Ministerial Statement by the Minister of Economic Development, The Hon. Dr. E. Grant Gibbons, JP, MP
Mr. Speaker, I am pleased to introduce the Electricity (Regulatory Authority Fees) Regulations 2017.
Mr. Speaker, these Regulations are made by the Minister responsible for Electricity in accordance with sections 7 and 13 of the Electricity Act 2016, as read with section 44 of the Regulatory Authority Act 2011. This is the first fiscal year in which Regulatory Fees shall be imposed on the Electricity Sector.
Mr. Speaker, the Regulatory Authority (‘Authority’) is funded through the authorized imposition of fees on the sectors it regulates. Since 2013, the Authority has collected fees from the Telecommunications sector, and now that the regulation of electricity is part of the Authority's remit, it is necessary for fees to be collected in order to fund regulation in this sector. Fees are assessed according to the Authority’s budget and work plan for the year, as approved by the Ministry of Finance and the Ministry of Economic Development.
Mr. Speaker, the Authority’s budget for the regulation of the electricity sector for Fiscal Year 2017/18 is approximately $3.4 million dollars. The Authority’s work plan includes the issuing of licenses, undertaking market studies and progressing the Integrated Resource Plan which is critical for the development of the electricity sector.
Mr. Speaker, there will be three categories of Regulatory Fees, namely Transmission, Distribution and Retail (TD&R); Bulk Generation and Self Supply. The Regulatory fees for Transmission, Distribution and Retail, which includes the BELCO grid (poles, wires, and transmission/distribution infrastructure) as well as the retail customer service section, are assessed at $0.00475 per kWh sold. This works out to an individual consumer impact of about $34 yearly for a middle-tier customer, and less than ten dollars per year for the lowest tier.
This fee will allow the majority of the RA’s energy work plan to be funded and will account for about $2.8 million dollars of the annual revenue for the RA. This fee is payable by BELCO on a quarterly basis, in arrears, analogous to how fees are collected in the Telecommunications sector.
Mr. Speaker, Bulk Generation Regulatory Fees are divided into several sub-categories, in order to fairly represent the regulatory work required in each instance. Bulk Generation Fees for any license holder with more than 25 megawatts of installed capacity are noted in the Schedule as a Utility Scale Electricity Generation provider, and they will pay $1,000 per megawatt per annum, in quarterly installments, paid in arrears. Currently, Belco is the only provider in this bulk generation category.
There are three additional sub-categories of smaller-scale bulk generation providers, namely fossil fuel generating facilities, waste-to-energy, and renewable energy – and these facilities are all between half a megawatt and 25 megawatts in installed capacity. The fees for all generation facilities of this size are set at $1,500 per megawatt of installed capacity, again paid quarterly in arrears.
There are no fees listed for a Self-Supply License due to the fact that there are no large-scale self-supply projects on the near horizon. An example of a Self-Supply Licensee would be a very large customer who wishes to sever their connection to the grid and reliably generate their own power. Self-supply fees may be added in the future as the need arises.
Mr. Speaker, the fees that will be generated from the Bulk Generation licensees in all sub-classes will total approximately $173,000, bringing the estimated total to about $2.88 million dollars. This would mean a projected shortfall for the Authority of about $500,000. Out of prudence and consideration for the customer, the fees were set at the levels noted, and any shortfalls in 2017/18 can be covered through the RA’s loan facility which in turn can be addressed in the subsequent fiscal year. The reason for this potential shortfall is a result of the extensive work that must be undertaken in this first year of electricity regulation in order to properly establish the regulatory regime for the sector – some of which is mentioned above.
There are also important processes that need to be developed around other aspects of the electricity sector, including but not limited to, evaluating rate cases, fuel adjustment rates, and the review of power purchase agreements with independent power producers as they come on line.
Mr. Speaker, this concludes my remarks on the proposed Regulations.
Thank you Mr. Speaker.