Pacific and Caribbean Conference On Effective and Sustainable Regulation of Energy and Water Services: Tanoa International Hotel, Nadi, Fiji 25-27, March 2014

CONTENTS
Page

I. Introduction

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II. Concept Paper and Agenda

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III. List of Participants

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IV. Presentations

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I. INTRODUCTION

The Asian Development Bank (ADB), in partnership with the Secretariat of the Pacific
Community (SPC), organized the Pacific and Caribbean Conference on Effective and
Sustainable Regulation of Power and Water Services in Nadi, Fiji on 25-27 March 2014. The
Conference builds upon the past and ongoing work of ADB under its Environment and Energy
Law, Justice and Development Program. The Conference seeks to promote South-South
cooperation on effective and/or sustainable regulation of electricity and water utility services in
small island countries in the Caribbean and the Pacific. It is convened through ADBs regional
technical assistance project on Enhancing Effective Regulation of Water and Energy
Infrastructure and Utility Services to consider the effectiveness of energy and water sector
regulation in this region.

SPC is the lead regional agency on energy in the Pacific and is responsible for coordinating the
Framework for Action on Energy Security in the Pacific (FAESP). One of the key outcomes of
the FAESP is strengthened energy policy, planning capacity and regulatory frameworks to
support coordinated development of the energy sector. SPC recognizes that absence of the
appropriate legislative and regulatory frameworks is often regarded as key barrier to the
sustainability of energy and water services in small island developing countries of the Caribbean
and the Pacific. Even where such frameworks exist, they are either out of date, not well
understood and known and ineffectively enforced.

The Conference was attended by senior government policy makers, regulators, and utility
service providers in the water and energy sectors; as well as representatives from the academe,
the civil society, and the private sector from small island states across the Pacific and the
Caribbean.

II. CONCEPT PAPER AND AGENDA

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24 March 2014

PACIFIC AND CARIBBEAN CONFERENCE ON EFFECTIVE AND
SUSTAINABLE REGULATION OF POWER AND WATER SERVICES
25-27 March 2014, Nadi, Fiji
Background

Pacific islanders need access to adequate, safe water for domestic and commercial uses,
such as drinking, sanitation, commercial development or industrial processes. They need access to
modern reliable energy to earn income, extend productivity and facilitate education, health and
commerce. However, along with a number of other developing countries, many Pacific island states
continue to experience limited and unsatisfactory access to power and water services. And in cases
where access and services are adequate, utility providers are frequently unable to obtain tariffs that
can cover their long-term cost of service and maintain financial performance sufficient to ensure
proper investment in maintenance and service expansion, while at the same time being transparent to
government and consumers.

Over the past several years, Pacific countries, supported by development partners, have
sought to undertake sector-based reforms in order to improve power and water service delivery;
increase tariff sustainability and transparency; reduce dependence upon diesel fuel; and increase
environmental sustainability. These reforms have focused largely on state-owned enterprises.
However, a few Pacific governments have undertaken regulatory reforms in line with similar reforms
worldwide, in order to regulate the water and energy sectors, and in an effort to improve performance
in the provision of water and energy services.
Yet, while Pacific islands are seeking to improve energy and water sector outcomes through
sector policies, and legal and regulatory reforms, available guidance has concentrated mostly on
policy and regulatory reform prescriptions from large developing countries with little specific guidance
for the unique conditions of small-island countries. This conference aims to promote South-South
cooperation on effective and sustainable regulation of energy and water utility services between
Pacific and the Caribbean island states. ADB is convening the conference under its Law and Justice
Development Program and a regional technical assistance project to consider the effectiveness of
regulation in the energy (primarily power) and water sectors of small island countries in the Pacific
and the Caribbean, taking into account how regulation in small-island countries may be different from
large-developing countries. The project also considers how economic regulation can promote
environmental sustainability through energy efficiency and renewable energy use.

Objectives

The Conference aims to bring together senior policy makers and regulators in the water and energy
sectors from small island states across the Pacific and the Caribbean to:

Share information and experience on relevant energy and water sector policies, laws, and
regulations in small island countries, including:
- models for effective regulation;
- case studies on effective application of such models;
- specific regulatory approaches for energy access, service quality, and tariff-setting;
and
- approaches to economic regulation to promote environmental sustainability, including
energy efficiency and renewable energy.

Consider the best ways of promoting South-South cooperation in policy, law and regulation of
the energy and water sectors, between and among Pacific and Caribbean countries.

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SCHEDULE AT A GLANCE
DAY 1 Tuesday March 25, 2014
8:30-9:00 am Opening Plenary
9:00-12:00 pm Session 1. Regulating Electricity and Water Services in SIDS: the Challenges
Session 2. Frameworks for Energy and Water Policy
12:00-1:00 pm Lunch
PART 1. MODELS FOR EFFECTIVE REGULATORY GOVERNANCE IN SMALL ISLAND
DEVELOPING STATES (SIDS)
1:30-5:30 pm Session 3, Part 1. The Autonomous Regulator Model: Single Sector Regulators
Session 3, Parts 2 and 3. The Autonomous Regulator Model: Multi-sector Regulators
(A Partial Solution to the Capacity Challenge?)
6:00 pm Reception
DAY 2 Wednesday March 26, 2014
9:00-12:30 pm
Session 4, Part 1. Low-Discretion Models: Concession Contracts and Regulation
Session 4, Part 2. Low-Discretion Models: Statutes and Regulation (Another Route to
Deal with Low Capacity)
Session 5. Multi-state and Regional Regulation: Potential and Challenges
12:30-1:30 pm Lunch
PART 2. BREAKOUT SESSIONS FOR ENERGY AND WATER (1)
1:30-3:00 pm Session 6. Consider the Choice of (a) Regulatory Model, and (b) Regulatory Design
and Establishment and (c) Challenges in Running a Regulatory Office
Session 6a. Energy Regulation
Session 6b. Water Regulation (including Energy and Other Resource People)
PART 3. REGULATION TO INCREASE ACCESS, AND ENSURE AFFORDABLE AND SUSTAINABLE
PRICING AND TARIFFS
3:15-5:45 pm Session 7. Increasing Access to Energy and Water Supply
Session 8. Efficient Affordable and Sustainable Pricing and Tariff Regulation for Public
and Private Sector Entities
6:15 pm Reception
DAY 3 Thursday March 27, 2014
8:30-10:00 am
Session 9a. Regulations for Energy Service Providers
Session 9b. Regulations for Water Service Providers
PART 5. REGULATION FOR ENVIRONMENTAL SUSTAINABILITY: Promoting Energy Efficiency,
Renewable Energy, Integrated Water Resource Management and Environment
11:00-11:45 pm
Session 10. Engaging Consumers and Civil Society
Session 11. The Water-Energy Nexus: Implications for Regulation
PART 6. Working Lunch BREAKOUT SESSIONS FOR ENERGY AND WATER (3)

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11:45-1:15 pm
Session 12a. Regulations for Energy Sustainability
Session 12b. Regulations for Water Sustainability
PART 7. CLOSING PLENARY
1:30-2:30 pm
Session 13. Breakout Groups Reporting Back
Session 14: Wrap-up and Conference Closing

Regulatory Reform and Regulation in the Power and Water Sectors
Over the past three decades, many countries across the world have initiated regulatory
reforms in their power and water sectors, with the aim of improving the delivery of energy services,
increasing investment in these sectors, and reducing the burden on state budgets related to
subsidizing service delivery and, in some cases, making essential infrastructure investments. While
there is widespread recognition that many of these reforms have not worked in developing countries,
elements of the same approach are still applied and, in particular, the establishment of independent
regulators and/or regulation by contract have been championed for small island states.
Yet, small island countries have several well-known and often cited features in common that
distinguish their needs and economies from larger countries: small, scattered populations and
physical remoteness prevent economies of scale and limit competition; limited natural fossil fuel
resources and geographic isolation lead to high dependence on diesel fuel and high transportation
costs; small unique and fragile ecosystems, with high vulnerability to climate change, such as rising
sea levels, water shortages, flooding, and infrastructural damage; and a small human resource pool
with limited capacity and a high dependence on donor aid. These factors have a significant impact on
the structure of the power and water sectors. Regulation therefore needs to take them into account.
Moreover, energy and water challenges, as well as climate change, have become significantly greater
concerns than in the 1980s, when the standard regulatory reform model began to dominate thinking
and since the 1990s, when its implementation started taking place in developing countries. Indeed,
water resource scarcity is at present a daunting reality for many small island states, as is climate
change. Also, small islands still rely primarily on diesel oil for their energy fuel. While the impact of
small islands switching to cleaner energy sources would be minimal on global GHG emissions, the
economic opportunity presented by low-cost renewable energy sources in small island states is large,
because of the high cost of diesel. Thus, there is a significant opportunity for small island states to
integrate approaches to regulatory reform of the energy and water sectors into an overall strategy. \

In the energy sectors of most Pacific island countries, governments have adopted national
energy policies, with most having quantifiable energy targets. SPC has reviewed most of these
policies, including in the Republic of the Marshall Islands, the Solomon Islands, and Nauru. The
absence of a regulatory and legislative framework in the energy sector is identified as a key barrier in
these national energy policies.
To date, in the Pacific islands, Papua New Guinea, Vanuatu, Tonga, Samoa, Fiji, and one
state in FSM have sought to adopt some form of an economic regulator, while the Federated States of
Micronesia is currently considering federal reforms. In terms of regulation, 11 of 15 Pacific nations
have no form of separate economic regulation for the power and water sectors. Movement towards
regulation in the Pacific began in the mid-2000s, and most efforts have been associated with broader
reforms and the desire to introduce private sector utilities -- or in one case, the regulation of an
existing private utility. Regulation by contract or concession, whereby all, or most, economic
regulatory terms are included in concession arrangements is also used in Vanuatu and Tonga. Pacific
territories, Guam and Saipan also have regulators that could provide guidance. In Palau, SPC is
assisting in the finalization its Energy Act.
In the Caribbean, during the 1960s, countries including Jamaica, Barbados, Grenada, and
Trinidad & Tobago established Public Utility Commissions (PUCs) to regulate either state-owned or
private utilities, borrowing from US models. Over time, these PUCs have been removed, and there

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has been a recent trend toward establishing independent regulators, which often regulate multiple
sectorsas multi-sector regulators. Barbados, Jamaica, and Trinidad & Tobago have existing multi-
sector regulators covering the power sector. Dominica has a power sector regulator. Grenada and St
Lucia have agreed to operate through a regional power sector regulator once established. In the
Water Sector, Jamaica and Trinidad & Tobagos multi-sector regulators also cover water, while
Barbadoss multi-sector regulator could potentially do so. St Lucia has a single-water sector
regulator, and the Bahamas has a multi-sector regulator covering telecommunications, with the
potential to cover both power and water. Hence, this lengthy experience in the Caribbean can provide
significant opportunity for learning about their successes and failures and the workings of regulatory
reform and regulatory models. This conference will provide a platform for participants from island
states to share and discuss this existing body of experience from the Caribbean and the Pacific, in
order to develop further ideas guidance on effective implementation models and frameworks.

Approach
This three-day conference will build upon and consolidate past and ongoing work of ADB under its
Environmental and Energy Law, Justice, and Development Program, and will draw on related efforts
by other development partners, particularly in the area of energy and water regulation. The
conference will cover four key themes over three days as follows:
Day 1:
Theme 1: Sector Status and the Role of Regulation. This section of the conference will introduce the
status of energy and water services in small island developing countries, and the distinctive
challenges these countries face in introducing independent regulation. It will consider the needed
linkages between National Energy Policies and Plans, and the need for regulation to support
implementation of the National Energy Policy and Plan (or National Water Policy and Plan, as
appropriate).

Theme 2: Regulatory Models. In this section, participants will review four regulatory models that may
help to address these challenges. The section will begin with an overview of the four approaches to
regulation, and this will be followed by case-studies from Jamaica, Barbados, Vanuatu, and Samoa.

Day 2:
Theme 3: Environmental Sustainability. This section will consider the nexus between energy and
water issues (in terms of ideology, pricing, technology, and efficiency), and efficient pricing of energy
and water. Conference participants will then divide into separate groups for energy and water. Under
the energy sector group, participants will consider integrated resource planning, energy efficiency,
renewable energy, the relevance of IPPs, PPAs, and FITs, and the role of regulation in relation to off-
grid systems. The water sector group will consider reducing Non-Revenue Water, integrating
regulation and Integrated Natural Resources Management, improving water quality, and the role of
regulation in relation to alternative service providers.

Day 3:
Theme 4: Regulation for Sector Outcomes. This section will examine regulation for key sector
outcomes of concern to many small islands. These will include: improving access and affordability,
the regulation of state-owned utilities; and effective engagement with consumers and civil society.

Output
The papers submitted for the conference will be compiled and edited as a volume for publication by
ADB. Participants will be requested to provide papers and presentations prior to the conference. The
papers and presentations submitted for the conference will also be uploaded to the ADB website.

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Participants

The organizers are expecting approximately 60 representatives comprising government officials,
regulators, utility service providers, academics, and representatives from civil society and the private
sector. The conference is targeting the Caribbean and Pacific islands, including Fiji, Tonga, Samoa,
Vanuatu, Palau, Jamaica, Barbados, Saint Lucia, and Dominica.

Partners

ADB is organizing the conference in partnership with the Secretariat of the Pacific Community.

Contacts
Kala Mulqueeny, Principal Counsel, Office of the General Counsel, Asian Development Bank (ADB)
(kmulqueeny@adb.org)

Solomone Fifita, Deputy Director (Energy), Economic Development Division, Secretariat of the Pacific
Community (SPC), (solomonef@spc.int / solomonefifita@yahoo.com)

Agenda: Peter du Pont, Ph.D., Consultant to ADB, Vice-President, Nexant Asia, Bangkok,
(pdupont@nexant.com)

Agenda: Olga Chepelianskaia, Consultant to ADB, Nexant Asia, India
(olga.chepelianskaia@ergterra.org)

Logistics: Ces Saniel-Gois, Associate Legal Operations Officer, Asian Development Bank (ADB),
(mcgsanielgois@adb.org)

Logistics: Emie Alcala, Operations Analyst (Consultant), Asian Development Bank (ADB),
(mialcala.consultant@adb.org)

Secretariat: Ascha Ceeripokagij, Consultant to ADB, Nexant Asia, Bangkok (ADB-
SPCPacificConference@nexant.com or aceeripokagij@nexant.com)

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CONFERENCE AGENDA
DAY ONE: Tuesday, 25 March
8:00-8:30 am Registration
8:30-9:00 am Opening Plenary
Welcome Remarks
Captain John Hogan, Director, Secretariat of the Pacific Community (SPC)
Effective and Sustainable Regulation of Power and Water Services:
Welcome and Introduction to the Conference
Dr. Kala Mulqueeny, Principal Counsel, Office of the General Counsel, ADB
INTRODUCTION
9:00-10:30 am Session 1. Regulating Electricity and Water Services in SIDS: the
Challenges
Pacific:
An Overview of the Challenges in Providing Water and Wastewater
Utility Services
Latu Sauluitoga Kupa, Executive Director, Pacific Water & Wastes
Association (PWWA), and KEW Consult Ltd
An Overview of the Challenges in Providing Power Services in the
Pacific
Andrew Daka, Executive Director, Pacific Power Association
Benchmarking Results for the Pacific Power Utilities, and
Comparison of Benchmarking Approaches for the Power and Water
Sectors
Pauline Muscat, Energy Specialist, Independent Consultant
Caribbean:
An Overview of the Challenges in Providing Power and Water
Services
O'Reilly Lewis, Caribbean Development Bank
Q&A and Discussion
10:30-10:45 am Coffee break
10:45-12:00 pm Session 2. Frameworks for Energy and Water Policy
Chair: John Hogan, Director, SPC
Pacific: Energy Policies
Solomone Fifita, Deputy Director (Energy), Secretariat of the Pacific
Community (SPC)
Tonga: Tonga Energy Roadmap (TERM)
Inoke Finau Vala, Director, TERM

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Vanuatu: Vanuatu Energy Road Map (VERM)
Jesse Benjamin, Director, Energy Office
Pacific: Water Policies
Latu Sauluitoga Kupa, Executive Director, Pacific Water & Wastes
Association (PWWA), and KEW Consult Ltd
Caribbean: Energy and Water Policies Overview
Alexander Ochs, WorldWatch Institute, ADB Consultant
12:00-1:00 pm Lunch break
PART 1: MODELS FOR EFFECTIVE REGULATORY GOVERNANCE IN SMALL ISLAND
DEVELOPING STATES (SIDS)
1:00 -1:30 pm
Overview: Models of Regulation in SIDS
Dr. Kala Mulqueeny, Principal Counsel, Office of the General Counsel, ADB
1:30 pm-2:45 pm Session 3, Part 1. The Autonomous Regulator Model: Single Sector
Regulators
Case Studies:
Philippines: Small Islands in a Large Country
Atty. Francis Saturnino C. Juan, Office of the Executive Director,
Energy Regulatory Commission, The Philippines
St. Lucia: The National Water Services Commission
Kelly Joseph, Executive Director, St. Lucia National Water and
Sewerage Commission
Dominica: Independent Regulatory Commission
Lancelot McCaskey, Executive Director, Independent Regulatory
Commission
Tonga: The Electricity Regulatory Commission
Lord Ramsay Dalgety, Chief Executive Officer, Electricity Commission
Q&A and Discussion
2:45-3:00 pm Coffee break
3:00-4:30 pm Session 3, Part 2. The Autonomous Regulator Model: Multi-sector
Regulators (A Partial Solution to the Capacity Challenge?)
Caribbean Case Studies:
Jamaica: Regulating Water, Power and Telecoms in a Multi-sector
Regulator
Hopeton Heron, Deputy Director-General, Office of Utility Regulation
Barbados: Regulating Power and Telecoms in a Multi-sector
Regulator
Peggy Griffith, Chief Executive Officer, Fair Trading Commission (FTC)

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Trinidad & Tobago: Regulating Water, Power and Telecoms in a
Multi-sector Regulator
Glenn Khan, Vice-Executive Director, Trinidad & Tobago's Regulated
Industries Commission
Bahamas: A Multi-sector Regulator Initially Regulating a Single
Sector
Randol M. Dorsett, Chairperson, Utilities Regulation and Competition
Authority
St. Lucia: New Legislation in St. Lucia to Develop a Utility
Regulator for the Energy and Water Sectors
Embert Charles, Managing Director of the Eastern Caribbean
Telecommunications Authority (ECTEL)
4:15-4:30 pm Coffee break
4:30-5:30 pm Session 3, Part 3. The Autonomous Regulator Model: Multi-sector
Regulators (A Partial Solution to the Capacity Challenge?)
Pacific Case Studies:
Vanuatu: Regulating Power and Water through a Multi-sector
Regulator
Hasso Bhatia, CEO and Commissioner, Vanuatu Utility Regulatory
Authority
Samoa: Regulating Power through a Multi-sector Regulator
Donnie De Freitas, Electricity (and Telecoms, Broadcasting and Postal)
Regulator, Office of the Regulator
Papua New Guinea: Regulating Power and Water through a Multi-
sector Regulator
Jack Timi, Executive Manager, Regulated Industries Division,
Independent Consumer and Competition Commission (ICCC) of Papua
New Guinea
Q&A and Discussion
6:00pm Reception

DAY TWO: Wednesday, 26 March
9:00-10:15 am Session 4, Part 1. Low-Discretion Models: Concession Contracts and
Regulation
Vanuatu: Private-sector Utilities, Concession Contracts and the
Autonomous Regulator Model
Carmine Piantedosi, Regulatory Department, Goulburn-Murray Water
Co, Australia (former Deputy Chairman, former CEO, Utilities Regulatory
Authority of Vanuatu)
Papua New Guinea: Regulatory Contracts for Water and Power
Bonny Riowa, Principal Analyst-Services (Prices & Productivity Division),
Independent Consumer and Competition Commission (ICCC) of Papua

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New Guinea
Tonga: Regulatory Administration of a Concession Contract
Mark Fogarty, Chairman of Renewable Energy and Energy Efficiency
Partnership (REEEP) for South-East Asia and the Pacific
Q&A and Discussion
10:15-10:30 am Coffee
10:30-11:15 am Session 4, Part 2. Low-Discretion Models: Statutes and Regulation
(Another Route to Deal with Low Capacity)
Case Studies:
St. Lucia: The potential and challenges of Low Discretion
Regulation
Alexander Ochs, WorldWatch, Consultant to ADB
Palau: Potential for Low Discretion in a Small-Small-Island
Q&A and Discussion
11:15-12:30 pm Session 5. Multi-state and Regional Regulation: Potential and
Challenges

Pacific:
Federated States of Micronesia (FSM): Regulating Power and
Water Services of States within a Federation
Mark Waite, CEO, Chuuk Public Utility Corporation
Regulation and Regional Economic Integration: Regional Options
for Economic Regulation
Ms Linda Kaua, Economic Reform Officer, Pacific Islands Forum
Secretariat (PIFS)

Caribbean:
The Eastern Caribbean Telecommunications Authority (ECTEL)
experience, and lessons for the Power and Water Sectors
Embert Charles, Managing Director of the Eastern Caribbean
Telecommunications Authority (ECTEL)
The Eastern Caribbean Energy Regulatory Authority (ECERA)
Project: its potential and its Challenges
Maxine Alexander Nestor, Project Manager - ECERA Project,
Organization of Eastern Caribbean States Secretariat
Q&A and Discussion

12:30-1:30 pm Lunch Break

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1:30-3:00 pm Session 6. Consider the Choice of (a) Regulatory Model, and (b)
Regulatory Design and Establishment and (c) Challenges in
Establishing and Running a Regulatory Office in a Small Island Country
Energy Track
Session 6a: Energy Regulation
Water Track:
Session 6b: Water Regulation
See Annex for details
3:00-3:15 pm Coffee Break
PART 3. REGULATION TO INCREASE ACCESS, AND ENSURE AFFORDABLE AND
SUSTAINABLE PRICING AND TARIFFS
3:15-4:15 pm
Session 7. Increasing Access to Energy and Water Supply
Country Presentations:
Philippines: Atty. Francis Saturnino C. Juan, Office of the Executive
Director, Energy Regulatory Commission, The Philippines
Vanuatu: Hasso Bhatia, CEO and Commissioner, Vanuatu Utility
Regulatory Authority
Q&A and Discussion
4:15-5:45 pm Session 8. Efficient Affordable and Sustainable Pricing and Tariff
Regulation for Public and Private Sector Entities
Key Issues in Pricing and Tariffs to Ensure Sustainability and
Consumer Affordability
Riley Allen, Research Director, The Regulatory Assistance Project (RAP)
Efficient Pricing and Tariff Regulation: Recent Experiences and
Lessons Learned
Case Studies:
Jamaica: Jamaicas K-Factor to Promote Water Efficiency
Improvements in a State-owned entity
Sashana Miller, Senior Analyst, Water Sector, Office of Utility Regulation
(OUR)
Tonga: Tongas Efficiency Incentives to Promote Performance
Improvements in a State-owned Entity
Lord Ramsay Dalgety, Chief Executive Officer, Electricity Commission
Fiji: Fiji Commerce Commission: Independent Regulation for Fair
Trade, Competition, and Consumer Protection (including Price
Control)
Abdul Ifraan, Senior Research Officer, Regulated Industry Department
Q&A and Discussion

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6:15 pm Reception

DAY THREE: Thursday, 27 March
8:30-10:00 am Session 9. Regulations for Service Providers
Energy Track
Session 9a. Regulations for Energy Service
Providers
Water Track:
Session 9b. Regulations for Water Service
Providers
PART 5. REGULATION FOR ENVIRONMENTAL SUSTAINABILITY: Promoting Energy
Efficiency, Renewable Energy, Integrated Water Resource Management and Environment
10:00-11:00 am Session 10. Engaging Consumers and Civil Society
Civil Society Perspective on Regulation in the Caribbean
Reggie Burke, Executive Coordinator, Caribbean Youth Environment
Network, Barbados
Business Perspectives
Paul Taumoepeau, Vice President, Tonga Chamber of Commerce &
Industry
David A. Conn, Chief Executive Officer, Port Moresby Chamber of
Commerce, Papua New Guineau
Ane Moananu, CEO, Chamber of Commerce, Samoa
Q&A and Discussion
11:00-11:45 pm Session 11. The Water-Energy Nexus: Implications for Regulation
Overviews:
The Water-Energy Nexus in SIDS
Case Study:
The Water-Energy Nexus in the Solomon Islands
Tendai Gregan, Energy Specialist, World Bank
Q&A and Discussion
PART 6: BREAKOUT SESSIONS FOR ENERGY AND WATER (3)
11:45 am-1:15 pm Working Lunch: Session 12. Regulations for Sustainability
Energy Track
Session 12a. Regulations for Energy
Sustainability
Water Track:

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PART 6: CLOSING PLENARY
1:30-2:15 pm
Session 13. Breakout Groups Reporting Back
Regulatory Choice, Design, and Operation
Regulations for Service Providers
Regulations for Sustainability
2:15-2:30 pm
Session 14: Wrap-up and Conference Closing
Solomone Fifita, Deputy Director (Energy), Secretariat of the Pacific
Community (SPC)
Dr. Kala Mulqueeny, Principal Counsel, Office of the General Counsel,
ADB

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ANNEX

DETAILS OF PARALLEL BREAKOUT SESSIONS

Overview

The Conference will provide opportunity for extensive interaction and discussion, with three (3) sets of
breakout sessions spread across Day 2 and Day 3. The breakout sessions will be divided into
parallel sessions one Energy Track covering regulatory issues related to the power and energy
sector; and the other Water Track covering regulatory issues related to the water sector, including
demand, supply, and treatment.

