The World Bank is providingUS$5.6 million for Grenada and St Lucia to establish the Eastern Caribbean Energy Regulatory Authority (ECERA) which will allow their energy consumers to benefit from improved electricity service from greener sources.
According to a press release on Thursday the World Bank Board of Directors approved the two zero-interest credits. As a regional entity, ECERA is expected to boost the delivery of electricity service and diversify sources of energy generation, including renewable energy to benefit consumers from the Organisation of Eastern Caribbean States (OECS) countries.
“ECERA will maximise economies of scale among OECS Participating States in establishing and operationalising a regional policy approach for the development of the electricity sector, enable better use of scarce skilled human resources, and increase the capacity of OECS countries to implement regional arrangements for electricity supply,” OECS Director General Len Ishmael said.
Demand for electricity in OECS countries has been growing at an annual rate of 3-4 per cent, the release said, adding that this is driven mostly by commercial and residential sectors in tourism-led economies, while electricity prices are among the highest in the world. “The high tariffs are due, in part, to the countries insular and small electricity systems, an almost complete dependence on diesel, as well as insufficient regulatory enforcement,” the release said.
It also noted that in order to ensure a reliable energy supply in the OECS, regional electricity utilities need stronger and more efficient regulation to improve oversight, tame the growth of electricity costs, diversify energy supply away from fossil fuels, and attract cost-effective investments in electricity generation.
In the light of this, the initiative will make it easier for OECS members to provide incentives to save energy, reduce electricity costs to consumers and, in the longer term, lower electricity price volatility by relying less on diesel, World Bank Director for the Caribbean Francoise Clottes said.
Specifically, the ECERA programme will finance its establishment including conducting all the legal and consultative processes leading to the formulation and ratification of the ECERA treaty, defining options for its self-financing mechanism ,reviewing tariffs, and examining incentive mechanics to promote renewable energy. It will also fund ECERA’s initial three years of operation, including day-to-day operations and execution of core regulatory tasks, such as tariff and investment plan reviews and definition of a regional licensing framework for electrify market participants.
According to the release the World Bank officially endorsed the creation of ECERA at the 44th OECS Authority Meeting in January 2007. The first phase of the ECERA programme will start with the stated countries. Other OECS members have expressed an interest in joining ECERA at a later date.