79 - General Provisions on Trade Provisions on Trade

LiberalisationLiberalisation

1. Member States shall establish and 1. Member States shall establish and maintain a regime for the free movement maintain a regime for the free movement of goods and of goods and servicesservices within the Single within the Single Market and Economy.Market and Economy.


1.1. Current legislations gives Current legislations gives exclusive franchises for exclusive franchises for transmission, distribution, sales, and transmission, distribution, sales, and more often than not, generation.more often than not, generation.

Ch 10 - Article 226 - Ch 10 - Article 226 - General ExceptionsGeneral Exceptions

Nothing in this Chapter shall be construed Nothing in this Chapter shall be construed as preventing the adoption or enforcement as preventing the adoption or enforcement by any Member State of measures: by any Member State of measures:

(d) … to the operation of monopolies by (d) … to the operation of monopolies by means of state enterprises or enterprises means of state enterprises or enterprises given exclusive or special privileges;given exclusive or special privileges;

(k) relating to the conservation of natural (k) relating to the conservation of natural resources or the preservation of the resources or the preservation of the environment,environment,

CSME - Article 226CSME - Article 226

but only if such measures are not but only if such measures are not used as a means of arbitrary or used as a means of arbitrary or unjustifiable discrimination unjustifiable discrimination between Member States, or as a between Member States, or as a disguised restriction on trade disguised restriction on trade within the Community.within the Community.

Thank Thank YouYou

Alternative Sources of Energy and Effective Implementation Policy Roland Clarke, Ph. D. Project...

Documents

Transcript of Alternative Sources of Energy and Effective Implementation Policy Roland Clarke, Ph. D. Project...