Below is an overview of the topics for the three sets of breakout sessions. The following page has a
list of panelists for the parallel Energy and Water Tracks. Following that, is a list of discussion
questions for each of the three sets of breakout sessions.

OVERVIEW OF BREAKOUTS FOR ENERGY AND WATER TRACKS

Energy Tracks Water Tracks
Breakout Sessions (1)
Session 6: Regulatory Models, Design, and Operation
Time: 26 March, 1:30-3:00 pm
Session 6b. Water Regulation (including Energy
and Other Resource People)
Session 9: Regulations for Service Providers
Time: 27 March, 8:30-10:00 am
Session 9a. Regulations for Energy Service
Providers
Session 9b. Regulations for Water Service
Providers
Session 12: Regulations for Sustainability
Time: 27 March, 11:45-1:15 pm
Session 12a. Regulations for Energy
Sustainability

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Instructions to Panelists

We have listed regulators from Pacific and Caribbean countries as panelists for the breakout
sessions. We expect that many of the panelists will have prepared remarks and comments based on
the topic and agenda, and the discussion questions for each panel, which are listed starting on the
following page. We do not, however, expect all panelists to make formal remarks. The list of names
therefore indicates our desire that all of the listed regulators attend and actively participate in the
breakout sessions.

PANELISTS FOR ENERGY REGULATION BREAKOUT SESSIONS (Sessions 6a, 9a, 12a)
Pacific:
Fiji: Pecelin Nakavulevu, Director Energy, Ministry of Works, Transport and Public Utilities
Fiji: Malakai Tadulala, Deputy Secretary for Energy and Water Department of Energy
Fiji: Hasmukh Patel, CEO, Fiji Electricity Authority
FSM: Hubert Yamada, Assistant Secretary (Energy), Energy Division
FSM: Minoru Mori, Chairman, Board of Directors, Chuuk Public Utility Corporation
FSM: Mark Waite, Chuuk Public Utility Corporation
Palau: Gregorio Decherong, Director, Palau Energy Office
Papua New Guineau: Jack Timi, Executive Manager, Regulated Industries Division,
Independent Consumer and Competition Commission (ICCC)
Samoa: Mr. Donnie De Freitas, Electricity (and Telecoms, Broadcasting and Postal)
Regulator, Office of the Regulator
Tonga: Lord Ramsay Dalgety, Chief Executive Officer, Electricity Commission
Tonga: Inoke Finau Vala, Director, TERM
Vanuatu: Jesse Benjamin, Director, Energy Office
Caribbean:
Barbados: Sandra Sealy, Director of Utility Regulation, Fair Trading Commission (FTC)
Jamaica: Hopeton Heron, Deputy Director-General, Office of Utility Regulation (OUR)
St. Lucia: Maxine Nestor, Project Manager, Eastern Caribbean Energy Regulatory Authority
(ECERA)
Trinidad & Tobago: Glenn Khan, Vice-Executive Director, Regulated Industries Commission

PANELISTS FOR WATER REGULATION BREAKOUT SESSIONS (Sessions 6b, 9b, 12b)
Pacific:
Fiji: Apisai Ketenilagi, Director Water, Ministry of Works, Transport and Public Utilities
Fiji: Opetaia Ravai, CEO, Water Authority of Fiji
Fiji: Ateet K. Roshan, Team Leader, National Water Quality Monitoring & Environment Unit at
the Water Authority
FSM: Minoru Mori, Chairman, CPUC Board of Directors
FSM: Leerenson Airens, IWRM Focal Point, Pohnpei Utilities Corporation
Papua New Guineau: Henry Mokono, CEO, Eda Ranu
Papua New Guineau: Bonny Riowa, Principal Analyst-Services (Prices & Productivity

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Division), Independent Consumer and Competition Commission (ICCC)
Samoa: Ekiumeni Fauolo, Acting General Manager, Samoa Water Authority
Tonga: Rose Kautoke, Assistant Crown Counsel
Vanuatu: Erickson Sammy, Water Resources Manager, Department of Geology, Mines &
Water Resources
Vanuatu: Hasso Bhatia, CEO and Commissioner, Vanuatu Utility Regulatory Authority
Caribbean:
Bahamas: Randol M. Dorsett, Chairperson, Utilities Regulation and Competition Authority
Barbados: Reggie Burke, Executive Coordinator, Caribbean Youth Environment Network
Dominica: Lancelot McCaskey, Executive Director, Independent Regulatory Commission
Jamaica: Sashana Miller, Senior Analyst, Water Sector Office of Utility Regulation (OUR)
St. Lucia: Kelly Joseph, Executive Director, St. Lucia National Water and Sewerage
Commission
St. Lucia: Embert Charles, Managing Director, Eastern Caribbean Telecommunications
Authority (ECTEL)

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26 May
1:30-3:00 pm
BREAKOUT SESSIONS (1)
Session 6. Consider the Choice of (a) Regulatory Model, and (b)
Regulatory Design and Establishment and (c) Challenges in
Establishing and Running a Regulatory Office in a Small Island Country
Facilitators:
Rapporteur: Cecille Sicangco, Legal Research Associate, OGC, ADB
Discussion Questions: Panelists will be asked to reflect and comment on a
subset of the questions below. The questions are illustrative of some of
the key regulatory issues in Small Island Developing States (SIDS). Each
group will collectively decide what issues to focus on during the breakout
session. The facilitators will guide the discussion in a way that participants
feel is important and useful.
Regulatory Model and Design
What regional and national policy frameworks and goals apply to the
energy sector in your country?
What regulatory model (or hybrid model) is being applied in your
country?
What challenges do you experience as a result of the particular
regulatory model applied in your country?
How independent is regulation (including tariff setting and quality
standards) in your country? How is this achieved? Is this needed?
Why or why not?
How effective is your countrys current regulatory model in
contributing to its energy sector policies and goals? Why, or why isnt
it effective?
What lessons from the case-studies presented could be applied to the
choice and design of reformed regulation in your country (if any)?
How might commonalities between the energy and water sectors
support a common regulatory design, such as multi-sector regulation
in your country?
Regulatory Capacity and Implementation
How does the size of the small island, affect the choice of regulatory
model?
How important is: the cost-effectiveness of regulation; and capacity
constraints in designing a regulatory system?
What are the key capacity-building needs in the design and operation
of an energy regulatory office?

17

What challenges are there to initially starting and running a regulatory
office?
What potential (if any) does regulation by a regional body offer?
Session 6b. Water Regulation
Facilitators:
Alexander Ochs, WorldWatch Institute, ADB Consultant
Rapporteur: Olga Chepelianskaia, Nexant, Consultant to ADB
Regulatory Model and Design
What regional and national policy frameworks and goals apply to the
energy sector in your country?
What regulatory model (or hybrid model) is being applied in your country?
What challenges do you experience as a result of the particular regulatory
model applied in your country?
Is regulation independent in your country? Is this needed? Why or why
not?
How effective is your countrys current regulatory model in contributing to
its energy sector policies and goals? Why, or why isnt it effective?
What lessons from the case-studies presented could be applied to the
choice and design of reformed regulation in your country (if any)?
How might commonalities between the energy and water sectors support
a common regulatory design, such as multi-sector regulation in your
country?
Is regulation of water unique requiring different regulatory approach? If so,
discuss how.
Regulatory Capacity and Implementation
How does the size of the small island, affect the choice of regulatory
model?
How important is: the cost-effectiveness of regulation; and capacity
constraints in designing a regulatory system?
What are the key capacity-building needs in the design and operation of
an energy regulatory office?
What challenges are there to initially starting and running a regulatory
office?
What potential (if any) does regulation by a regional body offer?

18

27 March
8:45-10:15 am
Regulations for Service Providers
Session 9a. Energy: Regulations for Service Providers
Facilitators:
Topics covered:
Technical Requirements: Service Quality
Independent power producers
Alternative/off-grid systems
subset of the questions below. The questions are illustrative of some the
of key regulatory issues in Small Island Developing States (SIDS). Each
What regulatory decisions and actions set service standards for the
quality of electricity in your country?
Do minimum or guaranteed service standards exist? Are they
contained in legislation or contract, or other form?
Are consumers permitted to participate in regulatory decisions and
actions? Do they have a formal avenue of complaint?
Independent Power Producers: Licensing
Do laws/regulations permit IPPs in your country? If not, what are the
legal and regulatory barriers, and what can be done to facilitate their
participation and entry?
What types of obligations for service providers are reflected in the
licenses?
Alternative/Off-Grid Systems
What policies or regulations apply to off-grid systems (if any)? Does
the regulatory body have a mandate covering such systems?
Tariff and Price Decisions
What are the regulatory decisions and actions in your country for (a)
setting the tariff levels for service providers, (b) determining the tariff
structure, and (c) periodically reviewing or adjust the tariff? Are they

19

adequate? Are they sustainable?
Session 9b. Water: Regulations for Service Providers
Facilitators:
Dr. Peter du Pont, Nexant, ADB Consultant
Topics covered:
Technical requirements for water quality
Alternative water providers
What regulatory bodies, decisions and actions set service standards
for the quality and continuity of water in your country?
Do minimum or guaranteed service standards exist? Are they
contained in legislation or contract, or other form?
Are consumers permitted to participate in regulatory decisions and
actions? Do they have a formal avenue of complaint?
Licensing
Do laws/regulations permit alternative water providers or private
sector licensees in your country? If not, what are the legal and
regulatory barriers, and what can be done to facilitate their
participation and entry?
What types of obligations for service providers are reflected in the
licenses?
Alternative Systems
What policies or regulations apply to off-grid systems (if any)? Does
the regulatory body have a mandate covering such systems? Has
limited regulation of alternative systems generated any challenges?
Tariff and Price Decisions
What are the regulatory decisions and actions in your country for (a)
setting the tariff levels for service providers, (b) determining the tariff
structure, and (c) periodically reviewing or adjust the tariff? Are they
adequate? Are they sustainable?

20

27 March
1:30-3:00 pm
Regulations for Sustainability
1:30-3:00 pm Session 12a. ENERGY: Regulations for Sustainability
Facilitators:
Carmine Piantedosi, Regulatory Department, Goulburn-Murray Water Co,
Australia (former Deputy Chairman, former CEO, Utilities Regulatory
Topics covered:
Integrated resource planning and energy efficiency
Renewable energy policies
Presentation:
Palau: An Energy Sector Development Framework to Support Clean
Energy
subset of the questions below. The questions are illustrative of some of the
key regulatory issues in Small Island Developing States (SIDS). Each
Resource Planning/Resource Mix
Has government policy determined a resource mix preference? (for
example, renewables, coal, hydro, gas, or nuclear).
Are these resource adequacy requirements imposed by
law/regulation?
Does the regulator play any role in resource planning i.e. through
administering an integrated resource planning scheme?
Efficiency
What are the regulatory decisions and actions that require water and
energy suppliers to deliver their services using the least energy, water,
or cost?
Do they involve measures to make the supply side of energy and water
sectors more efficient by improving the efficiency of supply,
transmission, and distribution?
Does the government, regulator, or utility have a policy, legal or
regulatory program to support measures to reduce energy demand?
Equity

21

What are the regulatory decisions and actions related to service
providers that concern, identify, or target poor or low income electricity
users?
Environmental Sustainability.
What are the regulatory decisions and actions for service providers
related to environmental sustainability?
Does the regulator have a mandate that covers sustainability issues?
Has the regulator taken actions that explicitly contribute to
environmental sustainability, renewable energy or energy
conservation/efficiency?
What types of requirements do regulators have in place to minimize
greenhouse gas emissions and respond to climate change?
Renewable Energy.
What legal or regulatory incentives exist to promote renewable energy,
and what role does the regulatory play in these?
What other network system issues encourage or discourage renewable
energy?
How does the tariff incentivize (or not) renewable energy?
Session 12b. WATER: Regulations for Sustainability
Facilitators:
Dr. Peter du Pont, Nexant, ADB Consultant
Topics covered:
Non-revenue water
Integrated water resources management
subset of the questions below. The questions are illustrative of some of the
key regulatory issues in Small Island Developing States (SIDS). Each
Integrated Water Resources Management
Has government policy determined a priority allocation for freshwater?.
Does the regulator play any role in allocating the raw water resource?
Water Efficiency
What are the regulatory decisions and actions that require water and
energy suppliers to deliver their services using the least energy, water,
or cost?
Has the regulator established standards for supply-side water
efficiencies, i.e. non-revenue water?
regulatory program to support water efficiency/conservation programs

22

in the water supply sector?
regulatory program to support measures to reduce water demand?
Equity
What are the regulatory decisions and actions related to service
providers that concern, identify, or target poor or low income water and
electricity users?
Environmental Sustainability
What are the regulatory decisions and actions for service providers
related to environmental sustainability?
Does the regulator have a mandate that covers sustainability issues?
Has the regulator taken actions that explicitly contribute to
environmental sustainability or integrated water resource
management?
What types of requirements do regulators have in place to minimize
greenhouse gas emissions and respond to climate change?

III. LIST OF PARTICIPANTS

NAME COUNTRY POSITION ORGANIZATION EMAIL
1 Barry Carrington Barbados Chief Legal Officer Division of Energy and
Telecommunications
jashby@energy.gov.bb
2 Teresa Manarangi-Trott Cook Islands President Cook Islands Chamber of Commerce chamber@commerce.co.ck or
trott@oyster.net.ck
3 Malakai Tadulala Fiji Deputy Secretary for Energy and
Water
Department of Energy malakai.tadulala@mwtpu.gov.fj
4 Sundhia Ben Fiji Research Officer, Regulated
Industry Department
Fiji Commerce Commisison sro-ri@commcomm.gov.fj
5 Narend Prasad Fiji Senior Research Officer, Accounting Fiji Commerce Commisison sro-ri@commcomm.gov.fj
6 Apete Soro Fiji Acting Manager Geological
Services Division
Mineral Resources Department apete.soro@mrd.gov.fj
7 Waqairapoa Tikoisuva Fiji National Water and Sanitation
Coordinator
Ministry of Health waqa101@yahoo.com;
waqa_101@yahoo.com
8 Vinesh Kumar Fiji National IWRN Project Manager Mnistry of Primary Industries, Land &
Water Resources Management Division
vinesh.kumar01@govnet.gov.fj
9 Apisai Ketenilagi Fiji Director Water Ministry of Works, Transport and Public
Utilities
apisai.ketenilagi@mwtpu.gov.fj
10 Pecelin Nakavulevu Fiji Director Energy Ministry of Works, Transport and Public
Utilities
npeceli@fdoe.gov.fj;
Pnakavulevu@fdoe.gov.fj
11 Anirudh Singh Fiji Associate Professor University of the South Pacific, Laucala
Campus
singh_ag@usp.ac.fj
12 Seymour Vimlesh
Singh
Fiji Business Analyt Water Authority of Fiji oravai@waf.com.fj
13 Mark Waite FSM CEO Chuuk Public Utility Corporation (CPUC) mwaite_cpuc@mail.fm
14 Minoru Mori FSM Chairman CPUC Board of Directors c/o mwaite_cpuc@mail.fm
15 John Filmed FSM Vice President FSM Association of Chambers of
Commerce
waayan@gmail.com
16 Weston Luckymis FSM Director Kosrae Department of Transportation &
Infrastructure
wluckymis@gmail.com; weston@mail.fm
17 Victor Nabeyan FSM Assistant General Manager Yap State Public Service Corporation vcnabeyan@gmail.com
18 Michelle Forbes Jamaica Chief Technical Director Ministry of Science and Technology,
Energy and Mining (MSTEM)
maforbes@mstem.gov.jm
19 Kireua Kaiea Kiribati Energy Planner for the Ministry Ministry of Public Works & Utilities kbkaiea@gmail.com
20 Reenate Willie Kiribati Water Superintendent Water Engineering Unit, Ministry of Public
Works & Utilities
reenteariki@gmail.com/
reenatew@mpwu.gov.ki
21 Elkoga Gadabu Nauru Permanent Secrectary Ministry of Commerce Industry and
Environment
elkoga28@gmail.com
22 Gregorio Decherong Palau Director Energy Office energy@palaunet.com
23 Lynna Thomas Palau Project Manager for GEF Environmental Quality Protection Board lynna.thomas7@gmail.com
24 Kione J. Isechal Palau CEO Public Utilities Corporation kji@ppuc.com
25 Henry Mokono Papua New
Guinea
CEO Eda Ranu ivanua@edaranu.com.pg
hmokono@edaranu.com.pg
26 Heremoni Suapaia-Ah
Hoy
Samoa Energy Coordinator Energy Policy and Coordination Division,
Ministry of Finance
heremoni.suapaia@mof.gov.ws
27 Sulutumu Sasa Milo
(Sasa)
Samoa President Independent Water Schemes Association
(IWSA)
zultum@yahoo.com
28 Mele Tanielu Samoa Senior WQ Officer Ministry of Health MeleT@health.gov.ws
29 Aussie Simanu Samoa Principal Sector Policy and
Performance Monitoring Officer
Ministry of Natural Resources and
Environment
aussie.simanu@mnre.gov.ws
30 Emelyn Papalii Samoa Senior Water Resources Policy
and Regulatory Officer
Ministry of Natural Resources and
Environment
emelyn.papalii@mnre.gov.ws
31 Ikiumeni Fauolo Samoa Acting General Manager Water Authority efauolo@swa.gov.ws
32 Rose Kautoke Tonga Assistant Crown Counsel Attoney General's Office, Government of
the Kingdom of Tonga
rkautoke@crownlaw.gov.to
33 Evan Musolino USA Research Associate WorldWatch Institute emusolino@worldwatch.org
34 Philippe Mehrenberger Vanuatu General Manager UNELCO (Power & Water) philippe.mehrenberger@unelco.com.vu
35 Jacques White Vanuatu Legal Officer UNELCO (Power & Water) unelco@unelco.com.vu
36 Marc Perraud Vanuatu UNELCO (Power & Water) unelco@unelco.com.vu
37 Peter Allen Vanuatu General Manager Vanuatu Utilities & Infrastructure Limited pallen@pernixgroup.com
PACIFIC AND CARIBBEAN CONFERENCE ON EFFECTIVE AND SUSTAINABLE REGULATION OF POWER AND WATER SERVICES
25-27 March 2014
Tanoa International Hotel, Nadi, Fiji
PARTICIPANTS
25-27 March 2014
38 Carmine Piantedosi Australia former Deputy Chairman, former
CEO of the Utilities Regulatory
Authority of Vanuatu
Goulburn-Murray Water Company cxpiantedosi@gmail.com
39 Mark Fogarty Australia Chairman for South-East Asia
and the Pacific
Renewable Energy and Energy Efficienty
Partnership (REEEP)
mark.fogarty@unsw.edu.au
40 Tendai Gregan Australia Energy Specialist World Bank Pacific Department tgregan@worldbank.org
41 Pauline Muscat Australia Independent Consultant muscat_pauline@hotmail.com
42 O'Reilly Lewis Barbados Operations Officer
President
Caribbean Development Bank
Caribbean Water and Wastewater
Association
lewisl@caribank.org
43 Reginald Burke Barbados Executive Coordinator Caribbean Youth Environment Network riburke@gmail.com
44 Sandra Sealy Barbados Director of Utility Regulation Fair Trading Commission (FTC) ssealy@ftc.gov.bb
45 Peggy Griffith Barbados Director General Fair Trading Commission (FTC) pgriffith@ftc.gov.bb
46 Randol M. Dorsett Bahamas Chairperson Utilities Regulation and Competition
Authority
rdorsett@urcabahamas.bs
jlightbourne@urcabahamas.bs
47 Lancelot McCaskey Dominica Executive Director Independent Regulatory Commission lmccaskey@ircdominica.org
48 Linda Kaua Fiji Economic Reform Officer Pacific Islands Forum Secretariat scott@forumsec.org /
scottmhook@gmail.com /
lindak@forumsec.org.fj
49 Andrew Daka Fiji Executive Director Pacific Power Association andrewd@ppa.org.fj
50 Abdul Ifraan Fiji Senior Research Officer Regulated Industry Department; sro-ri@commcomm.gov.fj
51 Hopeton Heron Jamaica Deputy Director-General Office of Utility Regulation (OUR) hheron@our.org.jm; cyoung@our.org.jm
52 Sashana Miller Jamaica Senior Analyst, Water Sector Office of Utility Regulation (OUR) smiller@our.org.jm
53 Jack Timi Papua New
Guinea
Executive Manager, Regulated
Industries Division
Independent Consumer and Competition
Commission (ICCC) of Papau New Guinea
vjack@iccc.gov.pg;
vali.k.jack@gmail.com
54 Bonny Riowa Papua New
Guinea
Principal Analyst-Services (Prices
& Productivity Division)
Independent Consumer & Competitions
Commission
vali.k.jack@gmail.com
55 David A. Conn Papua New
Guinea
Chief Executive Officer PNG Chamber of Commerce and Industry daveconn1@pomcci.com
56 Francis Saturnino C.
Juan
Philippines Attorney, Office of the Executive
Director
Energy Regulatory Commission fscjuan@erc.gov.ph
57 Ane Moananu Samoa CEO Chamber of Commerce ceo@samoachamber.ws
58 Donnie de Freitas Samoa Electricity & Telecoms,
Broadcasting, and Postal
Regulator
Office of the Regulator ddefreitas@regulator.gov.ws
59 Latu Kupa Samoa Executive Director Pacific Water & Wastes Association latu@kew.com.ws
60 Maxine Rosamund
Alexander Nestor
Sta. Lucia Project Manager Eastern Caribbean Energy Regulatory
Authority (ECERA)
manestor@oecs.org
61 Embert Charles Sta. Lucia Managing Director Eastern Caribbean Telecommunications
Authority (ECTEL)
echarles@ectel.int
62 Kelly Joseph Sta. Lucia Executive Director St. Lucia National Water and Sewerage
Commission
stlucia.nwsc@gmail.com
63 Lord Ramsay Dalgety Tonga Chief Executive Officer Electricity Commission lawlord.tonga@gmail.com
meleseini.folau@gmail.com
64 Inoke Finau Vala Tonga Director TERM inokefvala@gmail.com
65 Paul Taumoepeau Tonga Vice President Tonga Chamber of Commerce & Industry pmt@nautilusminerals.com
66 Glenn Khan Trinidad &
Tobago
Vice-Executive Director Trinidad & Tobago's Regulated Industries
Commission
khanglenn@hotmail.com
67 James Riley Allen USA Research Director The Regulatory Assistance Project RAllen@raponline.org
68 Alexander Ochs USA Director of Climate and Energy WorldWatch Institute Aochs@worldwatch.org
69 Jesse Benjamin Vanuatu Director Energy Office jbenjamin@vanuatu.gov.vu
70 Hasso Bhatia Vanuatu CEO and Commissioner Vanuatu Utility Regulatory Authority hbhatia@ura.gov.vu
RESOURCE PEOPLE
25-27 March 2014
71 Kala Mulqueeny Principal Counsel kmulqueeny@adb.org
72 Celeste Saniel-Gois Associate Legal Operations
Officer
mcgsanielgois@adb.org
73 Cecile Sicangco Consultant cecille.sicangco@gmail.com
74 Imelda Alcala Operations Analyst (Consultant) mialcala.consultant@adb.org
75 Peter du Pont Consultant PDuPont@nexant.com
76 Olga Chepelianskaia Consultant olga.chepelianskaia@ergterra.org
77 Ascha Ceeripokagij Consultant aceeripokagij@nexant.com
78 Mr. John Hogan Director, Economic Developmen
Division
JohnPH@spc.int
79 Solomone Fifita Deputy Director (Energy) SolomoneF@spc.int
SECRETARIAT OF THE PACIFIC COMMUNITY
ASIAN DEVELOPMENT BANK
NEXANT

IV. PRESENTATIONS

DAY 1: 25 MARCH 2014

22/04/2014
1

Session 1. Regulating Electricity and Water
Services in SIDS: the Challenges

Andrew Daka
Executive Director
Pacific Power Association

An Overview of the Challenges in Providing
Power Services in the Pacific

Background of the Pacific Power
Association
Power Sector in the Pacific
Present State of Utilities
Challenges

Established
Formally established in 1992 with the Secretariat based in Suva, Fiji
Membership

25 Active Members (Utilities) from 20 PICTs, 78 Allied
Members(Suppliers of Equipment and Services) and 10 Affiliate
Members

Vision

Access to sustainable and quality electricity services for the people of the
Pacific Island region.

