An unfair proposal
On November 23, 2012, the Fair Trading Commission announced the beginning of a consultation on a proposal of Barbados Light & Power to change the conditions under which small producers of renewable energy (solar/wind) could feed energy into the grid and be compensated for energy in excess of the needs of the producer/consumer.
This so-called consultation is scheduled to end on December 14, 2012.
The subject matter is of the greatest importance to all Barbadians and to the Government if it is really interested in saving foreign exchange and pursuing an aggressive renewable energy policy. Regrettably, the process the FTC has followed in arriving at this point is seriously flawed and, not surprisingly, has resulted in an unfair and self-serving BL&P proposal.
The proposal will seriously weaken public policy objectives to maximise the production of renewable energy and thereby prolong our dependence on fossil fuels with all the attendant negative economic and environmental impacts.
“As the designated protector of consumers and promoter of public policy, it is inexplicable that the FTC appears to be peddling a proposal from the regulated utility which so manifestly fails to serve public policy,” said Ralph A. Dungan and Professor Clive Landis, pioneer installers of renewable energy systems.
WHAT’S WRONG WITH THE FTC PROCEDURE?
With opaque and private communication between the Regulator and BL&P, the latter was given ten months to produce a proposal for extension of the Renewable Energy Rider.
Aided by its staff of lawyers, economists and rate specialists and equipped with copious data supplied by dependent customers, the monopoly supplier starts out with an immense advantage. No other party entitled to a seat at the table was informed of the process that was underway much less being invited by the regulator to submit a proposal. The process is therefore biased from inception.
So now we are faced with the challenge of having to comment on a document reflecting primarily the interests of the protected monopoly. Its proposal sets the framework of the discussion. Other stakeholders without access to anything like comparable resources are being asked to comment in a very restricted time frame during a holiday period.
Why was this time period chosen? Moreover, the format which the FTC requests respondents to use in commenting on the BL&P proposal does not inspire confidence that the FTC deliberations will be substantive enough or driven by a concern for fairness or advancement of the public interest.
A FEW WORDS ABOUT SUBSTANCE
It is important at the outset to be clear on what national interests are at stake in the pending matter of setting the parameters for the extension of the RER. The Government of Barbados wishes to maximise the utilisation of renewable energy from any source, but certainly solar and wind. This policy was reiterated by the Prime Minister in recent weeks.
Aggressive and consistent pursuit of this policy will reduce demand for foreign exchange and contribute to a clean and green environment. The outcome and fairness of the RER consultation is important to every Bajan, whether or not you currently have a solar electric installation, because what is established today will affect you tomorrow.
SO WHAT’S THE MATTER WITH THE BL&P PROPOSAL?
In quick summary, BL&P proposes to restrict the size of any permitted installation, reduce the amount of power the company will purchase and reduce the price it will pay for surplus energy fed into the grid. Thus in one fell swoop the monopoly company breaks a contract with individuals who have invested, or may wish to invest in the future, in sustainable energy generation by proposing to change the rules of the game in such a way as to disincentivise renewable energy installations while protecting company/shareholder interest. It is hard to imagine a proposal more contradictory to the renewable energy policies of our country.
Clearly this is a complex issue which requires full airing before any decisions are made. The consultative process which the FTC has proposed is wholly inadequate in time and scope to allow a thorough review of the BL&P proposal or the consideration of alternative proposals.
For example, in furtherance of the policy of maximising renewable energy generation one might consider removing any restriction on the size of a private system and compensating the owner for surplus fed into the grid at a rate that will provide a rate of return on the investment equal to that which is currently guaranteed the BL&P.
One might even consider mandating maximum utilisation of renewable energy as a condition of continuation of its monopoly status or similarly charge BL&P to up-grade its infrastructure (Smart Grid) to accommodate an expanding array of renewable energy options, such as the use of electric or hybrid vehicles.
In other words, to put in place incentive programmes to increase, not decrease, renewable energy production by householders and thereby to diminish our nation’s dependence on imported oil with its attendant foreign exchange and environmental costs.
At the very least the FTC should extend the consultation period until February 15, 2013. In addition, the commission might wish to invite a small group of knowledgeable stakeholders to consult with staff and/or members of the commission to discuss alternative models to the one proposed by the BL&P. If any reasonable proposals emerge from these discussions, they might be subject to the same or similar consultation as the one now underway.
* Ralph Dungan is an American national and retired diplomat who has adopted Barbados as his permanent home.