Mission:
To support the PICT power utilities in the provision of high
quality, secure, efficient and sustainable electricity services.

Present Status of Generation PPA Members (2011)
Utility
Distillate
ADO / IDO
Heavy fuel
HFO / IFO
Hydro Wind
Solar
PV
Biomass
& Bio-fuel
Total
No. of
Cust.
MD
(MW)
% RE
ASPA (A Sam.) 153,910 - - - 1,081 - 154,991 12,067 22.5 0.7
CPUC (Chuuk) 7,701 - - - - - 7,701 1,544 2.2 0.0
CUC (Saipan) 186,685 - - - - - 186,685 14,333 43.5 0.0
EDT (Tahiti) 132,034 352,264 181,313 489 - 666,137 81,866 114.6 27.2
EPC (Samoa) 73,773 - 35,247 - 8 - 109,029 39,922 20 32.0
FEA (Fiji) 256,220 83,540 456,469 4,977 35,978 837,184 155,322 146.7 59.4
GPA (Guam) 29,872 1,801,036 - - - - 1,830,909 52,333 263 0.0
KAJUR (RMI) 14.022 - - - - - 14,022 1,397 2 0.0
KUA (Kosrae) 6,504 - - - 56 - 6,560 2,591 1.1 0.9
MEC (Majuro) 61,730 - - - - - 61,730 4,832 8.75 0.0
NPC (Niue) 3,000 - - - 3 - 3,003 870 0.6 0.1
NUC(Nauru) 22,026 - - - 51 - 22,077 2,291 3.5 0.2
PPL (PNG) 334,542 153,184 672,084 - - - 1,159,810 91,022 196 58.0
PPUC (Palau) 76,677 - - - 334 - 77,011 6,423 12.6 0.4
PUB (Kiribati) 21,826 - - - - - 21,826 4,941 4.8 0.0
PUC (Pohnpei) 33,241 - - - - - 33,241 6,910 6.6 0.0
SIEA (Sol. Isl) 83,810 - - - - - 83,810 9,210 15.4 0.0
TAU (Cook Isl) 28,870 - - - n/a - 28,870 4,422 4.8 0.0
TEC (Tuvalu) 6,531 - - - 41 - 6,572 2,502 1.3 0.6
TPL (Tonga) 52,391 - - - - - 52,391 20,498 9.2 0.0
UNELCO (Van) 55,463 - - 4,295 67 806 60,632 10,998 11.3 8.5
YSPSC (FSM) 13,430 - - - - - 13,430 2,125 2.4 0.0
Total 1,643,557 2,397,725 1,345,114 9,272 2,084 36,784 5,434,578
% of total 30.2% 44.1% 24.8% 0.2% 0.04% 0.7% 100% 25.6%

The Pacific island states range in size with only 21 km2 of land area to
thousands of km
2
. Populations ranging from barely a thousand
people to well over 5 million.

Utilities size range from under 1 MW of capacity serving a few
hundred customers to those with hundreds of MW serving
thousands of customers;

Electrification rates range from well under 20% in several
Melanesian countries to nearly 100% in much of Polynesia;

Single grid network while others provide a country-wide service
with multiple grid systems on different islands;

Some utilities have well-developed transmission grids with voltages
above 33 KV, but most grids are lower voltage distribution networks;

Household electricity consumption ranges from
about 80 kWh per month to over 700 kWh.

Tariff formula complex and varies

Many utilities 100% dependent on imported
petroleum fuels, alternative indigenous energy
sources primarily hydropower and to a much lesser
extent wind, solar and biofuel resources;

Most power utilities are self-regulating whereas
several have external regulators for technical
standards and/or tariff setting or are considering
their introduction;

22/04/2014
2

Most utilities provide only electricity services but
several are also responsible for water systems and bulk
fuel bunkering

A number of utilities are run as private profit-making
companies, majority have government-established tariff
structures that have routinely been set below the cost of
supply, undermining cash flow and causing operational
and maintenance difficulties;

Three different sets of technical standards

legacy of decades of subsidies for generating equipment
and/or fuel, resulted in artificially low prices for
consumers and high levels of electricity consumption

Uniform tariff structure - high levels of cross subsidies
from the main urban to other electricity consumers;

Technology level in utility varies.

Limited energy options;
particularly for smaller islands,
with performance severely
impacted by fuel price
fluctuations
High energy losses (6 -24%
System Losses)
Limited Human Resource
Capacity (engineers, tradesmen,
utility specific skilled staff)
Inefficient Revenue Collection
Political influence on tariffs

Need to focus on Regulation, Policy
and Development Initiatives
No clear energy policies in a number of the
countries
Current policies are not properly enforced
Lack of Policy framework to develop and reinforce
the deployment of standardized PPAs leading to
increased IPPs
FIT are in early development stages only 2 of 25
utilities have FIT
Few countries have external regulators
Challenges facing the PPA Membership

Technical guidelines for
interconnections
Few utilities with guidelines in place
Can adopt existing guidelines
Performance Improvement
Overall utility efficiency improvements
Need to address SSM and DSM
Benchmarking work
Performance Improvement Plans


State of Existing Networks
Existing networks aging
Investment to upgrade networks
Technical limits on RE penetration

Tariff
Has to be cost recovery, not the case in most utilities
Complicated formula lacking transparency
Uniform tariff resulting in cross subsidy

22/04/2014
3

Utility staff capacity
Lack of technical capacity
Lack of capacity in regulatory aspects
Most significant in small utilities
Financing of RE investment
Private Sector involvement
Clarity on the ground rules to entice investment
Governance
Government of the day appoints the Board
Reward for political support
Lack of skills and expertise


Pacific Power Association
Naibati House
Goodenough Street
Private Mail Bag
Suva
Republic of Fiji Islands

email: ppa@ppa.org.fj
website: http://www.ppa.org.fj
22/04/2014
1
OVERVIEW OF CHALLENGES
PROVIDING WATER & WASTEWATER
SERVICES IN THE PACIFIC

www.pwwa.ws
Latu S. Kupa
Executive Director
Pacific Water & Wastes Association
latu@pwwa.ws
PWWA OVERVIEW TO DATE
23 PACIFIC WATER UTILITIES
55 ALLIED MEMBERS (incl some NZ & Aust
Water Utilities)
329000 water connections & 64000 sewer
connections supplying 2 million pop.
Still 45% water utilities are not able to provide
24/7 service
38% of utilities maintained Cl, 71% sewerage
produced are treated
52% NRW to-date
www.pwwa.ws
PACIFIC WATER
BENCHMARKING
Publisher and
Author
Month
Year
Report Title Brief Overview and Relevance to this Study
ADB
Castalia
Dec
2005
Enhancing Effective Regulation of
Water and Energy Infrastructure
and Utility Services ( Countries
Component) - Interim Pacific
Reprt
8 Participating Utilities (PNG, , , , , FSM, , )
Focus generally on regulation not specifically performance
Study was by country, not by water service provider as is the case in this
study
Useful information in terms of regulation around the Pacific and also
useful benchmarking information against other small island states such
as those in the .
ADB
Cheatham
2005 Performance Benchmarking for Pacific
Power and Water Utilities
8 Participating Utilities (Cook Islands, Fiji, FSM Yap, FSM Kosrae,
Papua New Guinea, American Samoa, Western Samoa, Vanuatu)
Accuracy of data questionable creating concerns regarding comparison
Study was by country, not by utility as is the case in this study
Limited relevance has been referenced where relevant
PWWA 2009 &
2010
PWWA preliminary benchmarking 10 Participating Utilities provided data
Many similar indicators
Provides a good source against which to validate some of the core data
from this study
Useful for comparison however only short time elapsed (i.e. cannot
observe long term trend)
www.pwwa.ws
INDICATORS ADOPTED
KRA 1
Production
KRA 2
Technical
Performance
KRA 3
Health and Safety
KRA 4
Human
Resources
KRA 5
Customer
Service
KRA 6
Financial
Performance
Service delivery
Staff capability
Executive management
Financial management
Stakeholder engagement
www.pwwa.ws
INDICATORS ADOPTED
KRA No. Indicator Units
K
R
A
1

P
r
o
d
u
c
t
io
n

V1 Volume of water produced kL/conn/day
V2 Volume of water sold (i.e. billed) kL/conn/day
V3 Volume of sewage produced kL/conn/day
K
R
A
2
-
T
e
c
h
n
ic
a
l
P
e
r
f
o
r
m
a
n
c
e

O1 Water supply coverage % of population
O2 Continuity of water supply service (hours available) Hrs/day
O3b Non-revenue water (%) % of water produced
O3 Non-revenue water (m3/conn/day) m3/conn/day
O3c Non-revenue water (m3/km/day) m3/km/day
O4 Sewerage coverage % of population
K
R
A
3

H
e
a
lt
h
&

E
n
v
ir
o
n
.
HE1 Drinking Water quality compliance - residual chlorine % compliance
HE2 Drinking Water quality compliance - microbiological % compliance
HE3 % of sewage produced which is treated to at least primary standard % of sewage
K
R
A
4

H
u
m
a
n

R
e
s
o
u
r
c
e
s

HR1 Water and sewerage business staff/ 1000 connections #FTE/1000 conn
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HR3 Average cost of staff (total labour cost / no of staff/GNI) % of GNI
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CM3 Affordability - new connection % GNI per person
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www.pwwa.ws
UTILITIES OVERVIEW
www.pwwa.ws
22/04/2014
2
INSTITUTIONAL
OWNERSHIP
LEGAL /
INSTITUTIONAL
FINANCIAL
REPORTING
www.pwwa.ws
PERFORMANCE OBSERVATIONS
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Overall EfficiencyIndicator (OEI) Overall Performance Indicator
Best efficiency &
performance with PSP
Poorest efficiency &
performance in
government
departments and
SOEs
Performance and
EOI related to size
www.pwwa.ws
KRA 1 PRODUCTION AND
VOLUME
The average water production per connection increased
from 1.95 kl per connection in 2012 to 2.13 kl per
connection in 2013. (~267 l/c/d compare to water billed 150
l/c/d)
www.pwwa.ws
KRA 2 TECHNICAL
PERFORMANCE - NRW
Water supply coverage higher than SE Asia
and Africa 95%
Very high NRW - 52%

www.pwwa.ws
KRA 2 TECHNICAL
PERFORMANCE WW Treated
Wastewater coverage 59%, lower than SE
Asia but higher than Africa
Wastewater Treatment to Primary at 71%

www.pwwa.ws
KRA 3 HEALTH & ENVIRONMENT
Drinking water quality compliance lower than it
should be
Low Level of residual chlorine, 62%
Low rate of sewage treatment
www.pwwa.ws
22/04/2014
3
KRA 4 HUMAN RESOURCES
The amount of training provided to the staff of the utilities improved from
1.34 to 1.56 days per staff, but is still below the Pacific Benchmark of
five training days per employee per year.
Observation: Staff qualifications and skills are still a major challenge for
all water utilities.
www.pwwa.ws
KRA 5 CUSTOMER SERVICE
Average number of customer complaints increased from 161 per 1000 customers in 2012 to 185
complaints per 1000 customers in 2013.
Observation: The increase appears to be partly due to the fact that more utilities report complaints
as compared to last year.
The number of complaints is extremely high and it proves that the majority of the utilities are
providing insufficient level of services. The most common complaints relate to continuity of water
supply, water quality and billing
www.pwwa.ws
KRA 6 FINANCIAL SUSTAINABILITY
OPERATING COST RECOVERY RATIO 84% (excluding depreciation and operating subsidies)
slightly decreased from 85 per cent in 2012.

198 DEBTORS DAYS FOR ACCOUNTS RECEIVABLE
www.pwwa.ws
MAINTENANCE PLAN & ASSET
DATABASE
While 59 per cent of the utilities reported to have a maintenance
plan, only 27 per cent of the utilities maintain an asset database
www.pwwa.ws
CLIMATE CHANGE & NATURAL
DISASTERS
55 per cent of the utilities have adopted the risks of
climate change and natural disasters in their operations.
www.pwwa.ws
UTILITY CHALLENGES
0%
10%
20%
30%
40%
50%
P
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Key Challenges as noted by participating utilities
Small utilities
Mediumutilities
Largeutilitilies
www.pwwa.ws
22/04/2014
4
OVERALL PERFORMANCE TREND
2012 TO 2013
www.pwwa.ws
PERFORMANCE OBSERVATIONS 2013
www.pwwa.ws
PERFORMANCE OBSERVATIONS
www.pwwa.ws
2011 2012 2013
UNELCO
Vanuatu
Pohnpei Utility
Corporation, FSM
UNELCO
Vanuatu
Eda Ranu PNG
UNELCO
Vanuatu
Eda Ranu PNG
Water PNG Eda Ranu, PNG
Tonga Water
Board
Utilities with a high Overall Efficiency (i.e. OEI) from a revenue perspective are more
likely to be in the higher overall performance group (i.e. both financial and technical) and
similarly, utilities with good overall performance are more likely to have good revenue
recovery.
Those organisations with private sector participation (i.e. private companies or
private/government joint companies) clearly perform better in terms of OPI and OEI.
Government departments and statutory organisations were in the lower performance
range, however, in terms of financial performance, the worst were the state owned
enterprises (SOEs).
Utility performance, both OPI and OEI, is related to size with the large and medium
utilities performing best.
22/04/2014
1
Pacific and Caribbean Conference on
Effective and Sustainable Regulation of
Energy and Water Services

March 25-27, 2014 - Nadi, Fiji

AN OVERVIEW OF THE STATUS
OF THE
WATER SECTOR IN THE CARIBBEAN
L. OReilly Lewis
Caribbean Development Bank
2
The purpose of the CDB is to:

contribute to the harmonious economic growth and
development of member countries in the Caribbean;

to promote economic cooperation and integration .
BACKGROUND
3
Regional Members
Borrowing Member Countries
Anguilla
Antigua and Barbuda
Bahamas, The
Barbados
Belize
British Virgin Islands
Cayman Islands
Dominica
Grenada
Guyana
Haiti
Jamaica
Montserrat
St. Kitts and Nevis
St. Lucia
St. Vincent & The Grenadines
Suriname
Trinidad and Tobago
Turks and Caicos Islands
4
CDBs Main Functions
Coordinate Development Programmes

Mobilise Financial Resources for Development

Finance Projects and Programmes

Provide Technical Assistance

Provide Policy Advice

Support Regional Integration
Overview of the CDB-financed Water Sector
Study

Brief Overview of Regulatory Issues

Summary of General Findings and Observations
(Draft Final Report)

OVERVIEW OF PRESENTATION
OVERVIEW OF WATER SECTOR
ASSESSMENT

Commissioned in 2012

An initial overview to guide future sector
work and CDB Sector Policy Development
22/04/2014
2
OBJECTIVES OF STUDY

Prepare water sector profiles and initial
water sector assessments of member
countries

Conduct preliminary assessment of CDBs
sector policies and past involvement

METHODOLOGY OF STUDY
Stakeholder Kick-off Meeting

Data Collection Questionnaires

Desktop Review

Validation Visits to 6 Countries (Jamaica,
Belize, St. Lucia, Barbados, Trinidad and Tobago,
Guyana)
Key Areas Investigated
Governance, Policy and Regulatory Framework

Water resources management systems, water availability,
impact of climate change

Organisational structures, coverage, service delivery and
commercial operations

Role of Multilateral Service and Finance Institutions

GENERAL INFORMATION
Anguilla, Antigua, Bahamas, Barbados, Belize, British Virgin
Islands, Cayman Islands, Dominica, Grenada, Guyana,
Jamaica, Montserrat, St. Kitts, St. Lucia, St. Vincent, Turks
and Caicos and Trinidad

Total Population of 6.5 million (10,000 3,000,000)

Water Sources: 52% Groundwater, 36% Surface,
12% Desalination

Established Regulatory Agencies
Guyana Public Utilities Commission (PUC) established under PUC Act 25.01 and
regulates the sector including water and sewerage and electricity.
Jamaica The Office of Utilities Regulation (OUR) established by an Act of Parliament
in 1995, to regulate the provision of utility services; Electricity,
Telecommunications, Water and Sewerage.
Bahamas The Public Utilities Commission (PUC) was established by Act of Parliament
(2000) with mandate for regulation of rates and standards for public utilities.
Belize Public Utilities Commission of Belize.
Trinidad and
Tobago
The Regulated Industries Commission (RIC) is the economic regulator for
the Water and Sewerage Authority and Trinidad and Tobago Electricity
Commission. The RIC was established by the RIC Act of 26 of 1998
St. Lucia The National Water and Sewerage Commission is an independent Authority,
whose mandate is to regulate the water and sewage sector in the island
under stipulation of the Water and Sewerage Act of 2005.
Established Water Resource Regulatory Agencies
Jamaica The Water Resources Management Authority which is responsible for the
overall management of the water resources throughout the country

Belize The Water Industry (Amendment Act 2009, entitled National Integrated Water
Resources Act (NIWRA) has established a new Water Resources Agency. This
Agency is in its infancy and organizational structures and management
systems are being established.
Trinidad
and Tobago
Water Resources Agency (WRA). This Agency is under the Ministry of Water
and the Environment but is a Department of the Utility.

St. Lucia
The Water Resources Management Agency (WRMA) has been established
through chapter 9:03 of 2008 with responsibility for the management for the
water resources and reports to the Ministry of Sustainable Development,
Energy Science and Technology.
22/04/2014
3

Country
Approximate
Population
Served
%
Unaccounted
For Water
Working
Ratio *
(cost/revenue)
Staff per 1000
Population
Served
%
Water
Coverage
%
Sewerage
Coverage
Residential
Tariff US$
per c.m.
A 15,000 60 0.76 1.6 75 Nil 3.67
B 90,000 30 0.98 1.40 70 Nil 1.70
C 320,000 49.9 1.32 1.4 90 14 2.64
D 290,000 49 0.85 2.968 99.0 10 1.24*
E 230,000 27 0.74 1.38 95.5 15 1.82*
F 32,000 63 3.33 2.95 91 27 2.64
G 53,000 17 0.90 2 90 16 2.50
H 75,000 40 1.07 1.6 90 15 0.40
I 110,000 1520 1.2 2.2 97 5 0.78
J 755,000 25 1.23 0.72 86 7 0.14
K 3,000,000 66 0.95 0.70 97 20 0.66
L 5,000 2530 1.04 3.6 95 0 0.98
M 41,000 50 0.90 2.80 100 0.0 0.63
N 10,000 50 0.28 7.50 100 0.0 0.63
O 163,000 4050 2.2 1.8 92 7 0.37
P 100,000 20 0.97 2.08 98 5 0.15
Q 1,350,000 40 3.27 3.50 92 30 0.27
E 46,000 50 1.70 0.43 70 0 6.6
PERFORMANCE CHARACTERISTICS FOR WATER PROVIDERS
Key Issues
Inefficient operations (high non-revenue water, high
energy usage, high wage bill)

Inadequate Cost Recovery Inadequate investment in
infrastructure generally low service quality

Lack of focus on management of water resources

Lack of attention being paid to impact of climate change

NEXT STEPS
Final Stakeholder Consultation

Further country-specific studies and
investment
CONCLUSION
Telephone No.:
(246) 431 1600

Website:
http://www.caribank.org

E-mail Address:
info@caribank.org

Presenters Contact:
lewisl@caribank.org
(246) 431 1658

Benchmarking
Power and Water Utilities
in the Pacific
Pauline Muscat
Energy Specialist, Consultant
March 2014

Overview
The Benchmarking Process
Benefits of Benchmarking
Evolving Benchmarking Processes in the Pacific
Key Sector Findings
Benchmarking Methodology and Approach
Challenges and Issues
Strategy for sustainability
Conclusion and Recommendations

The
Benchmarking
Process

Data
recording
Data
collection
Data analysis
Performance
Improvement
Initiatives
Measure
Monitor
Assess
Improve
Benefits of Benchmarking
A management and decision making tool
Able to compare performance of utilities through a set of
performance indicators
Allows analysis at the sector level
Allows performance gaps, and key trends to be identified and
addressed
Facilitates sharing of information and propagates best
practice, resulting in better services
Improve performance by learning from other similar utilities
Drives institutional and sector development
Evolving Benchmarking Processes in
the Pacific
Round 1st 2nd 3rd 4th
POWER 2000 2011 2012 2014
WATER 2000 2011 2012 2013
The 2011 benchmarking round provided baseline data for
trending of performance indicators

Key Results - Power
Key Power Sector Findings
19 of 21 utilities are 100% government owned
All but 2 utilities operate under formal power sector legislation
Most utilities have ambitious renewable energy targets, yet actual
renewable energy contribution remains low
Most utilities have no formal external regulation (technical or
commercial) but commercial regulation exists or is being
developed (eg Fiji, PNG, Vanuatu, Tonga, Samoa). Most are self
regulated technically, with strong government influence on tariffs
3 of 19 utilities have formal regulations for Independent Power
Producers (IPPs)
Power quality standards exist but are not enforced
Key Water Sector Findings
Government departments and statutory organizations were in
the lower performance range, however, in terms of financial
performance, the worst were the State Owned Enterprises
(SOEs)
The utilities that operate under private sector management or
with considerable private sector involvement demonstrate
better technical and financial performance
The most common form of private sector involvement is the
procurement of various services through service contracts
Comparison Between Power & Water Sectors

Water resources competes with a privately owned water source,
eg a well; financial sustainability difficult
Power services are generally of higher complexity and quality
Both sectors have mostly government owned utilities, without
external regulation, making tariff setting political
Water financial results openly published; water sector data will
be available online as of May 2014 for open access. Power utility
financial results are coded; utilities not identified.

Benchmarking Methodology and Approach
Benchmarking Questionnaire distributed
Data collection supported remotely and through site visits
Data validation
Data analysis. Comparison to other regions
(eg Power: CARILEC, NESIS and APPA)
Reporting; Small, Medium and Large Utilities
Benchmarking Workshops
Performance Improvement Initiatives
Challenges of Benchmarking
Lack of understanding of the purpose and value of benchmarking
Lack of suitable resources (and high staff turnover)
Lack of data; submission of incomplete or erroneous data
Level of complexity of questionnaires
Selecting the right indicators
Inadequate definition of indicators
Support visits to utilities are timely and expensive
Reluctance of some utilities to publicly share information
(such as financial indicators)

Addressing the Challenges
Establishment of improved data capture (eg water sector IBNET)
Capacity building; Training workshops, site visits, Benchmarking
Manual
Regional agreement to indicators and clear widely accepted
definitions
Indicators selected considering indicators used in other regions
Questionnaires that reach a balance between straight forwardness and
sufficient information; consideration of online entry
Donor support required to establish processes and build capacity
Sustainability of process ensured when led and sustained by regional
organisations, with buy-in from utilities, and supported by all users
(utilities, governments, development partners, regulators)
Issues
Who owns the data and how will it be used?
How often should benchmarking be conducted?
How to ensure that benchmarking is sustainable?

Strategy for Sustainability
Both sectors have developed a strategy for sustainability
Annual benchmarking
Supportive of high levels of disclosure
Use of online platform for data collection
Regional or sub-regional training workshops, or use of webinars
Costs for benchmarking to be shared amongst users
Annual calendar of benchmarking events; Regular newsletters
Adoption of awards night; PWWA
Involvement with benchmarking from other regions
Conclusion and Recommendations
Benchmarking facilitates improved data collection; Both
sectors are seeing improvements in data quantity and quality
Benchmarking facilitates performance improvement
Benchmarking activities are worthwhile
Sustainability of benchmarking is essential
Capacity building is key to sustainability
Independent regulation required to de-politicise tariff setting
Use of online tools to facilitate data sharing
More open sharing will ultimately lift performance for the
region

Questions?
22/04/2014
1
VANUATU NATIONAL
ENERGY ROAD MAP
1
Pacific and Caribbean Conference on Effective
and Sustainable Regulation of Energy and
Water Services 25-27 March 2014
Nadi, Fiji
OVERVIEW

Chapter 1: Road Map Development

Chapter 2: Implications for Vanuatu from Global Experience

Chapter 3: Petroleum Targets & Actions

Chapter 4: Electricity Targets & Actions Prospectus (2013-2020)
Comprehensive grid and off-grid programmes
Network scaled-up renewable energy investments and energy efficiency
Enabling policies, institutional strengthening, key studies

Chapter 5: Next Steps and Implementation Timeline
2
1 ROAD MAP DEVELOPMENT
Hon. Prime Minister of Vanuatu launched the development of the
Vanuatu Energy Road Map in October 2011.
Roadmap was completed in March 2013, approved by the Council
of Ministers in June 2013

The Government identified a vision to guide the energy sector:
To energise Vanuatus growth and development through the provision of
secure, affordable, widely accessible, high quality, clean energy services for
an Educated, Healthy, and Wealthy nation.

Guiding Principles Adopted in the Road Map preparation and design
Least-cost approaches
Sustainability financial, environmental and social sustainability
Clarity of roles
Consultation

3

2. IMPLICATIONS FOR VANUATU FROM GLOBAL EXPERIENCE
ENERGY, POVERTY, AND DEVELOPMENT LINKAGES

Vanuatus vision for the energy sector is on the mark

Sustainable Energy Access for All (SE4 ALL 2025/30) UN Rio 2012

Energy is a fundamental enabler of economic development, human
development (and MDGs)

Electricity Access provides
improved communication and reduced isolation (phone charging, radio/tv, internet)
Modern lighting; reading and enables productive uses

Modern Cooking Solutions provide
improved health and safety
reduces mortality, especially among women and children

4

VANUATU ENERGY SECTOR: CONTEXT AND KEY
CHALLENGES AHEAD

Overall low access (electricity and modern cooking fuels)

Near stagnant pace of expansion in last 30 years

Big rural-urban divide
Concession Areas
Very high retail tariffs and limited consumer affordability
Low connection rates
Outside Concession Areas
Fragmentation & small scale donor projects dont add up
Lack of comprehensive access and renewable energy
development strategy
Public Institutions:
Many remain without electricity
Ensuring sustainability of electrification essential

5

STRATEGIC DIRECTIONS FOR ACTION

VANUATUS NERM - STEERING A BREAK FROM THE PAST

Relevant Implications from global experience
Government leadership and commitment staying the course
Government to establish a comprehensive and consistent set of enabling
policies and legislative framework, that are transparently applied for all sector
stakeholders, in a sustained and predictable way in accordance with laws and
regulations
Empowering and holding accountable key energy institutions
Effective and fast-paced implementation requires strong sector institutions
(DoE, URA, and Ministry of Climate Change), with the requisite legislative
mandate, autonomy and independence, while being held accountable for
delivering results
Implementing a sector-wide approach to overall least-cost investment
Transform the sector by moving away from fragmented projects - within
concession areas and off-grid programs - to a Government led and
coordinated overall least cost sector-wide investment programme (presented
in a bankable sector-wide prospectus)
6
22/04/2014
2
ENERGY SECTOR PRIORITIES
1. Access - Access to secure, reliable and affordable electricity for all
Citizens by 2030

2. Petroleum Supply - Reliable, Secure and Affordable Petroleum Supply
throughout Vanuatu

3. Affordability - A more affordable and low cost of energy services in
Vanuatu

4. Energy Security - An Energy Secure Vanuatu at all times

5. Climate Change -Mitigating climate change through renewable
energy and energy efficiency.

7
VANUATUS NERM: SECTOR-WIDE LEAST COST INVESTMENT
FRAMEWORK FOR EXPANDING ACCESS TO ALL IN A COMPREHENSIVE AND
COORDINATED MANNER BY 2030
8
PETROLEUM
CHAPTER 3
PETROLEUM

CHAPTER 3
9
PETROLEUM SECTOR CONTEXT
10
Vanuatu ranks among the countries in the world rated highest in terms
of dependence on oil (petroleum intensity in the formal economy)
Regional peers are addressing this through aggressive policies on renewable
energy and fuel diversification

Potential for cost reductions
and efficiency gains via
better inter-island
distribution and storage

Prices for petroleum
products are generally
in line with regional
peers

KEY RECOMMENDATIONS FOR ACTIONS IN
PETROLEUM SECTOR
11

Electricity generation makes up a large component of
petroleum demand

Actions in the Road Map to
increase coast effective
renewable electricity
generation can have the
largest impact on the
demand for petroleum

Diversification of generation fuel
sources will make Vanuatu more
resilient to fuel price volatility and
supply shocks

Barge for Local Distribution
Increase efficiency in local distribution
MoU between Government and Pacific Petroleum

Additional Storage
To improve security of supply
Size and costs to be estimated

Upgrade of Safety Infrastructure
Pacific Petroleum requires approximately VUV560million (US$6.2million) in
investment to meet safety expectations
Origin Energy requires almost VUV90 million (US$1million) in investment to
meet safety expectations
OTHER KEY RECOMMENDATIONS FOR
PETROLEUM SECTOR
12
22/04/2014
3
ELECTRICITY
CHAPTER 4
ELECTRICITY

CHAPTER 4
13
GOVERNMENT LEADERSHIP AND COMMITMENT
Consistent and
Credible Regime
for Concession
Contract
Performance
and Results
Sector-wide
Approach to
Financial
Sustainability
Framework for
Encouraging
Investment in PPPs
in the best interest
Transparent
process &
accountability
with appropriate
checks &
balances for
changes in any
provisions of
existing
concession
contracts; positive
obligations on
utilities to connect
customers
Ensure all
investments
within concession
areas (URA),or
outside - a part of
the sector wide
least-cost plan of
the GOV; credible
financing policy
platform to fill
projected gap in
financing
Policies to
promote more
open and efficient
sector structure
and risk-sharing
between public
and private
sectors for
universal access
at least cost and
lowest possible
retail tariffs
Framework for
Environmental
and Social
Standards
Improve clarity
on standards to
be met, and
consistency
among investors
and programme
designers
14
4 - IMPLEMENTING A SECTOR WIDE APPROACH
PROSPECTUS
Access
Connections in (and close to) the existing grid
Rural Electrification
Network Extensions
Renewable Generation
15
PROSPECTUS:
CONNECTIONS IN (AND CLOSE TO) THE EXISTING GRIDS
Current
2015
target
2020
target
2030
target
Households within
grid areas
Output
Based Aid
(OBA)
subsidy
68% 75% 90% 100%
16
PROSPECTUS: OUTSIDE GRID AREAS
Current
2015
target
2020
target
2030
target
Total
Investment
Cost
Funding
Gap
Households with
permanent electricity
solutions
Rural Lighting
Subsidy Scheme
(RLSS)
10% 20% 50% 100% US$5.5m $2m
Micro-grids for
isolated
communities
Feasibility studies to be
commissioned
TBC TBC
Basic electricity
services to all
Pico Solar Products 50% 100% 100% TBC TBC
TOTAL US$5.5m $2m
PROSPECTUS
PUBLIC INSTITUTIONS - NATIONWIDE
Current
2015
target
2020
target
2030
target
Total
Investment
Cost
Funding Gap
Public Institution Electrification
Scheme (PIES)
50% 90% 100% 100% $5.2m $2.2m
Maintenance of existing installations $0.67m $0.67m
TOTAL $5.87m $2.87m
17
5 - NEXT STEPS AND IMPLEMENTATION TIMELINE
Build sufficient capacity in the Department of Energy to oversee Road
Map implementation, monitoring and reporting progress and flagging
corrective actions in a timely manner, as appropriate, with full
complement of staff and adequate budget resources

Recruit specialist resource within DOE to manage Off-Grid
programme

Studies to fill critical gaps in Electricity Act, and Geothermal Act with
a view to scaling up access to all at least cost and resulting in
affordable (lowest possible) retail tariffs to consumers (within four
months)
18
22/04/2014
4
NEXT STEPS AND IMPLEMENTATION TIMELINE
Pre-feasibility study for key grid extensions areas
Off-grid integrated geospatial least cost access scale up and
renewable energy supply investment and implementation
plan (including hybrid micro-grids)

Subsidy policy framework to support implementation of
sustainable energy access for all program ( grid, off-grid,
network, generation, basic electricity to all program; risk-
sharing)

19
TANKYOU TUMAS
Jesse Benjamin
Director
Department of Energy
Ministry of Climate Change and Natural Disasters
Tel: +678 25201
Email: jbenjamin@vanuatu.gov.vu

20
22/04/2014
1

Pacific and Caribbean Conference on effective and
sustainable regulation of power and water services

Solomone Fifita, Deputy Director (Energy), Economic Development Division, SPC
Energy security exists when all
people at all times have access to
sufficient sustainable sources of
clean and affordable energy and
services to enhance their social and
economic well-being
A Regional Framework
for Action on Energy
Security in the Pacific
The Origin of the FAESP
Regional Energy Officials Meeting in Tonga April 2009
Pacific Energy Ministers Meeting in Tonga April 2009
Ministers agreed that regional and donor coordination
delivery of energy services to Pacific Island Countries be
strengthened
in this context it was noted that there was a need to ensure
that energy policy and climate change policy remained
separate so as to ensure that the socio-economic aspects of
energy were adequately addressed
Ministers underlined the need to strengthen human capacity
development initiatives

The Origin of the FAESP
Ministers expressed the need to review and as appropriate
strengthen national capacity in energy data and information
gathering
Ministers acknowledged progress in the implementation of
the regional bulk fuel procurement initiative.
Ministers encouraged the necessary actions that would
facilitate investment in sustainable renewable energy
technologies and in energy efficiency and energy conservation
initiatives.

Access to grid-connected electricity
(2009)
8%
12%
28%
44%
46%
69.44%
78%
80%
81%
94%
98%
99%
99%
100%
100%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Solomon
PNG
Vanuatu
Kiribati
FSM
Average 14 PICs
Tonga
RMI
Fiji
Tuvalu
Palau
Samoa
Niue
Nauru
Cook Islands

0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
Equivalent of Fossil Fuel Imports on the GDP (2009)

$0.00
$0.05
$0.10
$0.15
$0.20
$0.25
$0.30
$0.35
$0.40
$0.45
$0.50
$0.55
$
U
S
/
k
W
h

Average Electricity Tariff in PICs - 2009
22/04/2014
2

0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
% of electricity generation from
renewable energy (2009)

0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
Power Distribution Losses (%)
The Regional Framework
Outlines a new approach to improving energy security
in the Pacific
Acknowledges that national energy polices and plans
must be the principal means for achieving energy
security
Promotes a whole of sector approach based on the
concept of many partners one team
Recognises that numerous stakeholders contribute to
energy security in the region and accepts them as equal
partners

Vision
An Energy Secure Pacific
Goal
Secure supply, efficient production and use of energy for
sustainable development
Outcomes
i. Access to clean and affordable energy
ii. Optimal and productive use of energy
PART 1
Context of Energy in the Pacific Islands
Guiding principles
1. Leadership, transparency, decision-making and
governance
2. National led solutions supported by regional
initiatives
3. Coordinated whole-of-sector approach
4. Need to sustainable livelihoods, and the
recognition of culture, equity and gender issues
5. Link between sources of energy (primary &
secondary, energy services) and uses

Guiding principles (Contd)
6. Cost-effective, technically proven and
appropriate technological solutions
7. Environment friendly energy solutions
8. Evidence-based planning the importance of
energy statistics
9. Appropriate investment in human capital
10.Many partners, one team
11.Financing, monitoring and evaluation

22/04/2014
3
National Responsibilities
1. Energy policies and implementation plans
2. Roles and responsibilities of national energy sector
institutions
3. Energy pricing, subsidies, legislation and regulation
4. Energy data and information
5. Energy studies and technical reports
6. Relationships between the government and private-sector
energy service providers
7. Capacity building and human resource development
8. Priorities for technical assistance
9. Collaboration with development partners
Regional Responsibilities
1. Economies of scale
2. Development and synchronisation of standards across
the region
3. Regional leadership, strategic engagement and
advocacy
4. Capacity building/supplementation and skills transfer
5. Policy analysis, research and development
6. Systems for data collection, analysis, reporting and
information dissemination

Part 2
Themes for Action to improve Energy Security
1. Leadership, Governance, Coordination and Partnerships
2. Energy Planning, Policy and Regulatory frameworks
3. Energy Production and Supply
Petroleum and alternative liquid fuels
Renewable energy
4. Energy Conversion
Electric Power
5. End-use Energy Consumption
Transport Energy Use
Energy Efficiency
6. Energy Data and Information
7. Finance, Monitoring and Evaluation
Theme 1 Leadership, governance, coordination and
partnerships
Expected outcome Strong leadership, good governance, effective multi-sectoral
coordination and partnerships for an energy secure Pacific
Long term Objectives - A regional implementation plan (involving all key energy-sector
stakeholders) that is established and implemented in an effective and coordinated
manner to achieve greater energy security.
Key Priorities
Regional and subregional coordination.
Commitment of development partners to energy sector development.
Regional and subregional energy initiatives and other programmes relating to
climate change, gender issues, socio-economic issues and health.
Strategic engagement with international organisations.

Theme 2 Capacity development, planning, policy
and regulatory frameworks
Expected outcome Strengthened capacity, policy, planning and regulatory
frameworks to support coordinated development of the energy sector
Long term Objectives
Determination of the best practical mix of energy options tailored to respective
PICTs as a basis for regional and national intervention strategies and resulting
financing mechanisms.
Enhancement of supportive policies and legislative frameworks, regulations and
other legal and administrative tools necessary for effective management of the
regions energy sector.
Key Priorities
Policies and implementation plans/roadmaps, and M&E frameworks.
Regulations, legislation and other administrative and legal tools.

Theme 3 Energy production and supply
(Petroleum)
Expected outcome Increased sustainability of current sources of energy and
strengthened efforts to explore other sources of clean and affordable energy
nationally and regionally
Long term Objectives - Reliable (sustainable) supply, safe transportation, and the
infrastructure required to store and distribute high-quality, affordable and accessible
petroleum fuels (and feasible liquid fuel alternatives) and their efficient use in all
PICTs.
Key Priorities
Harmonized fuel (petroleum and alternatives) standards.
Pacific bulk fuel procurement project.
Efficient use of fuels (petroleum and alternatives).

22/04/2014
4
Theme 3 Energy production and supply (RE)
Expected outcome Increased sustainability of current sources of energy and
strengthened efforts to explore other sources of clean and affordable energy
nationally and regionally
Long term Objectives - Increased level of investment in proven renewable energy
technologies (including biomass) in PICTs, as part of the regions strategic response to
mitigating the harmful effects of petroleum fuels on environments and economies
and, where feasible, supplementing and replacing petroleum fuels as the predominant
source of energy, particularly noting the price volatility of this market.
Key Priorities
Resource assessment, research and studies.
Investment in renewable energy.
Capacity development. / Higher proportion of renewable energy in the energy mix.

Theme 4 Energy conversion
Expected outcome Improved production, supply and accessibility of electric power
Long term Objectives - Reliable, efficient, safe and affordable access to electric power
and services for all PICT households and communities.
Key Priorities
System loss quantification and benchmarking.
Tariff structures.
Investment in capacity development.
Reliability of power supply (i.e. reduction of outages and fluctuation).
Renewable energy.
Operations and maintenance.

Theme 5 End-use energy consumption (Transport)
Expected outcome Optimal use of energy in all sectors, particularly in transport and
electricity
Long term Objectives - Environmentally clean, energy-efficient and cost-effective
transportation systems within the region.
Key Priorities
Legislation and fiscal arrangements.
Migration to low sulphur fuels.
Energy efficient vehicles and ships.
Advocacy of increased energy efficiency.
Improved infrastructure and energy efficiency.

Theme 5 End-use energy consumption (EE)
Expected outcome Optimal use of energy in all sectors, particularly in transport and
electricity
Long term Objectives - Efficient and cost-effective production (electricity, biofuels) and
end-use of all forms of energy modern and traditional throughout the Pacific.
Key Priorities
Capacity development.
Enabling regulations and legislation.
Effective partnerships.

Theme 6 Energy data and information
Expected outcome Timely, accessible and accurate energy data and information as a
basis for effective planning and decision-making in the energy sector
Long term Objectives - Current, reliable and timely energy data and statistics are
readily available to decision-makers in PICTs at government and industry level to
support informed decisions on long-term national energy strategies.
Key Priorities
Collation of and access to energy data and information.
Storage of energy data and information.
Interpretation of energy data and information.

Theme 7 Financing, monitoring and evaluation
Expected outcome A financing plan that captures all funds flowing into the regions
energy sector by funding source and implementation arrangements, supported by a
comprehensive monitoring and evaluation framework.
Long term Objectives - Scaled-up, better coordinated financing for clean and
affordable energy in the region, with clear outcomes and milestones supported by a
results-based M&E framework to measure achievements.
Key Priorities
Donor coordination.
Support for national implementation plans.
Financial planning (budgetary processes) at national and regional levels.
Standardised and synchronised M&E indicators for national and regional plans.
22/04/2014
5
Part 3
Linking the Framework to the Implementation Plan
The implementation plan:
o Focuses only on regional interventions, which are
aimed principally at supplementing capacity and
providing support to national governments and
stakeholders
o Comprises of specific activities under each theme
o Links directly to the long term objective/s and key
priorities under each theme
o Includes set targets and milestones to measure
impact and effectiveness of regional responses

Format of the Implementation Plan
Theme
Expected outcome
Long term objective
Key priorities
Targets and milestones
Strategies and activities for 20102015
Strategy 1.1
Activities for strategy 1.1

Thank You
22/04/2014
1

Pacific Regional Action Plan for Sustainable Water
Management 2003
MDG 2000
to halve by the year 2015 the proportion of the worlds
population who are unable to reach or afford safe drinking
water and to stop the unsustainable exploitation of
water resources
halving the proportion of people who do not have access
to basic sanitation by 2015

Fragmented control, management and protection of fresh water
resources.
Conflicting demands for water.
Insufficient knowledge and monitoring of fresh water resources.
Microbially compromised fresh water, especially harvested rain tank
water.
Limited use of rain water storage.
Excessive demand for fresh water.
Limited community participation in fresh water management and
conservation.
Limited community understanding of responsible water use and
management.
Only limited use of rain water harvesting techniques.
Difficulties over the declaration of fresh water reserves on private land.
Land ownership problems.
Unsustainable water supply systems and schemes.
Little use of data collection on water systems currently used.
Modelling of water supply systems.

Leak detection of the water systems.
Little use of water conservation via shower head restrictors, toilet cistern dual flush
systems and the like.
No government policy to charge for water usage, even for large commercial users
such as hotels, motels, tourist accommodation units, plus private and other large
swimming pools attached to hotels used for commercial gain.
Little research into atoll ground water recharge and the depth of the lenses for
water extraction.
Geological studies for under ground aquifers need to be carried out.
Use of desalinasation plants to provide water for island communities in times of
drought periods with little or no water except rain water harvesting on a limited
scale.
Impact study to access the use of septic tanks on surface water and ground water
in the water environment.
Access and evaluate the impact of construction of roads, soil erosion and storm
water run off into the water environment.
Baseline studies to examine the overall quality of the rain water catchment
systems. Also other contaminants that may be present in the system.
Hydrological studies to identify new sources of fresh water supplies.
Studies to investigate the development of and/or new technologies to improve the
water quality of existing water supplies and/or systems.

WATER RESOURCE
SURFACE WATER
GROUNDWATER
DESALINATION
RAINWATER
WATER VAPOUR
WATER SOLAR
LAND ISSUES
E-FLOW
ALLOCATIONS

WATER SERVICES
USER PAYS
QUALITY
QUANTITY
WASTEWATER
SERVICES
TREATMENT
MONITORING

Commitment, the political will and buy in to achieve
effective implementation is indispensable on the part of
those taking part, both in the public and private sectors.
Content, policies outlined by the Government must be
meaningful and achievable, especially the in the poorer
and marginalised communities in the outer islands.
Cooperation, water management needs to be prepared
with the full involvement of all stakeholders concerned.
Checking, monitoring of implementation and of results
is essential, with all stakeholders involved.
Communication, to be successful all communications
should include reporting back to the public at large on
results, as well as listening to feedback that could
enhance the water sector development.

22/04/2014
2

CHALLENGES TO THE REGION
Where's
the water?
There isnt
enough
water going
in, too much
rubbish!
Inlet
point
Take your foot
out of the
Water. People
are drinking
downstream!
Source
Time for
a swim
and do
my
washing!
Possible soil erosion and runoff
22/04/2014
3
Looks like
a knife air
valve to
me?
POOR CONNECTION
LEAK
Now who
did this?
Nice eh?
Please
bury this
pipe or
cover with
some soil?
Contamination from
swamp and waste
water
I feel sick
already!
Leaking connection and pipe
failure
Wheres
that
plumber?
22/04/2014
4
Someone
fix this
tap!
Taps with no faucets
Yeah fix it pal!

22/04/2014
1
Caribbean Energy and Water Policies
Overview

Pacific and Caribbean Conference on Effective and
Sustainable Regulation of Power and Water Services

Alexander Ochs
Director of Climate and Energy
Nadi/Fiji, 25 March 2014
Caribbean Electricity & Water Challenges
Electricity
Limited fossil fuel resources
Electricity poverty
High electricity costs
Technical & non-tech. losses
High levels of system
interruptions
Low efficiency & RE
penetration, despite potentials
Limits to off-grid solutions &
grid access for IPPs
Need to transition to more
sustainable systems

Water
Limited freshwater resources
Water poverty
Low sewerage access
Varying water quality
Unprofitable service providers
Lack of investment in new &
existing infrastructure
High levels of non-revenue
water
Need to design more
sustainable solutions

Integrated Energy Planning
Policy
Recommendations
Vision & Long-Term
Goals
Concrete Policy
Mechanisms
Governance &
Administrative Efficiency

Technical
Assessment
Energy Efficiency
Potential
Renewable Energy
Potential
Grid Solutions
Finance &
Policy
Assessment
Gap Analysis
International Support
& Cooperation
Domestic Reform and
Capacity Building
Socio-
Economic
Analysis
Levelized Cost of
Energy +
Energy Scenarios
Macroeconomic
Effects
Policy
Recommendations
Vision & Goals
Policies & Mechanisms
Governance &
Regulatory structure

Technical
Assessment
Energy Efficiency
Potential
Renewable Energy
Potential
Grid Solutions
Finance
Assessment
Gap Analysis
International Support
& Cooperation
Domestic Reform
and Capacity
Building
Socio-
Economic
Analysis
Levelized Cost of
Energy +
Energy Scenarios
Macroeconomic
Effects
Regulatory Analysis
Utility set-up
Regulatory
structure
Governmental
oversight
Tariff setting
mechanisms
Quality control
Licensing and
permitting
Electricity Sector Status
Access Affordability
(%GNI/household)
Quality
(SAIDI)
Sustainability
(Renewable share)
Operational
efficiency
Barbados 100% 3% 4.99 hrs 0% Rate of return: 6.7%
Grid losses: 6.2%
Dominica 99% 3.5% 20.1 hrs 26% Rate of return: 12.7%
Grid losses: 8%
Jamaica 98%
Urban:100%
Rural: 84%
4.9% 13.5 hrs 7% Rate of return: 3.5%
Grid losses: 24%
St. Lucia 99% 3.6% 11.8 hrs 0% Rate of return: 15%
Grid losses: 9.6%
Water Sector Status
Access Afford
ability
(%GNI/house
hold)
Quality Sustainability Operational
efficiency
Barbados 96-98% 1.1% Failed water
quality tests in
past
No water
mgmt
regulations
Rate of retn: N/A
Non-revenue:
49%
Dominica 95% 1.6% No water
quality data
available
No water
mgmt
regulations
Rate of return:-1%
System
losses:40%
Jamaica 70%
Urban: 91%
Rural: 47%
1.3% WHO
standards 95%
of time
Water mgmt
regulations
Rate of retn:-11%
Non-revenue:
69%
St. Lucia 88% 1.7% No water
quality data
available
No water
mgmt
regulations
Rate of return:-9%
Non-revenue:
50%
22/04/2014
2
Regulatory Overview: Electricity
Operator Regulator Regulatory Model Tariff Setting
Procedure
Barbados BL&P FTC Independent multi-
sector regulator
Rate of return
assessed by
FTC
Dominica DOMLEC IRC Semi-autonomous
single-sector
regulator
Proposed CPI-X
assessed by IRC
Jamaica JPS OUR Independent, multi-
sector regulator
CPI-X assessed
by OUR
St. Lucia LUCELEC None Statutory tariff
mechanism, no
regulator
Rate of return
set by
government
statute
Regulatory Overview: Water
Operator Regulator Regulatory
Model
Tariff Setting Procedure
Barbados BWA None No
independent
regulation
Set by Board of BWA,
subject to Cabinet approval
Dominica DOWASCO None No
independent
regulation
Set by Minister based on
full cost basis
Jamaica NWC OUR Independent,
multi-sector
regulator
CPI-X-type controls,
assessed by OUR
St. Lucia WASCO NWSC Single sector
regulator
Set by NWSC based on
efficiently incurred costs
of the service &
reasonable return on
capital

Importance, Regulatory Structure
Decoupling services and oversight
Create clarity of roles
Enable autonomy/independence/authority
Provide transparency/accountability

Tariff Structure, Setting, Review
Block tariffs provide demand side efficiency,
affordable access
Prices need to balance customer and operator
needs (including funds for new investments)
Different impacts of differing tariff
mechanisms: Efficiency v. investment security
Independent, regularly conducted reviews
necessary for efficient pricing
Importance of Standards
Service, technical, and operation standards
Ambitious but feasible
Monitoring, reporting, verification/review,
enforcement
Maximizing Limited Capacity
Mechanisms to reduce capacity needs
Multi-sector regulation
Statutory tariff setting
Regional regulation
Mechanisms to create new capacity
Regional knowledge centers
22/04/2014
3
Utility Models & Challenges: Past and
Future
Successes of the past v. challenges of the
future
Improving efficiency; creating sustainable energy
supply
Need to transition the grid
Public vs. private operations
Monopolies vs. competitive markets

Regulation w/in Enabling Framework
Smart regulatory system not enough
Importance of national policy framework to
link to effective regulation
Goals and concrete policy mechanisms
Importance of integrated energy planning

THANK YOU!

Alexander Ochs
Director of Climate and Energy
aochs@worldwatch.org

22/04/2014
1
Presentation by Kelly Joseph
Executive Director

Background information on the Commission

Tariff Application for Water Company

Public Outreach

Conclusion
Water and Sewerage Act of 2005

Established two Regulators:

Resource Regulator Agency

Economic Regulator

Single Sector Regulator

Functions and Powers:

Established and Approved tariff

Receiving and considering application for:

-Water supply services

-Sewerage Services
Organizational Structure

Five (5) member Board of Commissioners

Executive Director manage day-to-day
operations
22/04/2014
2
Water & Sewerage Company (WASCO) Inc.

Total Customers :45,470

Customer Categories:

Domestic, Commerce/Industry, Hotel,
Government and Ships
Administrative organ established in 2012

Application for Tariff Review October 2012

Last Tariff increased 2000

Cabinet was responsible for approving Tariff
Three types of Tariff:

Annual Review

Triennium Review

Extraordinary Review
High cost

Energy major cost driver

Hurricane Tomas in 2010

OUR assistance
Tariff approval

Total water tariff 66.15%

Dredging Fund 10.43 %

Sewerage Services 50.8%

Service Standards Regulations

Consultative Approach

22/04/2014
3
Stakeholder Consultation

Community Meeting

Relationship Forged

Learnt from others mistakes

Regulators need Champions

info@nwsc.org.lc

www.nwsc.org.lc

22/04/2014
1
Presented By Kelly Joseph
Executive Director

Background information on NWSC

Tariff Application

Public Outreach

Conclusion

Questions and Answers (Q &A)
Thank You !!

www.nwsc.org.lc
info@nwsc.org.lc

22/04/2014
1
1
Philippine Electric Power Industry

Francis Saturnino C. Juan
Energy Regulatory Commission

March 2014
A Brief History
1905 MERALCO was born
November 3, 1936 Commonwealth Act No. 120 created the NPC
November 7, 1936 CA 146 or the Public Service Act created the PSC and
granted it control and supervision over all public services including the
power sector
April 30, 1971 RA 6173 created the Oil Industry Commission (for oil
industry)
1972 PSC was abolished and for the power and water sectors was replaced
by the Board of Power and Waterworks
November 7, 1972 PD 40 established basic policies for the power industry
August 6, 1973 PD 269 created the NEA (for electric cooperatives)
October 6, 1977 PD 1206 created the DOE and BOE
May 8, 1987 EO 172 created the ERB (for oil and power)
May 10, 1987 EO 215 opened the generation sector to IPPs
April 12, 1993 RA 7648 reconstituted the DOE

2
Republic Act No. 9136
Electric Power Industry Reform Act
(EPIRA)
Signed: 8 June 2001
Effectivity: 26 June 2001

Implementing Rules & Regulations
Signed: 27 February 2002
The industry prior to EPIRA
Generation
&
Transmission
Distribution
& Supply
Captive
Customers
The Industry Today
Generation Transmission Distribution Supply
Captive &
Contestable
Customers
The Markets
6
Competitive Retail Electricity
Market (CREM)
Luzon
Visayas
Commencement- 26 Dec.2012
Commercial Ops: 26 June 2013

Wholesale
Electricity Spot
Market (WESM)
Luzon
June 26, 2006
Visayas
Dec. 26, 2010

Interim Mindanao
Electricity Market
(IMEM)
Mindanao
Dec. 3, 2013

22/04/2014
2
Our MANDATE
Sec. 38 of EPIRA

There is hereby created an
independent, quasi-judicial regulatory
body to be named the Energy Regulatory
Commission (ERC).
Our MAJOR FUNCTIONS
Promote
competition
Monitor the
Market
Encourage
market
development
Ensure
customer
choice
Penalize
abuse of
market power
Our MAJOR FUNCTIONS
Generation
Transmission
Distribution Supply

Regulated Competitive
Our MAJOR FUNCTIONS
Generation

Issuance of Licenses/Certificates of Compliance to IPPs and Self Generating
Facilities
Monitoring and enforcing compliance with the terms and conditions of the
licenses including compliance with financial standards
Monitoring and enforcing compliance with the cross ownership
limitations, market share limitations and affiliate contracting limitations
Monitoring the operations of the spot market
Issuance of applicable license to such other members of the spot
market
Enforcement of the spot market rules
Conduct of investigation of any market power abuse and anti-competitive
behavior and imposition of penalties therefor
Our MAJOR FUNCTIONS
Transmission

Rate and Service Regulation of NGCP
Capital Expenditures
Operational Expense
Performance Standards
Compliance with Philippine Grid Code
Procurement of ancillary services

Our MAJOR FUNCTIONS
Supply

Declaration of open access and retail competition
Issuance of RES Licenses to qualified suppliers in the retail market
Monitoring and enforcing compliance with the terms and conditions of the licenses
Promulgation and enforcement of applicable regulatory rules governing the retail
market
which include the Business Separation Guidelines and Rules on the Supplier of Last
Resort
Monitoring behaviour of players in the retail market including conduct of
investigation for anti-competitive or discriminatory behaviour
Overseeing the operations of the retail market including evaluation of
performance, to reduce the threshold level until it reaches household demand level
22/04/2014
3
Our MAJOR FUNCTIONS
Distribution

Tariffs of distribution utilities
CAPEX plans
CPCN
Bilateral power supply contracts
Compliance to Philippine Distribution Code
Enforcement of Magna Carta and other rules

Our ORGANIZATION
COMMISSION
Chair
Commissioner
General Counsel
& Secretariat of
the Commission
Chief Executive Officer
(Chair)
Financial and
Administrative Service
Regulatory Operations
Service
Legal Service
Planning and
Information Service
Market Operations
Service
Consumer Affairs
Service
Internal Audit
Unit
Executive Director Field Offices
Investigation &
Enforcement
Division

Thank you
15
Increasing Energy Access
Challenges to
electrification
Missionary
electrification in the
off-grid areas
Privatization program
in the off-grid and
unviable areas
Universal Charge
RE option
16
ERC-Approved FITs
NREB
(in PhP/kWh)
ERC-Approved
(in PhP/kWh)
ROR Hydro 6.15 5.90
Solar 17.95 9.68
Wind 10.37 8.53
Biomass 7.00 6.63
Note: Decision on OTEC
FIT deferred
ERC Case No. 2011-006 RM
Effectivity
Payment of the approved FIT rates to the eligible RE Developers
shall commence upon the effectivity of the Feed-in Tariff
Allowance (FIT-All), which shall be determined by the Commission
at a later date after due proceedings thereon.
Section 2.5: FIT Rules
Uniform /kwh charge
Payable by all electricity users
Periodically calculated and set
Based on forecasted RE deliveries
Proceeds go to a fund administered
by Transco from where the RE
payments will be sourced
TRANSCO ERC FIT-ALL
Feed-In Tariff Allowance (FIT-All)
22/04/2014
4
On the Pipeline
Reserve Requirement- WESM
Regulating Reserve- 4% of the total demand
Contingency Reserve- Highest unit online
Dispatchable Reserve- Second highest unit online
Interruptible Reserve- No program yet
Renewable Portfolio Standard/ Reserve Market (RPS/REM)
Market based policy that requires the Mandated Sector to source an agreed portion of
their energy supply from eligible RE resources
19
Page 1 of 6

The Autonomous Regulator Model : Single Sector Regulators
(Session 3, part 1)
The position in the Kingdom of Tonga

INDEPENDENCE
1. The Electricity Commission in the Kingdom of Tonga was established by Act of Parliament.
1
It
is a body corporate with perpetual succession
2
and its INDEPENDENCE is GUARANTEED by
law

Except as expressly provided otherwise in this Act, the Commission shall act
independently in performing its statutory functions and duties under this Act.
3

2. The exception relates primarily to the power of Cabinet to appoint the Commissioners for three
year terms,
4
and another important matter referred to intus at paragraphs 10-14.

3. That apart there is no political interference whatsoever from Government with the
Commissions independence of action in carrying out their duties. Regulators in other countries
may wonder why that is so and I would proffer the following reasons : -

[1] Tongas basic constituent document, the Constitution, includes an express
provision added in 2010 to effect that The existing underlying constitutional
principles of the Rule of Law and Judicial Independence shall always be
maintained.
5
Anybody whose independence is guaranteed by law is also
regarded as Sacrosanct, outwith the control and machinations of politicians in the
performance of their duties.

[2] The Commissioners and Chief Executive jealously guard their freedom of action
and the status of those appointed reinforces this: any attempt at interference
would be robustly defended in the full glare of publicity. The Tongan political
system is mature enough to recognise this outcomes.

[3] It is always useful for Government and Parliament to have an external third party to
blame if something goes wrong!

[4] See also paragraph 15 of this paper on Funding.

1
Electricity Act 2007
2
Section 3(2)
3
Section 3(4)
4
Section 6
5
Clause 83.A of the Constitution
Page 2 of 6

4. But just because the Commission is independent does not mean that National Development
Policies are ignored they are not, due consideration is given to them. Or that Government
and Parliamentarians are not consulted and their views canvassed the Commission
recognises the Legitimate Interest of the body politic in what the Commission does and
welcomes input from them. However, the decisions reached by the Commission are theirs
alone, freely and independently arrived at, and the Commission accepts full responsibility for its
actions.

5. An independent body is only as good as its component parts. Tonga has three commissioners
the first with a background in physics and mathematics, the second a practicing lawyer, and the
third holds M.B.A. and B. Sc. Degrees. The Commission also employ as Accountant as
Financial Controller and Regulatory Auditor; a technical team of two with extensive practical
knowledge of electricity; and an experienced Administrator who also acts as Chief Licensing
Officer and Secretary to the Commission. The Chief Executive has been involved with
economic regulation of the energy sector for some 13 years, and was from 2003-2011 also the
Chairman of the Commission.

BASIC DATA

6. Before looking to the functions of the Commission it might be helpful to consider some basic
information about Tongas electricity sector : -

The average Tongan family spends less than 100 Paanga/month
6
on electricity;
Tongas electricity provider, Tonga Power Limited, has some 20,516 Customers of
whom some 80% (16,315) are Domestic and 20% Commercial
7
(4,201);
kWh Billed to customers in 2013 amounted to 43,383,804 kWh (after deducting
Parasitic and Line Losses totaling 13% in 2013, and decreasing);
Future Demand Growth until 2022 is moderately estimated as + 0.25% per annum;
The average monthly usage of the average Tongan domestic customer would not
exceed 50 kWh;
For reasons of geography Tonga has to operate four separate Island Grids;
Total Installed Capacity is 19MW (including one 2.8 MW genset on line only this
month);
Of that Capacity 1.4MW is Solar. A further 1.5MW of Solar will be in use by early
2015; and
The Distribution Grid comprises some 301km of High Voltage Lines and some
623km of Low Voltage Lines.

6
At current rates of exchange 1.87 Tongan Paanga = 1 United States Dollar.
7
Commercial in this context includes such as Industry, Offices, Government Buildings, Schools, Churches.
Page 3 of 6

FUNCTIONS

7. In an Appendix to this paper I have set forth the terms of the law which prescribe the
Functions
8
and Powers
9
of the Commission. For a better understanding of what the
Commission does perhaps I should explain that as well as being the Economic Regulator of the
electricity sector, the Commission is heavily involved in ensuring that electrical hazards are
avoided. This is does by for example : -

licensing electricians;
requiring electricians to pass Theory and Practical examination papers set by the
Commission
10
unless they are already registered as an electrician in overseas
jurisdictions, such as New Zealand, Australia, where rigourous professional entry
requirements are in force.
inspecting all electrical works before power is connected to premises where such
works have been undertaken;
disciplining electricians whose work is found to be unsafe or who fail to adhere to
the Commissions rules for the conduct of electrical works; and
reporting for prosecution illegal electrical works by unlicensed personnel.
11

In other countries this work may be done by Local Authorities or Government. In Tonga there
are no local authorities. The emphasis on electrical safety makes the Commission the perfect
home for independent oversight of these matters.

8. The Economic Regulation aspects of the Commissions activities in large measure are based
upon an Electricity Concession Contract which came into force in July 2008. There is a
separate Conference Session on the Administration of Concession Contracts but there are
some general observations which it is appropriate to make in this paper.

9. The Act already referred to prohibits anyone generating, distributing or supplying electricity
except under the authority of and in accordance with the provisions of a Concession Contract.
12

10. The Commission are entitled to enter into such a Concession Contract with an energy
provider.
13
However in respect of the first Concession Contract of July 2008 the Minister of
Finance was authorised to (and did) direct the Commission to enter into that Contract.
14
This
the Commission had to do as it was a legal requirement, although they did so with the utmost
reluctance as there had been no prior consultation whatsoever with them about its content.

8
Section 4
9
Section 5
10
Based on the exams required to practice as an electrician in New Zealand
11
Thus late in 2013 there was a successful prosecution for Manslaughter against an unlicensed person whose
unsafe electrical works had led to another persons death through electrocution.
12
Section 19
13
Section 20(1)
14
Section 20(3)
Page 4 of 6

11. The experience of the last six years has uncovered many defects (all remedial) in that
Concession Contract which will require to be addressed at the Reset process now beginning
and due for completion by June 2015. Indeed a fair number of these defects were evident to
the Commissioners as long ago as July 2008!

12. All this can be explained when it is understood that the present Concession Contract was
prepared in 2006 as a draft regulatory instrument to persuade a New Zealand company to
acquire Tongas then electricity provider. Due to certain civil disturbances in Tonga in 2006 the
New Zealand company withdrew its bid and Government itself then decided to acquire the
electricity assets of the previous operator and incorporated them into a wholly owned public
enterprise. But the previously drafted Concession Contract remained!

13. In the Commissions opinion such Contracts should be driven by the need for sensible
Regulatory oversight; incorporating reasonable service standards; and adopting a robust tariff
model. Although in many respects the 2008 Contract did that there are some key defects (in
the Commissions opinion) one of which has resulted in a higher tariff than would have been
the case had the Commission been the guiding light in preparing this regulatory instrument.

14. We are however reasonably hopeful that the new Concession Contract which emerges from
the 2014-2015 Reset will resolve amicably the issues we have referred to. The Reset process
itself requires dialogue between the Commission and other interested parties before any final
decisions are made. Unlike 2008 when the Commission was dictated to, whatever results from
the Reset will be the product of an open review and frank discussion.

FUNDING

15. The Electricity Commission is funded by Regulatory Fees paid to them by the electricity
provider, in accordance with the provisions of the Concession Contract. That is what the law
requires.
15
These arrangements only enhance the Regulators independence. Difficulties
can arise where a Regulator is funded by Government from public funds voted by Parliament,
e.g. the Regulator may not receive the funds they consider necessary to carry out their
functions effectively and efficiently: or, instead of controlling their own finances, they have to
comply with the same procedures as Ministries and apply by Voucher to Treasury for every
expense they wish to incur and then await their pleasure in processing that Voucher and
releasing the necessary funding.

16. In the period immediately prior to 2003, when the Tonga Electric Power Board was transitioning
from electricity provider to electricity regulator they received a payment of 2 seniti (cents) per
kWh generated by their provider successor. As at todays date all the Electricity Commission
charges is 1.1 seniti per kWh billed to consumers, or less than 1 seniti/kWh based on Gross
Generation. This substantial decrease in their cash requirements is the direct result of
experience operating as a regulator and increased efficiency in outputs.

15
Section 17
Page 5 of 6

EVOLUTION
17. Nothing in life is ever static. Thus it was, as long ago as 2011, that Tonga Government were
advised by the Electricity Commission to consider the evolution of the Commission into a multi-
sector regulator. That option is now being considered seriously. Only electricity in Tonga has
an independent regulator. There are other sectors desperately in need of such assistance
and a multi-sector independent regulatory commission would be the most cost-effective means
of achieving this ideal.
16

Appendix / . . . . . . . . .

19
th
March 2014

16
This paper was prepared by the Rt. Hon. Lord Dalgety Q.C., Chief Executive of the Electricity Commission of
the Kingdom of Tonga for the March 2014 Conference organised by ADB and SCP on Effective and Sustainable
Regulation of Power and Water Services in the Pacific and the Caribbean.
Page 6 of 6

APPENDIX

Functions and Powers of the Electricity Commission

4` Functions

The Commission shall have the following functions, to

(a) Take enforcement actions under this Act or any regulations made under this Act;
(b) Carry out all activities required by the terms of a concession contract;
(c) Carry out all activities necessary or desirable for the licensing of electricians;
(d) Develop and recommend regulations establishing standards for electrical safety;
(e) Develop and recommend regulations establishing powers for a concessionaire (in
addition to those set out in the concession contract) for the purpose of performing any
obligation under a concession contract or undertaking any work pursuant to a
concession contract;
(f) Develop and recommend regulations establishing requirements for major electrical
work, including maintenance or protection of submarine cables;
(g) Do all things necessary for the performance of its functions and the exercise of its
powers under this Act or otherwise as it is entitled to do under, or as required by, this
Act.
5 Powers
(1) Subject to subsection (2), the Commission shall have the following powers, to

(a) take enforcement action for any breach of a concession contract or permit;
(b) enforce its rights under a concession contract;
(c) do all things necessary to enforce any regulations made under this Act;
(d) do all things necessary to enforce any offences provided for in this Act; and
(e) do all the things it is entitled to do under this Act, any concession contract and
any regulations made under section 21.
(2) The Commission shall not exercise any power or take any action where to do so would
be inconsistent with the terms of a concession contract.
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6

2
2
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0
4
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2
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4

2

T
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(
3
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11
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12

2
2
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3

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13

I
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2
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4/23/14
1
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Land Mass - 616 square kllomeLers
Cu er CaplLa - uS$ 3,344.20
unemploymenL 8aLe - 23
lnauon - 1.4
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vulnerable 8ural Supply SysLems
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PoLels - 96
CovernmenL - 1,718
CLher (boaLs) - 30
4/23/14
2
9$#*5 :*6#-5 2*34&$0-+
LsLabllshed for Lhe purpose of
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Make recommendauons Lo Lhe MlnlsLer for
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LsLabllsh and approve Larl schemes
romoLe economy and emclency ln Lhe
dellvery of any servlces
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nWSC comprlses
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4/23/14
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4/23/14
4
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regulaLory
reglme for Lhe
LlecLrlclLy
secLor wlll also
be necessary
!&*6#5'6'#7 :*6#-5 2*34&$0-+
2*>'*A X-$58
LSA sLaLes LhaL Lhere shall be a 8evlew 8oard
whlch shall conslsL of 3 persons
1he members of Lhe 8evlew 8oard shall be
appolnLed as follows:
(a) Lhe rsL member by Lhe MlnlsLer,
(b) Lhe second member by Lhe Company, and
(c) Lhe Lhlrd member, who shall be Lhe chalrperson,
as agreed on by Lhe members appolnLed
2-&* -. 2*>'*A X-$58
MonlLor Lhe Company's performance agalnsL
muLually agreed LargeLs and benchmarklng
sLandards
8evlew Lhe company's developmenL plans,
expanslon programmes, and fuel cosL emclency
MuLually agree and seL Lechnlcal, operauonal,
emclency sLandards and benchmarks for a Lhree
year perlod for Lhe company Lo meeL ln annual
phases
8evlew and reporL on Lhe emclency of asseL
uullzauon and opumlzauon, and Lhe
approprlaLeness and lmpllcauons of Lhe raLe
sLrucLures
4/23/14
3
2$#* 2*>'*A
noL more Lhan once aL Lhe end of
every 3 years, revlew Lhe baslc energy
raLes LhaL are calculaLed ln accordance
wlLh Lhe LlecLrlclLy Supply AcL and
charged by Lhe Company
IA- B455*+# T+'0$0>*"
LsLabllshmenL of nauonal uullues 8egulaLory
Commlsslon (nu8C)
lormauon of LasLern Carlbbean Lnergy
8egulaLory AuLhorlLy (LCL8A)
1he nauonal uullues 8egulaLory
Commlsslon 8lll allows for llberallzed
and non-dlscrlmlnaLory enLry lnLo Lhe
uullues secLor and enables a robusL
compeuuve envlronmenL ln whlch
Lhere ls falrness, Lransparency and
accounLablllLy on Lhe parL of Lhe
regulaLors
:-)* H4+60-+" -. #(*
/*A B-))'""'-+
Advlse Lhe MlnlsLer on Lhe formauon of
nauonal pollcy on uullues mauers,
Lnsure Lhe emclenL, harmonlzed and
economlc developmenL of Lhe uullues secLor,
Lnsure Lhe economlc regulauon of Lhe uullues
secLor,
8ecelve and conslder and deLermlne
appllcauons for llcenses Lo provlde uullLy
supply servlces,
8esponslble for Lhe
Lechnlcal regulauon of
uullLy supply servlces
and Lhe semng of
Lechnlcal sLandards,
LsLabllsh, approve,
monlLor and revlew
Larl schemes and
Larls,
MonlLor and
ensure servlce
llcensees comply
wlLh Lhe
condluons
auached Lo Lhelr
llcenses,
4/23/14
6
Lnsure Lhe
proLecuon of Lhe
lnLeresL of
consumers ln relauon
Lo Lhe supply of Lhe
uullLy servlce,
romoLe compeuuon
and monlLor anu-
compeuuve pracuces
ln Lhe uullues secLor.
/*K# :#*C"
llnallze nauonal uullues 8egulaLory Commlsslon
8lll followlng lnpuLs from SLakeholders aL recenL
nauonal ConsulLauon
nu8C 8lll enacLed ln arllamenL (!ul - Aug 2014)
Amend WaLer and Sewerage AcL and LlecLrlclLy
Supply AcL Lo repeal provlslons relaLed Lo nWSC
and 8evlew 8oard and make new provlslons for
Lhe role, funcuons and power of Lhe nu8C (!ul -
Aug 2014)
ulssolve nWSC and appolnL new Commlssloners
Lo nu8C
!KC*6#*8 =4#6-)*"
ubllc condence ln Larl-semng process,
roper framework for lnvesLmenL ln Lhe
elecLrlclLy secLor,
Commlsslonlng of renewable energy pro[ecLs,
CreaLer emclency ln Lhe elecLrlclLy secLor,
CpporLunlues for economles of scale by
merglng Lhe operauons of Lhe Lwo uullLy
secLor regulaLors, and
CosL savlngs Lo consumers and lower prlce
volaullLy from reduced rellance on dlesel.
!$"#*5+ B$5'%%*$+ !+*537 2*34&$#-57
E4#(-5'#7 D!B!2EF
9($# '" !B!2E
ConcepL of a 8eglonal Lnergy 8egulaLor
endorsed by CLCS Peads of CovernmenL ln
2007
Collaborauon among CovernmenLs of SalnL
Lucla, Crenada, Lhe World 8ank and Lhe CLCS
SecreLarlaL
Crlglnally was supposed Lo cosL consumers ln
Lhe slx CLCS Member SLaLes 0.22 uS cenLs per
kWh dellvered
4/23/14
7
?$5$&&*&" #- A($#
#--[ C&$6* A(*+
I*&*6-))4+'6$0-+"
:*6#-5 A$"
;'%*5$&'\*8
X4# #(*5* $5* V'J*5*+6*"
1he reglonal elecLrlclLy landscape ls dlerenL and
more varlegaLed Lhan Lelecommunlcauons was
prlor Lo llberallzauon
nauonal elecLrlc uullLy companles have dlerenL
ownershlp sLrucLures - some are prlvaLely owned
companles Lraded on Lhe 8CSM, some are SLaLe-
owned enuues
unllke Lhe slLuauon wlLh 1elecoms, Lhere ls noL
unlversal supporL for a reglonal energy regulaLor
So, a soluuon has Lo be found LhaL meeLs Lhe
dlverse needs of Lhe counLrles
B-)C$0%'&'#7 %*#A**+ /12B $+8 !B!2E
LCL8A ls essenual for Lhe creauon of a
reglonal elecLrlclLy secLor, glven Lhe goal of
CLCS Member SLaLes Lo exporL excess
renewable energy Lo hlgh demand counLrles
LCL8A wlll have Lo lnLerface wlLh nauonal
regulaLors (exlsung - uomlnlca, and proposed
- SalnL Lucla and oLhers) Lo ensure
complemenLarlLy and congruence of eorLs
22/04/2014
1
THE AUTONOMOUS
REGULATOR MODEL
MULTI-SECTOR REGULATORS
(A PARTIAL SOLUTION TO THE
CAPACITY CHALLENGE)

Peggy E. Griffith
Fair Trading Commission, Barbados
Nadi, Fiji, March 2014
MULTI-SECTOR REGULATION
REGULATING POWER AND
TELECOMMUNICATIONS
AGENDA

Barbados Context
Fair Trading Commission
Challenges
Successes
Lessons Learned

2
BARBADOS CONTEXT
Small island nation
166 square miles
Population 270,000 persons
Main exports - Tourism, International
Financial Services, Manufacturing and
Agriculture
3
FAIR TRADING COMMISSION
Multi-Function Organisation
Multi-Sector Regulator
Established in 2001 - core functions
- Utility Regulation
- Fair Competition
- Consumer Protection
Staff complement 32 persons
4
UTILITY REGULATION
Commission Regulates:
- The Barbados Light & Power Co. Ltd.
- Cable & Wireless (Barbados) Ltd.
(some services)
Sets Standards of Service
Sets tariffs
Handles billing and standards of
service complaints
5
FAIR COMPETITON
Promote and encourage fair competition
Investigate allegations of anti-competitive
conduct, abuse of a dominant position
Conduct research in areas of commercial
activity with potential to impact
competition
Cooperate with the CARICOM
Competition Commission on cross-border
investigations

6
22/04/2014
2
CONSUMER PROTECTION
Unfair contract terms in Standard
Form Contracts
Unfair trading practices
Misleading advertisements
Consumer complaints
Advocacy schools and businesses
7
NON-EXECUTIVE STAFF
Chairman and 10 Commissioners
Administrative Meetings every two months
Panel of Commissioners
- Telecommunications
- Electricity
- Fair Competition/Consumer Protection
- Decisions, Findings and Determinations
by the full Commission Meeting

8
Decisions final and made on
behalf of the Commission
FULL-TIME STAFF
Three Divisions
- Each supervised by a Director
- 3 Technical Staff Members
- 1 Administrative Support Officer
Legal Division
- 2 Lawyers
- 1 Research Administrative Assistant
9
FULL-TIME (CONTD)
CEO and Directors
- Appointed on contract and can be reappointed
Director
- Chief Technical Advisor to respective Panel
Staff:
- Finance
- Human Resources
- Administration
Provide support to all divisions
10
CAPACITY ISSUES
Use of contracted highly technical
expertise
Too expensive to retain on staff
Not required on constant basis
Most recent contracts:
- PPA Energy Fuel clause; IRP
- Frontier Economics Interconnection; Price Cap
- NERA Rate hearing e.g. tariff-setting, ROR
- Sepulveda Consulting Price Cap
- Colleago Consulting Separated Accounts EAM
11
CHALLENGES
Initially building credibility
Ministry sets policy and regulates some
aspects of sectors
Legislative framework
- amendments to legislation proposed tardy
process
Managing expectations
- general public and other stakeholders
Rate hearing process expensive and
time-consuming
Limited response to consultation papers
Information asymmetry

12
22/04/2014
3
13
SUCCESSES
Move from ROR to Price Cap
- Liberalisation of telecommunications sector
Credibility, legitimacy
- other divisions have helped in this process
Refining procedures
- URA procedural rules
- Interconnection dispute resolution

SUCCESSES (CONTD)
14
Transparent rate review hearing process
Reasoned decisions and findings
- accepted
Review mechanism
- involves all parties
Utilising networks
- e.g. OOCUR; ITU
Media relations

SOME DECISIONS
Electricity:
- Fuel Clause Adjustment (FCA) (2013-10-11)

- Renewable Energy Rider (2013-08-09)

- Costs Decision arising from Rate Review Decision
(2010-11-17)

- BL&P Rate Review (2010-01-25)

- Standards of Service Decision (2010-01-22)

- Approval of the Depreciation Policy of
the BL&P (2009-02-25)
15 16
SOME DECISIONS (CONTD)
Telecommunications:

- Price Cap Plan 2012 (2012-03-29)

- Long Run Incremental Cost (LRIC) Guidelines (2011-12-13)

- Consolidated Reference Interconnection Offer - (2010-02-22)

- Standards of Service (2010-02-22)

- Application for Rate Adjustment and the Introduction of
Usage Based/Flat Rate (2004-07-20)

- Represcription of Useful Lives of Assets and
Plant in Service (2002-10-25)

17
LESSONS LEARNED
Public engagement and understanding of
important issues
- Public consultations
- Annual lecture (some relevant topics)
- Newspaper articles
- Other outreach
- Website
Collaboration and international learning helpful
- e.g. PURC, conferences
Periodic formal review of legislation
- Reassessment and refinement important
Continuous aggressive advocacy programme
required - can never be enough
18
LESSONS LEARNED (CONTD)
Importance of participating in networks,
alliances and establishing links to
regulatory bodies
Early training of staff is important
Prioritise
focus on significant issues
Sense of urgency in coming to decisions
Make findings public
- transparency
Reasoned Analysis
- important

22/04/2014
4
19

Thank
You!
20
Good Hope
Green Hill
St. Michael
Barbados, W.I.
BB12003

Tel: (246) 424-0260 Fax: (246) 424-0300
E-mail: info@ftc.gov.bb

Visit our website: www.ftc.gov.bb
22/04/2014
1

Sustainable Regulation of Energy and Water Services
The multi-sector regulator
Regulating WATER, POWER AND TELECOMS
in Jamaica

1 Presenter: Hopeton P. Heron
CONTENT

Link between Needs, Research,
Policy, Legislation and Regulation

Policy, Legislation & Regulations in
Jamaicas:-

Water Sector
Electricity sector
Telecommunications

25/03/2014 Presenter: Hopeton P. Heron 2
Roadmap to Regulations
Needs
People need affordable water, energy,
electricity, telecommunications, transportation.
RESEARCH
Research informs options available and
advises optimal use of resources
POLICY
Policy, guided by research and analysis,
sets the framework for development
Roadmap to Regulations contd
Legislation
Legislation is informed by Policy
Examples ofLegislation : Electric lighting
Act.; Telecommunications Act etc.; OUR Act
Regulations
Rule Making
Licensing
Tariff Setting
Quality of Service

Rules
Directives
Determination Notices
Directives
Role of the Regulator
To Protect Public /Stakeholders
Interest
To ensure that the Investor:
can stay in Business
deliver quality service and is
supported by adequate tariff.
To ensure that Governments policy
and legislation is being upheld.
While being independent and
transparent
OFFICE OF UTILITIES REGULATION
JAMAICA
REGULATES:-
WATER AND SEWAGE
ELECTRICITY
TELECOMMUNICATION
TRANSPORTATION BY ROAD, RAIL
AND FERRY (Economic Regulations only)
22/04/2014
2
Benefits of Multi-Sector Regulation
Technologies have emerged /merged seamlessly

Todays customer is about Push- button
Impatience for reliable service across utilities
Decisions are made faster since common
economic parameters exists across sectors

Core services such as provision of water or
electricity benefits from Telecommunication
overlay (Control Systems, Monitoring schemes)
BENEFITS OF MULTI SECTOR REGULATOR
Skill sets Required for effective Regulation
Legal
Engineering
Economics
Customer and public interface Professionals
These professionals work across all sectors
General support:-
Administration
Information Technology
WATER SECTOR
POLICY AND LEGISLATION
National Water Commission Act
Water Resources Act
Natural Resources Conservation Act
Office of Utilities Regulation Act
No overarching Legislation to Govern the Sector
A Water Policy, Strategies and Action Plan was
finalized in 2002
Provides for entrants of Small providers
Water Sector Industry Structure
.
Water
Resources
Authority
Approves Supply Sources
National
Environment &
Planning Agency
&
Min. of Health
Regulates Standards, Quality and
minimize Environmental impact
National Water Commission
&
Small Water and Sewage providers
Develop systems and
supplies the Customers
Office of
Utilities
Regulation
Economic,
Efficiency &
Quality of Service
ELECTRICITY SECTOR
Policy and Legislation
The Electric Lighting Act (outdated and being
Replaced)
Electricity Policy
OUR Act
Licences to JPS (Exclusive for Transmission and
Distribution)
Licences to Independent Power Producers (IPPs)
to Generate and sell to the Grid
ELECTRICITY SECTOR
INDUSTRY STRUCTURE
.
JPS Generation
IPP
IPP
JPS Transmission and Distribution
IPP
consumers
Economic,
Efficiency,
Quality of
Service
Regulation
OUR
22/04/2014
3
Quality of Service
Overall Standards
Notices for Outages
Reliability of Service
Meter Reading and Billing Punctuality

Guaranteed Standards
Access to Supply
Emergency response
Billing
Emergency response
Meter
Disconnection
Reconnection
OVERALL STANDARDS
OVERALL STANDARDS CONTD
Efficiency
Efficiency = output < 1.0
input
-----------------------------------------------------------------
Electricity
Heat Rate
The conversion of the content of the fuel to electricity
Losses
Technical losses due to heating loss & Non- Technical
Water
Non Revenue Water
Cost / Revenue Relationship


O & M costs
TAXES
PROFITS
FUEL
Debt Servicing
TARIFF

Rate of Return
Cost recovery + Targeted ROR
{used for smaller water companies}
Price Cap {non-Fuel Tariff}
T1 = T0 + X + Q + Z
Where X efficiency gains or loss
Q - quality of service index
z - costs outside of management control
22/04/2014
4

The Rate Case Process

1. Determining Rate Base for Test Year
Are all the assets used & useful?
Test year: current or projected future test year
2. Verify Income Statement for Test Year
Are all expenses reasonable & justified
3. Determine Appropriate Rate of Return
Method used to determine appropriate rate of
return (Risk free rate + Country& Industry premium)
Weighted Average Cost of Capital (WACC) ie. {cost of Debt
+
cost of equity}

4. Calculate Revenue Requirement
5. Establish Rate Design to Meet Revenue Requirement
How should the rate increase (decrease) be distributed
amongst consumers?
Price-Cap Technique

PERFORMANCE BASED RATE-MAKING MECHANISM(PBRM)
Private operator can increase its profits by
reducing its costs and increasing its efficiency
Prices are set in relation to movements of a
general retail price index (RPI) minus an
efficiency factor (X). RPI-X
Price indicator must be readily available on at
least monthly or quarterly bases.
TELECOMMNCATION
LEGISLATION
Telecommunications Act
OUR Act
For Economic, Quality of Service Regulations
Other entities
Spectrum Management
Broadcasting Commission
Fair Trading Commission{ for competition issues}
Single Regulator Initiative
There are initiatives to Merge
SPECTRUM MANAGEMENT
BROADCASTING COMMISSION
OUR {ECONOMIC REGULATIONS}
To form a single ICT Regulator.
The Jury is still out on how this will
turn out
.
15/7/2010
Presenter: Hopeton P. Heron

23
.
22/04/2014
1
Regulating Water and Power in a
Multi-Sector Regulatory Agency

By

Glenn A. Khan
Deputy Executive Director
Regulated Industries
Commission
Trinidad and Tobago

Presented at the Pacific and Caribbean
Conference on Effective and Sustainable
Regulation of Power and Water Services
25 27 March 2014
Nadi
Fiji
1
INTRODUCTION
Background Information on the establishment of
the RIC

The Service Providers it regulates

Financing of Agency

Commissioners and Staff complement

Regulation of Electric Utility

Regulation of Water Company

2
BACKGROUND
The Regulated Industries Commission was
established by an Act of Parliament, # 26 of 1998.

First Board of Commissioners appointed, April,
2001.

Appointment of Staff completed by January, 2003

Total staff complement - 34 persons

3
SERVICE PROVIDERS
Trinidad and Tobago Electricity Commission Transmission
and Distribution utility (Monopoly)
The water and Sewerage Authority water and waste water
provider (Monopoly)
The Power Generation Company of Trinidad and Tobago
(IPP- jointly owned by T&TEC and Maru Energy Trinidad,
llc.) subsidiary of Marubeni Corporation of Japan
capacity 1386MW
Trinity Power Limited (IPP) privately owned capacity
225 MW
Trinidad Generation Unlimited (IPP State-0wned) -
capacity 720 MW at full capacity, currently operating at
225 MW.
All IPPs operate under Power Purchase Agreements with
the Government of Trinidad and Tobago.
4
FINANCING OF THE RIC
Initially with some Government support

After start up fees levied on all service providers

RIC budget and planned activities must be
approved by the Minister of Public Utilities
before fees are collected 0.1% of regulated
revenues

5
COMMISSIONERS AND STAFF
A maximum of seven Commissioners (but no less
than five) who must be appointed by the
Countrys President on the advice of the Minister

Commissioners must be selected from persons
capable in the following disciplines; Engineering,
law, Economics, Business, Finance, Human
Resource Management or Public Administration

Professional staff possessing similar qualifications
are appointed by the Board ( 34 persons)

6
22/04/2014
2
REGULATION OF ELECTRIC UTILITY
Sector restructured in 1994 - unbundling of generation from
transmission and distribution
The RIC effectively regulates only the Transmission and
distribution Utility (438,272 customers)
Last price review -Prior to the introduction of the RIC 1992
Partial review for Industrial customers in 1998
Only complaints resolution
After the RIC; First Price Review 2006 2011 using RPI-X
(or incentive regulation)
Quality of Service Standards introduced in 2004 (guaranteed
and overall standards) and revised in 2009
Continuation of complaints resolution
What have the challenges been?

7
REGULATION OF THE WATER SECTOR
WASA has been heavily subsidized by the State
Has never achieved a surplus (387,856 customers)
Between 1995 -2000 subject to management contract (Seven
Trent)
Desalination plant operationalised (first of its kind in the
Country) -30mgd
With change of Government contract canceled
No Price Review since 1993
Revenue covers only about 40% of operational costs
Quality of Service Standards completed but not instituted
Application for a Rate Review made in 2007 but
Determination outstanding
Second desalination plant launched 2013(5mgd)
What have the challenges been?
8

The End
9
23/04/2014
1
The Autonomous Regulator Model
Multi-sector Regulators
(Case of small Island regulation)
Pacific and Caribbean Regulatory Conference
March 2014

Hasso BHATIA, PhD
CEO and Commissioner URA Vanuatu

What is independent regulation?
Specific market powers are vested with a
statutory body separate to government
Pricing
Quality standards
Consumer protection
Regulatory decisions are made outside of
political or government approval
Government has policymaking role
Independent regulation is useful when
intervention is required for a fair market outcome
Fair market outcome:
Prices reflect fair cost of service (e.g. no heavy
subsidies, no excessive profits)
Quality standards maintained
Customers treated fairly
Tariffs cover all unsubsidized costs of operator
This is unlikely when there is:
Restricted competition (monopoly/oligopoly)
Political interference
Essential public good or service
Cost of regulation can be high for small
markets
Effective regulation requires specific expertise
Expertise often not available within a small
market, so must be drawn from outside
Diverse regulatory functions must be addressed
But:
Multi-sector regulation creates some economies
of scale
Regulatory office provides independent focal
point for external expertise, with emphasis on
long-term consumer benefit

Small does not mean simple or easy
Most of the same market issues arise in a small
market as in a large one
Plus a lot of other issues specific to small markets
Level of sophistication and complexity of issues no
lesser, warrants high technical knowledge and
discussion
Difference is that government and regulatory agencies
have only a fraction of the resource needed
Therefore, any resource that does exist gets over-used
Also, all issues arise at once: to-do list starts off long,
prioritization a luxury but not always available
The political context
instability in the political process
social environment affects the quality and
commitment of staff
weak institutional environment
Entrenched power companies can frustrate
regulatory efforts, specially State-owned( case:
Azerbaijan)
Design of regulatory institutions is impacted by
the political and economical environment ( seize
the moment; Moldova in 1998)

23/04/2014
2
Establishing independent regulation is a
challenging process
First battles. Fight to keep the
advantage. Easier to stop the
game than play the game.
Win little victories. Show
value to all sides. Seen as
part of the solution
Cement progress. Create
vision for the future, sell
it in, and be patient to
achieve it
Time

Novelty. Good intentions
but little understanding.
Status quo still in effect.
No respect.
3 phases of independent agency development
Independent
structure is becoming
established
Independence relies
on the individual
Situation:
Incumbent vested
interests are very
strong
Legal framework new
and untested
Doing everything for
the first time
Situation:
Challenges to the
institution, rather
than its decisions
Adjustments required
to the framework
Local team beginning
to form
Independence
maintained through
structure, framework
and processes; In the
end, regulation as good
as the regulator
Situation:
Challenges to decisions,
but not to the
institution
Stable framework and
robust transparent
processes
Local team and
leadership
1: Infancy 2: Transition 3: Maturity
Basic Vanuatu economic facts
Archipelago of 83 islands, 65
inhabited, 17 islands with regular
internal flight connections
Total population 234,000
25-30% urban population
GDP US$ 828 million
Per capita US$4,800 (164
th
in world)

Electricity
Private electricity supply by UNELCO in Port Vila since 1930s
4 electricity networks supplied by private operators
Diesel-dominated generation mix
Diesel 75%
Copra oil 9%
Wind 8%
Hydro 7%
Overall the service reliability is good, but prices are high
Over 70% of population has no access to mains electricity

Water
Good quality supply in Port Vila, concession contract
with UNELCO; prices reasonable and stable
Other urban centers supplied by Govt. through Public
Works Department
Many smaller providers for mini-grids, subdivisions etc.
PWD network is aging (some dating from WWII) and
quality is variable

The URA
The Utilities Regulatory Authority is the economic regulator of
electricity and water sectors in Vanuatu
Established by Utilities Regulatory Authority Act of 2007
URA has the power to set maximum prices, safety and
reliability standards; assist to resolve complaints and disputes
Also plays advisory role to Government on issues related to
electricity and water
Relatively independent: clear mandate, little day to day
interference, Comm. selection open and transparent; staff
hiring , salaries, set by the agency; not subject to civil service;
few govt. imposed regulations

23/04/2014
3
URA Mission and Goals
Mission Statement:
To enhance quality of life and business growth in Vanuatu by ensuring reliable, customer
friendly electric and water services at reasonable prices, available to all who demand it.
Goals:
Enhance rapid access to power and water services, especially in outlying and rural
communities
Contain prices to affordable levels thru efficiencies in operations, fuel mix, renewable,
IPPs, smart grid, smart metering, competition etc.
Create incentive mechanism thru pricing and public education to promote efficient use of
power and water resources
Ensure safe and reliable services thru developing standards of safety, performance
monitoring and enforcement
Develop mechanism and tools to enhance consumer protection and consumer care and
improved relationships between service providers and consuming public
Strengthen organization and skills thru training and professional development
Make electricity a vehicle for growth in Vanuatu by offering businesses competitive prices
in the region

External support is very useful in establishing
independence
Successful end-state is:
Strong Local team and leadership
Well defined framework that withstands legal challenge
Robust and transparent decision-making processes
Decisions well reasoned and articulated
Acceptance of agency decisions by majority of stakeholders
Presently inadequate in-country resources that can build this by
themselves
Lack of expertise
Lack of funds
Deference to established power base and vested interests
External support is critical through the early stages of institutional
establishment and development

Relationships with Stakeholders
Relationship with regulated utilities critical factor
Doesn't always has to be adversarial and confrontational
In fact working together often brings better results for
effective regulation
Avoid throwing surprises at each other
Regulation can be firm and fair
Understand utility viewpoint: must run the system, make
adequate profit; plan for long term

URA- the Initial years
Concession contracts: pre-dating URA
overlapping provisions; some rate making parameters locked-in;
unclear appellate process; incumbent utilities new to
independent regulatory concept.
Therefore:

- First major rate review did not go well, led to arbitration
- Generally relations with utilities strained
- Information and data requests ignored
- Resistance on many issues with stakeholders: e.g PPM; IPPs
- No consumer support base
- In conflict with Govt. policies
- As a result attempts to undermine the agency from all sides
- URA under siege
- Inadequate in-house skills and professional capacity to meet challenges

Access to information as limiting factor

Limited accounting data to set fair tariffs
Lack of accounting standards and reporting
requirements
Lack of transparency
Tariffs end up being more negotiated than
calculated

Recent trend
Improved relationship with Govt., utilities
Receiving cooperation from operators
Better mutual understanding and dialogue
Developed mutually agreed regulatory
agenda(stipulate tariff issues; consumer
protection, new connection rules, DR, safety
rules, IPP, URA funding, etc.)
Improved support from State and local gov.

23/04/2014
4
Current and recent activities
Strengthen org. skills and professional dev.; hired local staff
Re-examined policies and practices; set priorities
Just completed Luganville elec. tariffs review with cooperation of
the VUI(shared hydro benefits, performance incentives, Fund to
enhance accessibility, etc.)
First formal tariff order; voted 2-0
Drafted and discussing feed-in and net-metering scheme with
Unelco
Drafting IPP/PPA policy and rules
Drafting Consumers bill of rights, safety standards, complaint and
DR procedures
Have established regulatory reporting requirements
Introduced case docketing system
Streamlined website and consumer access to URA information

Recent. contd
PWD water tariff order issued - conditional upon management
performance, issued Show-cause
Working with PWD to improve quality and service reliability
( excessive leakage, poor collections, questionable water quality,
inadequate budgets for maintenance and upgrades). Have
suggested outsourcing billing system, amnesty for defaulters, long-
term measures.
Active intervention to mitigate woes of local municipalities lacking
capacity and budgets
Street Lighting in Luganvile and Port Vila, transferred to Utility -
supported by VUI and Unelco
Facilitate negotiations for bridge rehab
Sometime necessary to intervene in utility management
prerogatives

Challenges going forward
Build organization and local capacity: finding qualified
people real challenge
Role of expat TAs essential at this stage
Independent funding source, financial sustainability. Third
party donor assistance still needed, despite generous
support over the years
Establish clear rules and procedures for tariff review,
methodology, tariff design, etc.
Audits of selected accounts of utilities to validate tariff
determinations
Monitoring and enforcement: safety, reliability
Complaint and dispute resolution procedures and
implementation
Contd
Creative ways to enhance accessibility consistent with NERM
goals( work with DOE, utilities, others)
Encourage to contain tariff levels thru efficiencies, loss
management, optimal gen. mix, greater network utilization
Develop policy and framework on IPP/model PPA
Assess and achieve renewable readiness and targets: feed-in
tariff scheme, outreach to solar suppliers, financing mechanism
Ultimate aim: Electricity as vehicle of economic growth,
enhanced life-style thru expanded customer base, usage,
business expansion
Implement regulatory framework for liquids energy sector: LPG,
diesel, PP, as proposed under NERM
Make URA a premiere agency for economic regulation in
Vanuatu

1
Multi-Sector Regulation in Samoa
PRE S E NTATI ON TO THE PAC I F I C AND C ARI BBE AN
C ONF E RE NC E ON E F F E C TI VE AND S US TAI NABL E RE GUL ATI ON
OF POWE R AND WATE R S E RVI C E S
NADI
FI J I
25
TH
MARCH 2014
Office of the Regulator Multi sector frame work
New Telecoms Act passed
in 2005
Office of the Regulator
established in 2007 to
Regulate the
telecommunications sector
The Broadcasting, Postal
and Electricity added in
2010
12 member staff including
5 support staff
Now developing the Multi-
Sector legislation
Report to Cabinet through
two Ministers (1 for ICT
and 1 for Electricity)
No Board or Commission
Introduction
2
Contents

Approach
Rationale
Challenges
Sector specific issues
Experience
Recommendations

3
Approach

Office of the Regulator has had additional responsibilities
added after its inception
Legislation makes for an independent Regulator for the 4
sectors
Multi-sector legislation being developed after the fact
Staff had to be hired, trained and equipped to assist in the
regulation of the sector
Team of consultants hired to advise on best approach

4
Rationale

Simply put- a Regulator was needed and OOTR existed
OOTR had proven track record in Telecoms regulation and
would be a prime candidate for this new sector regulation
OOTR was self financing and generally collected more
monies than required for their financing
Recommendations were for an independent Regulator
Would be no further burden to tax payers
5
Challenges
Many!!!
Governance structure two Ministers to report to and brief
No Utility Legislation and as such single entity have to deal
with 4 different Acts
Some of the Acts differ in respect of the administrative
procedures for staffing
Contract staff hired through the Public service commission
and governed by their processes
Currently ICT sectors pay for their own regulation but no
fees as yet for electricity regulation

6
2
Sector specific issue
Limitation of staff in the OOTR for electricity
Several bodies with responsibility in the sector including
an Energy body to deal with high level Energy policy
issues
Ministry of Finance is the administrative body for the Act
Act exists but to date no regulations, rules and
documented processes
Tariff review request had to be done
Licences, Regulations, rules and processes had to be
developed concurrently with Policies

7
Experience
A detailed case study on Samoa will be revealing, I would
welcome an early review of the study being done by ADB.
Lessons that we can share are:
Capacities required for electricity regulation have
similarities and differences to other sector
Capacity building and institutional strengthening must be a
prerequisite for the establishment of the Regulator
Regulatory framework should be in place prior to
establishing Regulator outlining clarity of roles
Regulatory fees should be determined before starting
regulation
8
Conclusions
Small Island States have limited human resource capacities
and would benefit from the multi-sector approach
The different sectors have significantly different challenges
for regulation and special attention has to be paid to
capacity building
Pacific Countries need to be wary of adopting big country
approaches
Countries need to be wary that for each sector the donor
priorities may not necessarily match how countries see the
development of the sector
9
Recommendations

For Small Island States a multi-sector approach to
regulation is recommended
There is no one size fits all and countries need to decide on
its priorities and required outputs and put in place the
legislative approach to facilitate the outcomes.
There is an opportunity for South South cooperation in
developing appropriate frameworks
10
Any questions?
11
Let me know over a drink
later
OFFI CE OF THE REGULATOR
SAMOA

DONNI E DEFREI TAS
REGULATOR
SAMOA
EMAI L DDEFREI TAS @REGULATOR. GOV. WS
WEB S I TE WWW. REGULATOR. GOV. WS

23/04/2014
1
Independent Consumer and Competition Commission (ICCC)

Regulation of Electricity Services in PNG

J ack Timi
Executive Manager-Regulated industries Division
ICCC

- Structural Reforms 2002- ICCC Act was passed by
Parliament and ICCC was established in 2003.

-Electricity and Water utilities (and post, ports, CTP insurance) were declared
for regulation under the ICCC Act.

Organisational indepedence
-ICCC is partly funded by Govt and from licensing fees and reports
administratively to the Minister for Treasury.

-However ICCCs regulatory decisions are independent from Govt. For
example; Telecommunications Competition

ICCC - Organisation Structure
It has a board comprising 1 full time Commissioner/CEO and 2 Associate
Commissioners (1 resident and 1 Non-resident)

It has four main divisions and two support divisions. Out of the four (4) main
Divisions, Regulated Industries Division performs the ICCCs function of
regulating the Electricity Industry in PNG.

In addition to regulating utilities - ICCC is also the Regulator of the Electricity
Industry in PNG

Types of Electricity Undertakers Licence
Generation
Transmission
Distribution
Retail
Electricity Providers
PNG Power Limited ( PPL)- is the only Regulated Entity
Western Power (generation, distribution, retail)
PNG Forest Product (distribution)
Lihir Gold Limited (generation, distribution, retail)

PNG power Limited is the only regulated entity and main electricity
supplier in PNG other providers are based in areas where PPL is not
operating or sell power to PPL under power purchase agreements.

Methods of Regulation
a. Five (5) year Regulatory Contract
b. Building Block Model- is used to estimate the
cost of the businesses and set their prices.
There are 3 Building Blocks
1. Operating costs
2. Recovery of capital costs (Depreciation)
3. Return on capital costs (WACC * RAB)
Revenue Required = 1+2+3
Price Path for the regulatory period
*WACC Weighted Average Cost of Capital (WACC)
*RAB Regulated Asset Base

Building Block Calculation - Calculating the revenue requirement
(Electricity Company Example)
Year 1 Year 2 Year 3
1 Annual Operating Costs 100 100 100
2 Return Of Capital 100 110 120
3 Regulatory Asset base value 1000 1100 1199
4 Return On Capital 100 110 120
5 Revenue Requirement 300 320 340
Annual Power Delivered (kWh) 2000 2000 2000
6 Maximum Average Price (Kina / kWh) 0.15 0.16 0.17
1. Annual Operating costs is all the operating expenditure that ABC power incurs in a year. It excludes any capital costs.
2. Return of Capital is the same as the depreciation on capital assets.
3. Regulatory Asset Base Value is the value of the firms assets. Use the opening value each year.
4. Return on Capital is the WACC times the Regulatory asset base value
5. Revenue Requirement = Annual Operating Costs + Return of Capital + Return on Capital
6. Maximum Average Price = Revenue Requirement divided by Annual Power Delivered
23/04/2014
2
Methods of Regulation
-ICCC exploring options to explore other pricing models in
the future contracts.

-Five (5) year Regulatory Contract
Service standard requirements (penalties)
Capex requirements (now opex)-Midterm Review
Price path
Quarterly fuel cost pass through in tariffs apart from
annual adjustments

TPA CODE & GRID CODE

Government Policy
-To increase access of electricity services to Papua New Guineans,
the ICCC has developed:
Third Party Access Code ;and
Grid Code (currently developing)

-These Code will govern access to currently facilitate access
arrangements with PNG Power Limiteds power line infrastructures or
other network operators.

-Technical regulatory functions of ICCC to be transferred to a technical
regulator in the future (Currently delegated to PNG Power).
System Hydro Thermal Total
Port Moresby 62 65 127
Ramu 82 21 103
Gazelle 9 6 15
Minor Centers 2 26 28
Total 155 118 273

END


22/04/2014
1
Potential for Low Discretion in a
Small- Small - Island
Mark Fogarty REEEP
Nadi 26 March 2014
This Presentation Electricity
Introduction to Palau
Energy Issues in Palau Energy Development
Framework SPC
Energy regulation in Palau Effectiveness
The Case in favour of a Low Discretion Model
The Case in favour of a Regional Regulatory
Advisory Body - Palau a Comparative with St Lucia
Conference takeout's from Palau.
Palau Some Facts
-8 degrees north -800 east PHI
-300 Islands -16 States ,21000 people + tourists
- Independent since 1994 US
Energy Issues in Palau
High Electrification Rates -99% -good reliability of supply
R High system losses 20% and high usage probably the highest in the Pacific.
R Outer Islands have no grid access
EMER High cost of energy associated with importation and price volatility of diesel fuel
R Lack of transparency in development processes for IPPs
Bud Under resourced and fragmented energy administration
R Lack of accountability in PPUC and PEO
R The need for more robust tariff setting arrangements.
R Lack of clarity in the grid-connection processes
EMER/Pol A need for a clearer, more defined and productive role for the NEC
R Promoting stronger management of energy-related climate change commitments
R Lack of incentives for energy efficiency and renewable energy investment by PPUC
Pol Promoting a stronger framework of the NDBP financing package for rooftop solar PV

Why is this Energy Development
FRAMEwork important for Palau?
Answer = Effective deployment of technology ? To be effective we
need integrated deployment of all the three WAREs .
3. Hardware
Cost effective
LCOE/efficient.
2. Software
Skills /Capacity
building
1. Orgware
Regulatory
Institutional
Frameworks
Economics
Commercial
Energy Policy
Palau National Energy Policy targets Energy Act is about giving
effect to this policy
This Policy is about Institutional Development
- A more robust Energy Administration establishing a distinction
between Energy Service Delivery and Energy Administration
- A more robust and relevant National Energy Committee with
cross sectional representation Govt/ Business/Community
- More meaningful Energy Monitoring Evaluation and Reporting
- Establishing a clearer role for third party independent review a
Regulator

22/04/2014
2
Regulation Ineffective ?
Both Energy and Water Government Owned were stand
alone however in 2013 the Palau Water Sewerage Corporation
was merged in the PPUC ( existing Electricity Utility) the services
are still stand alone.
ADB effectiveness analysis suggests there is limited regulatory
governance with no real independent regulator for either
sector . Therefore autonomy is limited ,participation minimal and
as highlighted transparency is at a low level.
Tariff regimes despite some improvements as a result of UC Act
are not effective with PPUC exposed to political interference.
The main scrutiny is derived from the Public Auditors monitoring
of PPUCs financial reports
Case for a Low discretion lite
Regulatory Model
The SPC initiated Energy Development Exercise has
concluded that Indepentent Regulatory Intervention is
warranted to enhance
1. Accountability and transparency as to the development
of the tariff guidelines ,including a specific tariff formula and
the process of application of those guidelines and formula
.Secondly securing the commitment from Government as
to its expectations for the PPUC on financial performance
and quality of service delivery.
2. Transparency as to the process of accommodating IPP
contribution to Palaus generational profile.
3. The SPC initiative has concluded that a part time
independent Regulator be could be appointed for a
period of three years reporting to the NEC.
Does Palau demonstrate the opportunity
for Regional Co-operation.
Based on a comparative with Saint Lucia there may be merit in considering a more regional
approach .
There are differences in tariff arrangements with St Lucias private sector provider LUCELEC a
certain rate of return and PPUC having no such arrangement.
There are similarities St Lucia is fairly small with a private ,vertically integrated monopoly
provider despite differences in base population the customer base including tourists is
similar .
Both Palau and St Lucia have real no regulatory regime St Lucia enabling legislation
provides for two bodies to ensure compliance A Certification Committee and a Review
Board in reality neither of these Boards have ever been established. Palau only embraces
the Public Audit Process which has limited monitoring of accuracy of financial reporting
St Lucia have now considered alternatives . Together with the OECS member states
(Anguilla/Antigua/Barbuda/British VI /Dominica/Grenda/Montserrat/St Kitts /St Vincent have
endored a proposal to establish a regional regulator Eastern Caribbean Energy Regulatory
Authority ( ECERA) Eastern C Energy Reg Authority
Does that opportunity exist in the Northern Pacific =Marshalls/FSM/Palau,Saipan etc ? SPC
North REP
Conference Take-outs Palau
Size doesnt matter -Palau is a small energy economy - -
but its fundamental that orgware dominates the
deployment proposition. It hasnt.
PEMMs who ? Where - Your experiences
Regulatory Maths - ummh unfortunate complication ?
Donor Duplication plague portions
The Private Sector Investment 2 degrees / where is it
?/crowding out.
Thankyou

23/04/2014
1
Regulation and Regional Economic
Integration: Regional Options for
Economic Integration
Power and Water Services 25 27 March
2014

Linda Kaua, Economic Reform Officer
Presentation Outline
About the Pacific Islands Forum Secretariat.
The role of the Pacific Forum Secretariat in Energy
and Water.
Regulation and Economic Integration Experience
with Regional Initiatives.
Key Points.
Going forward.
About the Pacific Islands Forum Secretariat
Established in 1972.
Inter-governmental Regional Organisation.
16 member countries (independent and self-governing):
Australia, Cook Islands, Federated States of Micronesia, Fiji,
Kiribati, Nauru, New Zealand, Niue, Palau, Papua New Guinea,
Republic of Marshall Islands, Samoa, Solomon Islands, Tonga,
Tuvalu & Vanuatu.
Headquarters in Suva, Fiji.
Over 100 staff.
3 programmes: Economic Governance, Political Governance &
Security and Strategic Partnerships & Coordination.
www.forumsec.org.fj
What Shapes Our Work
The Pacific Plan lays out the guiding principles on
improving the quality and performance of
infrastructure. These aim at enhancing and stimulating
economic growth and good governance. The relevant
objectives include:
Improved efficiency and effectiveness of infrastructure
development and associated service delivery.
Increased private sector participation in, and contribution
to development.
Improved transparency, accountability, equity and
efficiency in the management and use of resources in the
Pacific.
and Water
There are aspects of Energy and Water which require a regional
approach to address them effectively (e.g. regulation, research, capacity
building to name a few).
The Forum Economic Ministers Meeting (FEMM) provides a means to
raise and discuss these matters.
Focus has been on energy (such as FEMM 2013), while water is a key
component of Economic Infrastructure it has not been discussed as the
other aspects of economic infrastructure at the high level.
The Pacific Islands Forum Secretariat also seeks to play a role in these
sectors through coordination and planning with other relevant regional
agencies, donors and development partners to support developments in
these areas.
The linkages that energy and water have with development, trade and
other aspects of infrastructure are important.
Regulation and Economic Integration Regional
Initiatives
At the 2006 Forum Economic Ministers Meeting (FEMM), Ministers
noted the broad rationale for the introduction of economic
regulation which is to correct market failures to that optimal
efficiency in production, pricing and economic welfare is achieved.
Economic Ministers at that same meeting were updated on the
lessons and success factors of the Eastern Caribbean
Telecommunication Authority referred this to the ICT Ministers.
Consultations with member countries highlighted that regional
cooperation was possible at all levels of regulation particularly
through the provision of policy advice and regulatory oversight.
23/04/2014
2
Regulation and Economic Integration (contd)
In 2007, one of the proposed options for regional approaches
was the establishment of a Regional Regulatory Advisory
Authority. This proposed body would:
provide advice on, and implement regulatory enforcement, in
competition, pricing and access and fair trading and consumer
protection.
Further analysis was undertaken on the need for an Authority
and at the 2008 FEMM a Regional Regulatory Step Ladder was
endorsed by Economic Ministers.
This led to the development of a Model Regulatory and Policy
Framework for Forum Island Countries in 2010.
What happened?
The Model Regulatory and Policy Framework had recommendations
for Forum Island Countries in the areas of competition, pricing and
access and fair trading.
However, at the 2010 FEMM the initiative was not progressed.
FICs while welcoming the proposal were not able to progress to
implementation that would have required them to give up their
sovereignty in these areas.
Other similar initiatives in the region
The Pacific Aviation Safety Office (PASO) established in 2006. It was
developed from a Treaty with agreements from 10 countries.
It provides regulatory oversight of civil aviation for Member
countries in Airworthiness, flight operations, airports, security and
personnel licensing for these subjects.
It is linked to international commitments under ICAO.

The experience with Regional Regulation
PICASST provides the legal foundation for PASO specifies that
each Party has complete and exclusive sovereignty over its
airspace and responsibility for aviation safety and security
regulatory oversight within its territory.
PASO has benefited from funding and support from Australia
and New Zealand and expertise from Fiji and PNG and
technical support and funding from ADB and World Bank.
However, despite the importance of the functions of PASO,
the agency was experiencing issues with sustainability.
Hence, over the past year PASO had undergone reform.
(contd)
The Pacific ICT Regulatory Resource Centre was established in
2011.
Objectives:
- encourage sharing of information and industry data,
- provide direct assistance to ICT policymakers and regulators,
- collaborate with National Regulatory Authorities (ICT Sector),
policy makers and regional institutions.

Key Points
In approaching regional regulation in the Pacific, PIFS has found there
are:

Problems with regulatory rules, including the adoption of rules that
are too complex to be properly understood and enforced and the
adoption of rules that do not work well with other legislation or
policies;
Weak institutions, which includes the lack of technical capacity
among regulatory staff and lack of financial and human resources
for the regulatory organisation; and
Problems with regulatory processes and implementation, such as
the need for an independent regulator, and the lack of appropriate
or sufficient enforcement when rules are broken.

Going forward
With the 2010 Model Regulatory & Policy Framework,
Economic Ministers were not prepared to pursue this through
a regional approach, so what has changed?
The sustainability of such an initiative needs to be carefully
considered.
Are there intermediate steps to build expertise and
confidence in the exchange of knowledge and experience
going forward?
23/04/2014
3

Vinaka
http://www.forumsec.org/

Concession Contracts and Regulation
Vanuatu: Private-sector Utilities and the Autonomous Regulator Model

Carmine Piantedosi
March 26, 2014

1

Concession Contracts and Regulation
Concession Contracts Lead to Compliance -
A Suitably Empowered, Functional and Autonomous Regulator
Leads to Engagement.
2

Regulation by Contract
Pre Regulation (The Concession Contracts)
...UNELCO (GDF Suez) single private electricity and water operator
...Five concession contracts on four islands throughout Vanuatu
...Contracts provided UNELCO exclusivity to generate, transmit, distribute and supply
electricity and water within the concession area
...Contracts defined the technical specifications for the concession
...Contract set out the rates and tariff structure to be applied, provided for price adjustments
and review of electricity and water prices on a periodic basis.
...Set out the requirements for arbitration in the event of any disputes in relation to tariffs and
prices
...Period of Concession contracts were generally for 20 years

Regulation
by Legislation
Regulation
by Contract
The Autonomous
Regulator
Summary and
Conclusion
Questions
3
Regulation by Contract

Key Challenges and Constraints
The regulatory problem before Regulation
Regulated by Government
...Lacked contractual, technical and enforcement capacity and capability
...Information asymmetry Lack of information to effectively monitor the contracts
...Lack of independence, transparency and autonomy
Tariff reset not requested by Government or review undertaken for more than 10
years
...High electricity prices impacting on business activity and economic development
...Lack of consumer awareness and consultation
...Consumers generally satisfied with the reliability and quality of supply
...Consumer dissatisfaction and distrust of both Government and UNELCO
regarding price of electricity
Political influence and bias - GoV holding shares in the Utility

4
Regulation
by Legislation
Regulation
by Contract
The Autonomous
Regulator
Summary and
Conclusion
Questions

Regulation by Legislation
Regulator established in 2008 under Legislation

Act empowered the Regulator to regulate service standards and prices and
ensure compliance with Contracts

Object of the Act

... to ensure provision of safe, reliable and affordable electricity and water
services

... to maximise access to electricity and water throughout Vanuatu

Regulation
by Legislation
Regulation
by Contract
The Autonomous
Regulator
Summary and
Conclusion
Questions
5
Regulation
by Legislation
Regulation
by Contract
The Autonomous
Regulator
Summary and
Conclusion
Questions
6
Key Challenges and Constraints The Beginning (the first year)

1. Limited resources, capacity and capability

2. Building the relationships with partners (GoV, Donors & Agencies)

3. Building the rapport with the Utility

4. Lack of policies, standards, guidelines, systems and processes

5. Information asymmetry between Utility and Regulator where is it?

Regulation
by Legislation
Regulation
by Contract
The Autonomous
Regulator
Summary and
Conclusion
Questions
Key Challenges and Constraints The Medium Term

1. Explaining the tariff review process (GoV, Utility and public)

2. Arbitration following the regulators Final Decision

3. Re-tendering of a Concession

4. Balancing the interests of the Investor (mnage quattre)

7

The Autonomous Regulator
Regulation
by Legislation
Regulation
by Contract
The Autonomous
Regulator
Summary and
Conclusion
Questions
Key Challenges and Constraints Going Forward

1. The Perfect Storm

2. Court proceeding initiated by UNELCO against the GoV over the
Concession Tender

3. Geothermal Project

4. Pre-payment Meter Decision of the Regulator

5. Middle of Elections

8

Summary and Conclusion
Regulation
by Legislation
Regulation
by Contract
The Autonomous
Regulator
Summary and
Conclusion
Questions
Key Challenges and Risk Regulatory Capture

Regulatory capture happens when a regulatory agency, formed to
act in the public's interest, eventually acts in ways that benefit the
industry it is supposed to be regulating, rather than the public.

The price a regulator pays for an independent mind

9

THANK YOU
Carmine Piantedosi
cxpiantedosi@gmail.com
10
22/04/2014
1
Pacific & Caribbean Conference On Effective & Sustainable
Regulation of Power & Water Services
CONTENTS

Introduction

Background of Water Regulation

Form of Regulation

Tariff Setting Calculation

Service Standard Assessment

Mid-Term Capital Expenditure (CAPEX) & Additional
Allowable Revenue (AAR) Review

Conclusion

INTRODUCTION

Independent Consumer & Competition Commission (the
Commission or ICCC) Independent Statutory body
established by an Act of Parliament, the ICCC Act in 2002

Primary function is to correct market failures thus
enhancing the welfare of the people of PNG through the
ICCC Act and other mandated legislations

This presentation sets out ICCCs Regulation of Water
Services in Papua New Guinea

ICCC commenced the regulation of water service in 2004

The Independent Consumer & Competition Commission
Act 2002 (ICCC Act 2002) and Prices Regulation Act
(PR Act)

Water companies / utilities in PNG that engaged
in the provision of water service
i. Water PNG;
ii. Eda Ranu; and
iii. Goroka Urban Local Level Council (GULLC)

The Commission only regulate Eda Ranu and Water PNG
entities
BACKGROUND OF WATER REGULATION
FORM OF WATER REGULATION IN PNG
Water Services in PNG is not regulated through a
Regulatory Contract, rather it is regulated through a
hybrid form of price control formula

There are significant differences between regulation
through a Regulatory Contract and the hybrid form of
price control ICCC is using to regulate water services

The key determinations that are applied in the current
regulation of water are formulated through a review
process

The key determination in the current regulatory
arrangement include: Tariff Setting Calculation, Service
Standard Assessment, and Mid-term CAPEX& AAR
Review
TARIFF SETTING CALCULATION
The Commission uses Cost Building Block Method of
Economic model to calculate the Total Efficient Costs for
the two water utilities in determining their respective
MAR and Revenue Requirement .

The Commission set annual water tariffs for the two
water utilities based on CPI +/-X formula as:
i. Eda Ranu : MARt = MARt-1 X (1+(CPIt + Xt))
ii. Water PNG MARt = (MARt-1 + Po) X (1+(CPIt + Xt);

22/04/2014
2
TARIFF SETTING CALCULATION.cont
The X factors for Eda Ranu and Po and X factors for
Water PNG for the calculation of their respective MAR
price paths for this regulatory period are as:

Both Water utilities have complied with ICCC Allowable
Revenue for this regulatory period:

Year Water PNG Eda Ranu Water PNG Eda Ranu
2010 53,286,000.00 89,686,000.00 52,496,432.00 84,686,000.00
2011 58,693,222.63 93,767,000.00 58,533,200.00 97,175,000.00
2012 70,075,752.00 111,412,325.04 59,894,650.00 97,175,323.00
2013 78,913,097.00 115,810,013.71 68,643,070.00 106,912,000.00
2014 92,659,216.67 125,447,812.36 80,224,609.60 115,792,804.00
Cum 2010-2014 353,627,288.30 536,123,151.11 319,791,961.60 501,741,127.00
ICCC Allowable Revenue (Kina) Water Utilities Proposed Revenue (Kina)
SERVICE STANDARD ASSESSMENT

The Commission set to asses the service standards
performances for the two water utilities on annual basis
for this regulatory period;

The Commission measures the service standard
performance of the two water utilities against Key
Performance Indicators (KPI);

The Commission has undertaken two sets of
assessment on the Services Standard performance for
the two water utilities for this regulatory period;

MID-TERM CAPEX & AAR REVIEW
The Commission has conducted a mid-term CAPEX and
AAR review for the two water utilities in late 2012

The Commission established from the mid-term review
that both companies had met their respective CAPEX
and AAR requirements

The Commission also noted that both companies has
spent most of their CAPEX on administrative costing,
and few CAPEX were spent on improving the
infrastructure network systems for Water & Sewerage.

CONCLUSION

In PNG Regulation of Water Services is not regulated through
Regulatory Contract

Both water companies complied well with their respective
Revenue Requirement and the MAR for this regulatory period

However, the two water utilities failed to fully meet their
respective KPIs for their Service Standards;

The Commission do faces many challenges in regulating the
water services

END OF
PRESENTATION

THANK YOU

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REGULATING POWER & WATER SERVICES WITHIN A FEDERATION
Author: Mark Waite CEO, CPUC Page 1 of 3

1 INTRODUCTION OF UTILITY SET UP IN FEDERATED STATES OF MICRONESIA (FSM)
FSM is a Federation of 4 States Kosrae; Pohnpei; Chuuk; Yap
Each state has its own government with an executive branch and a legislative branch;
State utilities were established within the last 20 years under State Law 3: power water & sewerage; 1:
power only at the moment.
Prior to that utility services were provided through State Public Works departments.
In general the State Acts establishing the utilities are the same but there are some differences in each.
The Association of Micronesian Utilities is an organisation consisting of all 4 utilities formed in 2010 by
National charter; the purpose is to work more closely together sharing experiences and look for and
develop synergies for the benefit of the utilities and customers.
The National Government has no role in the operation or regulatory oversight of the utilities;
HOWEVER development partner support is controlled/coordinated by National Government and any
support provided requires sign off by National Congress.
Each of the States has Energy Action plans looking forward to 2023 which identify investments and energy
sector related initiatives; these are included within the National Energy Policy which was ratified by the
National Government in 2012.
2 CHUUK PUBLIC UTILITY CORPORATION CREATION & OVERSIGHT
Turning now to the specific situation in Chuuk State (which in general is probably quite typical of all the
utilities).
CPUC is a corporation created under Chuuk State Law in 1996. The utility is overseen by a 5 person Board of
directors.
Board Appointees are proposed by the State Executive and approved by the State Legislature.
Selection criteria is identified through the Act and requires:
representation of each of 5 regions in the State; and
a cross section of relevant experiences utility/engineering management; accounting; Personnel
management; and Business administration.
Currently there is no representation from the private sector or NGO sector;
There is no external regulator and also, beyond board appointment, no control by State executive or
legislature
Notably there is no recourse for customers other than through the Board unless we have harmed
someones rights in law
For tariff setting the decision is made by the Board of CPUC. Typically, management requests a change in
tariff and once accepted in principle by the Board there are stipulations in the law for process
Firstly announcement of the proposed changes this is done through written notice as well as
radio and TV channels
A public hearing has to be held with at least 15 days notice at which the proposed changes are
discussed with reasons and the public has the right to ask questions and make comment at and
after the meeting.

Subsequently the Board meets to consider feedback after 15 days and a decision may be
announced for implementation of all or part of the proposal, as the board sees fit, within 30 days.
The whole process takes a minimum of 60 days.
Since January 2011 CPUC has had two changes in tariff the first to introduce an automatic fuel surcharge
and the second to introduce water and sewerage charges.
(attendance was quite poor in both cases so both were followed up with meetings with State Leadership;
The Chuuk State Chamber of Commerce and the Chuuk Womens Council).
3 PERFORMANCE TARGETS
There are no specific externally set targets for service or technical operation performance. The Act
specifies powers and duties which include general provisions concerning operating and managing systems
in accordance with acceptable commercial practice; preparing and instituting plans for the maintenance
and improvement of services; establishing 5 year strategic plans; training and improving employee skills;
establishment of a customer service hotline and respond to customer enquiries; etc.
CPUC is also allowed to enter into contracts to improve service and is also empowered/allowed to incur
indebtedness;
We prepare a 5 year rolling business plan in which management proposes targets these are accepted or
amended by the Board at the business planning stage.
The business plan is centred around a 5 year financial model showing operations costs; efficiency
improvements; and capital requirements to achieve the improvements and expansion plans identified in
the State Energy Action plan.
Targets within the business plan include service coverage; efficiency/loss levels; operating ratio; return on
assets; and liquidity; As yet we are very light on customer facing targets we are compliant with the law
but not where we should be in terms of truly serving the customer in a reliable and timely manner.

4 REPORTING
Under the Act we have to report on an annual basis to the State Executive and Legislature this entails:
An Annual Report for the year ended which details forecast against actual performance (financial
and technical) with variance analysis;
The approved budget for the year forward;
Audited Financial statements within in 6 months of the Financial Year just ended.
5 IS EXTERNAL REGULATION NECESSARY
From this point on the views expressed are my own based on prior and current experience in managing
utility businesses in SE Asia and FSM.
So the question posed - is external regulation necessary.
I think on balance that external regulation would be of benefit as amongst other things it would:
Place more emphasis on the customer that is the level of service for current customers including
reliability and quality of service; as well as provide impetus to the expansion of service at only 25%
coverage at the moment there is an urgent need for coverage improvement.
Having a qualified/competent regulator would also make engagement with the private sector simpler (PSP
is an aim within the National energy policy and also seen as important at the State level as well) so the
regulator would support educated discussion of PSP and help CPUC to fend off unfeasible schemes driven

by vested interest rather than commercial and operating sense; and to engage more effectively with
credible companies.
It would also provide an independent check on performance external input is often useful, even if its
painful at times.
The principal challenges that I see are included in many other presentations at the meeting, e.g. the cost of
funding the regulator; and the capacity of the regulator; there is an essential need for capacity building
this would help to mitigate the potential risks around the desire to manage rather than regulate; as well as
reinforcing the need for independence based on servicing the customer rather than any personal or
political interest.
6 WHAT TYPE OF REGULATION MAY BE APPLICABLE
So coming back to the models we were heard about yesterday if regulation was to be put forward what
would be the best model to use single sector or multi sector and in the case of FSM should it be at the
State or National level.
Single sector state regulators for water and power in FSM would require 8 regulatory bodies that would
seem to be unwieldy and inefficient.
If we agree that multi sector makes sense should we as a nation then say ok we will have 4 multi sector
regulators one for each state an improvement on 8 but still not very practical we would 3 or 4 times the
cost and probably still an unrealistic call on capacity.
So lets say a multi sector national regulator is the most sensible option we then have to set that against
the fact that:
State independence is highly valued and establishing the framework may be difficult;
Attracting and setting up development partner support is managed by National government; If
there is sufficient funding this may not be too much of a problem but if funds have to be shared
the regulator may be drawn into the business of prioritising state allocations the impact of this
would probably be to slow down all investment which would work against the principle of
regulating improvements and expansion.
It would also open a large debate about differential tariffs across states.
These are just a few concerns, Im pretty sure there are many more waiting to surface.
If and when we get to that point there is a discussion to be had over the best way to improve utility
services and ensure accountability of the service providers so that we can really get on track to providing
reliable, affordable and sustainable service.

22/04/2014
1
Regulation and Regional Economic
Integration: Regional Options for
Economic Integration
Power and Water Services 25 27 March
2014

Linda Kaua, Economic Reform Officer
Presentation Outline
About the Pacific Islands Forum Secretariat.
and Water.
Regulation and Economic Integration Experience
with Regional Initiatives.
Key Points.
Going forward.
About the Pacific Islands Forum Secretariat
Established in 1972.
Inter-governmental Regional Organisation.
16 member countries (independent and self-governing):
Australia, Cook Islands, Federated States of Micronesia, Fiji,
Kiribati, Nauru, New Zealand, Niue, Palau, Papua New Guinea,
Republic of Marshall Islands, Samoa, Solomon Islands, Tonga,
Tuvalu & Vanuatu.
Headquarters in Suva, Fiji.
Over 100 staff.
3 programmes: Economic Governance, Political Governance &
Security and Strategic Partnerships & Coordination.
www.forumsec.org.fj
What Shapes Our Work
The Pacific Plan lays out the guiding principles on
improving the quality and performance of
infrastructure. These aim at enhancing and stimulating
economic growth and good governance. The relevant
objectives include:
Improved efficiency and effectiveness of infrastructure
development and associated service delivery.
Increased private sector participation in, and contribution
to development.
Improved transparency, accountability, equity and
efficiency in the management and use of resources in the
Pacific.
and Water
There are aspects of Energy and Water which require a regional
approach to address them effectively (e.g. regulation, research, capacity
building to name a few).
The Forum Economic Ministers Meeting (FEMM) provides a means to
raise and discuss these matters.
Focus has been on energy (such as FEMM 2013), while water is a key
component of Economic Infrastructure it has not been discussed as the
other aspects of economic infrastructure at the high level.
The Pacific Islands Forum Secretariat also seeks to play a role in these
sectors through coordination and planning with other relevant regional
agencies, donors and development partners to support developments in
these areas.
The linkages that energy and water have with development, trade and
other aspects of infrastructure are important.
Regulation and Economic Integration Regional
Initiatives
At the 2006 Forum Economic Ministers Meeting (FEMM), Ministers
noted the broad rationale for the introduction of economic
regulation which is to correct market failures to that optimal
efficiency in production, pricing and economic welfare is achieved.
Economic Ministers at that same meeting were updated on the
lessons and success factors of the Eastern Caribbean
Telecommunication Authority referred this to the ICT Ministers.
Consultations with member countries highlighted that regional
cooperation was possible at all levels of regulation particularly
through the provision of policy advice and regulatory oversight.
22/04/2014
2
Regulation and Economic Integration (contd)
In 2007, one of the proposed options for regional approaches
was the establishment of a Regional Regulatory Advisory
Authority. This proposed body would:
provide advice on, and implement regulatory enforcement, in
competition, pricing and access and fair trading and consumer
protection.
Further analysis was undertaken on the need for an Authority
and at the 2008 FEMM a Regional Regulatory Step Ladder was
endorsed by Economic Ministers.
This led to the development of a Model Regulatory and Policy
Framework for Forum Island Countries in 2010.
What happened?
The Model Regulatory and Policy Framework had recommendations
for Forum Island Countries in the areas of competition, pricing and
access and fair trading.
However, at the 2010 FEMM the initiative was not progressed.
FICs while welcoming the proposal were not able to progress to
implementation that would have required them to give up their
sovereignty in these areas.
Other similar initiatives in the region
The Pacific Aviation Safety Office (PASO) established in 2006. It was
developed from a Treaty with agreements from 10 countries.
It provides regulatory oversight of civil aviation for Member
countries in Airworthiness, flight operations, airports, security and
personnel licensing for these subjects.
It is linked to international commitments under ICAO.

PICASST provides the legal foundation for PASO specifies that
each Party has complete and exclusive sovereignty over its
airspace and responsibility for aviation safety and security
regulatory oversight within its territory.
PASO has benefited from funding and support from Australia
and New Zealand and expertise from Fiji and PNG and
technical support and funding from ADB and World Bank.
However, despite the importance of the functions of PASO,
the agency was experiencing issues with sustainability.
Hence, over the past year PASO had undergone reform.
(contd)
The Pacific ICT Regulatory Resource Centre was established in
2011.
Objectives:
- encourage sharing of information and industry data,
- provide direct assistance to ICT policymakers and regulators,
- collaborate with National Regulatory Authorities (ICT Sector),
policy makers and regional institutions.

Key Points
In approaching regional regulation in the Pacific, PIFS has found there
are:

Problems with regulatory rules, including the adoption of rules that
are too complex to be properly understood and enforced and the
adoption of rules that do not work well with other legislation or
policies;
Weak institutions, which includes the lack of technical capacity
among regulatory staff and lack of financial and human resources
for the regulatory organisation; and
Problems with regulatory processes and implementation, such as
the need for an independent regulator, and the lack of appropriate
or sufficient enforcement when rules are broken.

Going forward
With the 2010 Model Regulatory & Policy Framework,
Economic Ministers were not prepared to pursue this through
a regional approach, so what has changed?
The sustainability of such an initiative needs to be carefully
considered.
Are there intermediate steps to build expertise and
confidence in the exchange of knowledge and experience
going forward?
22/04/2014
3

Vinaka
http://www.forumsec.org/

22/04/2014
1
March 25 27, 2014, Nadi Fiji

THE EASTERN CARIBBEAN ENERGY
REGULATORY AUTHORITY (ECERA) PROJECT:
POTENTIAL AND CHALLENGES
Presented by Maxine Alexander Nestor
Project Manager, ECERA Project
OECS Secretariat
1

OBJECTIVES OF EASTERN
CARIBBEAN ENERGY
REGULATORY (ECERA)
PROJECT

2
Broad objective:
Establish and operationalize a regional
framework to enhance the efficiency in
the provision of electricity services and
develop the energy sector in the OECS.
3
PART A ESTABLISHING ECERA

4
Source: World Bank Project Appraisal Document
5
PART A ESTABLISH ECERA
Commence ECERA Project with the establishment of the
Project Management Unit and Regional Energy Committee.
Define Options for ECERA Self Financing and Power Pricing
Strategy.
Establish the Legal Basis for ECERA through formulation and
ratification of the ECERA Treaty.
Modify Domestic Electricity Supply Acts and other laws to
give effect to ECERA Treaty.
Public Awareness on ECERA Project and Institution.
Develop ECERAs 5 Year Business Plan, Model Documents
(including Licence Concession, Standard Terms & Conditions
for Power Supply etc.), and procedure guidelines.
Hire full complement of staff for ECERA, appoint
Commissioners and establish Council of Ministers.

Support policy work to promote the ECERA as a regional hub of
knowledge and best-practice (develop standard PPA and make
recommendations on tariff for independent geothermal producers;
develop grid code and standards for interconnection; identify policy
instruments for promoting RE).
Support observers participation in REC activities and consultations and
outreach.

IDA Credit of
US $2.61
million
November 2012 December 2014
SIDS DOCK
grant fund
of US $1.5
million

POTENTIAL FOR A REGIONAL
REGULATORY FRAMEWORK
FOR THE OECS
POWER SECTOR
6
22/04/2014
2
1. EXISTING REGIONAL INTEGRATION ARCHITECTURE
Several common institutions established over the past 33 years including:
The OECSCommission
which incorporates
the OECSSecretariat;
Eastern Caribbean
Central Bank;
Eastern Caribbean
Supreme Court;
Eastern Caribbean
Civil Aviation
Authority;
Eastern Caribbean
Telecommunications
Authority.
Total population in the OECS is estimated at 650,000.
8 of the 9 countries share a common currency pool
foreign exchange reserves and exercise common
monetary policy.
OECS Economic Union established under the Revised Treaty
of Basseterre signed in June 2010 to create closer economic
relations (free movement of people, free circulation of goods
etc.).
Comprise 7 full members and 2 Associate Members which
form an archipelago in the Caribbean Sea.
The OECS was established by the Treaty of Basseterre in 1981
as an Inter-Governmental Organisation to promote economic
harmonisation and integration.
7
2. FALLS WITHIN ARTICLE 4.2 OF REVISED TREATY OF
BASSETERRE
Article 4.2:
In achieving the purposes of the
Organisation the Member States shall
endeavour to co-ordinate, harmonise and
undertake joint actions and pursue joint
policies particularly in the fields of
(k) regulatory and competition authorities,
8
3. COMMON POWER SECTOR CHARACTERISTICS
COMMON SOLUTIONS
Vertically integrated (generation, transmission, and distribution
bundled)
Relatively small markets sizes low density consumption peak load
varies from approximately 17 MW in Dominica to 56 MW in Saint Lucia
Pure monopoly in terms of transmission and distribution single
buyer model
Semi-liberalised (generation opened to competition IPPs allowed
sub-licence to be granted by the utility)
Self generation allowed permission required from utility in some
instances
Capital intensive and attract high operational cost
Disproportionate reserve margin required to maintain system
reliability
Relatively high electricity prices resulting from diseconomies of scale
high prices for inputs
9
4. HUGE RENEWABLE ENERGY POTENTIAL BUT.
10
Antigua, Saint
Kitts & Nevis,
Grenada, Saint
Vincent & the
Grenadines.
All OECS
Countries
.
Dominica, Saint
Kitts & Nevis,
Grenada, Saint
Lucia,
Montserrat,
Saint Vincent
and the
Grenadines
Dominica, Saint
Vincent & the
Grenadines
Saint Kitts
& Nevis
5. SIMILAR POWER SECTOR CHALLENGES
11
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Antigua &
Barbuda
Dominica Grenada Montserrat Saint Lucia Saint Kitts
and Nevis
Saint Vincent
& the
Grenadines
Biomass
Solar
Wind
Geothermal
Hydropower
Fossil Fuel
Reduced dependence on
imported fossil fuels
through diversification of
energy sources
Energy efficiency
and energy
management (both
on the demand and
supply side)
Reduction in
energy costs
Environment
sustainability
Greater private sector participation in the
sector (including at the distributed
generation level) in renewable energy
development and energy efficiency
12
6. COMMON SECTOR GOALS AMONG OECS MEMBER STATES
22/04/2014
3
7. OPPORTUNITY TO HARMONISE POWER SECTOR LAWS IN THE OECS
Many of the
existing
Electricity
Supply Acts
are archaic
date back to
over 40 years:
Antigua & Barbuda - 1973 Public Utilities
Authority Act;
Saint Vincent & the Grenadines -1973
Electricity Supply Act;
Saint Kitts & Nevis - 1993 Electricity Act and
1998 Electricity Ordinance;
Grenada - 1994 Electricity Supply Act;
Saint Lucia - 1994 Electricity Supply Act;
Dominica - 2006 Electricity Supply Act.
Do not include
any provisions
that:
Promote competition in generation,
Allow for self generation,
Foster renewable energy development,
Cater for grid connection at distribution end,
Obligate energy efficiency,
Address technical and safety issues, and
Provide for cross border purchase and
supply of electricity.
13
8. ABSENCE OF INDEPENDENT NATIONAL REGULATORY
AUTHORITIES
14
Independent
Regulator
GOVERNMENT
(sets policy and gives
policy directions)
INDEPENDENT
REGULATOR
(tariff setting retail and
bulk; setting and
monitoring quality of
service and performance
standards; licensing new
entrants; setting rules for
interconnection; ensuing
protection of the
environment; etc.)
UTILITY
(comply with
licence
obligations)

Line
Ministry

GOVERNMENT
(sets policy and gives policy
directions)
REGULATOR
(lower levels of
independence; limited
scope of authority;
inadequate resources)
UTILITY
(comply
with licence
obligations)

Antigua and Barbuda
Montserrat
Grenada established a Public Utilities
Commission through a 1994 Public Utilities
Commission Act but this was never operationalized
St. Kitts & Nevis
St. Lucia
Electricity Supply Act makes provision for Review
Board but this was never operationalised.
Steps have been taken to establish a national multi-
sectoral commission for water and power sectors
St. Vincent & the Grenadines
Dominica

9. MANDATE FROM OECS AUTHORITY SUPREME POLICY
MAKING BODY

44th OECS
Authority
Meeting in
Jan 2007
electricity supply
challenges
should be
addressed
regionally
through:
Improved regulatory
framework for
electricity sector
governance;
Increased use of RE.
49th
Authority
Meeting in
2009
First Set of OECS
Countries
Saint Lucia and
Grenada
expressed
interest in
setting up
ECERA
50th OECS
meeting in
November
2009
Heads
reiterated their
interest in
establishing
ECERA
March 2011
Special
Meeting of the
OECS
Authority
gave no
objection for
OECS
Secretariat to
act as
Implementing
Agency
15
ECERA
Regulatory
Reform
Policy Reform
Legislative
Reform - Greater
private sector
participation
(including at the
distributed
generation level)
Power sector
restructuring
(competition in
wholesale
generation; tariff
reforms)

Corporatisation of
State-owned
Electricity Utilities
change legal
framework from
statutory corporation
to public company

Commerialisation
process of change
management,
accountability for
improved efficiency
and performance
monitoring (cost
reflective tariffs)
16
10. ECERA - PART OF
HOLISTIC SECTOR
REFORMS TO IMPROVE
PERFORMANCE
11. SUPPORTS ENERGY TRADE
17
Electricity Market I
Dominica Interconnections
Geothermal
Dominica-Martinique
-100 MW,
-70 km,
-US$588/kW
-Highly economic
Dominica-Guadeloupe
-100 MW,
-70 km,
-US$588/kW
-Highly economic

Source: World Bank
Adopted from the 2010 Study conducted by the World Bank titled:
Caribbean Regional Electricity Generation, Interconnection, and
Fuels Supply Strategy.
Nevis St.
Kitts
- Geothermal
- 50 MW,
- 5 km,
- US$328/kW
-Highly economic
Nevis US Virgin Islands
- Geothermal
- 80 MW,
- 320 km,
- US$ 3,540/kW
- Marginally economic
18
Electricity Market II
Nevis - St. Kitts/Nevis-US VI/Nevis-
Puerto Rico
Nevis Puerto
Rico
- Geothermal
- 400 MW,
- 400 km,
- US$ 1,790/kW
-Highly economic
Adopted from the 2010 Study conducted by the World Bank titled:
Caribbean Regional Electricity Generation, Interconnection, and
Fuels Supply Strategy.
SUPPORTS ENERGY TRADE contd
22/04/2014
4

CHALLENGES IN
ESTABLISHING A REGIONAL
REGULATORY AUTHORITY

19
1. MARKET STRUCTURE OF ELECTRIC UTILITIES
DIFFER
OWNERSHIP CONTINUUM
100% State-owned
Antigua and Barbuda; St.
Kitts & Nevis; St. Vincent
& the Grenadines.
St. Lucia 40% private, 12.4% - State,
16.8% National Insurance Corp., City
Council 16.3%, 14.5% widely held;
Grenada private 50%, National
Insurance Scheme 21%, employees
and others 29%; Dominica private -
52%, Social Security 20%, widely held
28%.
WHOLLY
STATE-
OWNED
WHOLLY
PRIVATELY
-OWNED
20
2. DIVERSE CHALLENGES
Apparent Lack of sustained political will - little traction since the
project was conceptualised in 2006.
Insufficient demonstration of ownership regional regulatory
framework for power sector not reflected in national sector strategies.
Different understanding of the proposed regulatory framework for the
power sector regional regulatory structure for the
telecommunications sector differs to that of the power sector.
Supranational enforcement authority or intergovernmental
organisation?
Inequity in funding source to support the
establishment and operationalisation of ECERA:
World Bank funding not available to 3 UK Overseas Territories
International Development Association (IDA) Funding accessible to only 4 of the 6
Independent OECS Member States
Challenges in other 2 Independent OECS countries accessing concessionary funds
under the International Bank for Reconstruction and Development (IBRD)envelope.
21
Maxine Alexander Nestor
Project Manager
Eastern Caribbean Energy
Regulatory Authority (ECERA)
Project
OECS Secretariat
Morne Fortune
Saint Lucia

Tel: (758) 455 6368
Fax: (758) 452 2194
E-mail: manestor@oecs.org
skype: maxine.alexander.nestor
22
Product Development
1

Federated States of Micronesia:

Regulating Power & Water Services within a Federation
Mark Waite
Association of Micronesian Utilities (AMU)
CEO, Chuuk Public Utility Corporation

Federated States of Micronesia

Federation of 4 States Kosrae; Pohnpei; Chuuk; Yap

Utilities established within the last 20 years under State Laws

3 power, water & sewerage; 1- power only at the moment.

AMU an organisation consisting of all 4 utilities formed by National charter;

National Government no role in the operation or regulatory oversight of the
utilities development partner support is controlled/coordinated by national
Government.

CPUC is a corporation created under Chuuk State Law CPUC Act 1996.

Overseen by a 5 person Board of directors:

Board Appointment Proposed by State executive; Approved by Legislature

Selection criteria: representation of each of 5 regions in the State; and
having a cross section of relevant experiences utility/engineering management;
accounting; Business management; Personnel management;

Currently no representation from private sector or NGO sector;

No external regulator and no control by State executive or legislature

No recourse for customers other than through the Board unless we have harmed
someones rights in law
Tariff Setting
CPUC Act stipulates the process to be followed by CPUC in changing
tariffs:

Request for change typically comes from management who
propose to the Board ;

Board reviews and concurs or amends or dismisses

General announcement;

Public Hearing present the proposed changes, receive
feedback;

Board considers the feedback and makes a decision;

The whole process takes no less than 60 days;

Performance Targets
No externally set targets for service performance;

Targets proposed by management and agreed/amended by Board

5 year business plan prepared that details business performance:

operations costs;

technical assumptions fuel efficiency; losses;

investment requirements efficiency gains; expansion need;
reliability; quality

On an annual basis:

1. Annual Report prior year performance
financial;
technical;

2. Approved (by Board) budget for the year ahead;

3. Audited Financial Statements within 6 months of year end;

Product Development
2
On balance - yes

Benefits
Place more emphasis on the customer expansion and service quality
It may provide support to the utility wrt PSP and public perception;
Independent view on all aspects of performance;

Challenges
Cost & Capacity;
Personal/political interest;
Micro-management;

Views expressed are those of the speaker and not Chuuk State or FSMGovernments

Practicality and sense of four regulators (SS or MS) within a nation ?

Capacity & Cost efficiencies with Multi Sector & National

Set against that

State independence is highly valued

Capital investment ok if fully funded; difficult if funds are limited

what takes priority:
expansion/reliability/quality State requirements are different

Views expressed are thoseof the speaker and not Chuuk State or FSM Governments

12/27/10
1
The Regulatory Assistance Project www.raponline.org
Sustainable Tariffs Setting for Island
Systems
Organized by Asian Development Bank (ADB) and
Secretariat for the Pacific Community (SPC)
Fiji, 25-27 March 2014
Presented by J. Riley Allen
RAP, Global Research Manager
March 26, 2014
Topics
1. Common features of island systems
2. Cost-effective clean energy solutions
3. Avenues for acquiring clean energy
4. Tariff regulatory frameworks and
decoupling margins from sales
5. Pricing principles and options

2
Common characteristics of island systems
High rates and moderating to
declining loads

3
High proportion of fossil fuel
generation (esp. diesel)
Source: RAP/EIA, www.eia.gov
Cost-Effective Clean Resources Available to
Islands Include Solar and Wind
4
Significant opportunity for
renewables and distributed
generation
Almost Everything is Cheaper than
Diesel
5
Oil Generated Electricity @ $110/bbl oil $0.32/kWh
Solar PV <$0.15/kWh
Wind Generation <$0.12 kWh
Solar Water Heater $0.08 kWh
Energy Efficiency <$0.08 kWh
Source: RAP, BNEF,
Lazard
PV Costs versus Retail Prices and
Avoided Costs
6 Source: RAP, Jim Lazar
$-
$0.05
$0.10
$0.15
$0.20
$0.25
$0.30
$0.35
$0.40
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
PV Solar Cost
Hawaii Electricity Prices
Avoided Fuel Cost
12/27/10
2
Utility and Policy Avenues for
Promoting Clean Resource Initiatives
and Commitments

7
Net
Metering
Standard
Offer
Utility
Investment
RFP
Energy Efficiency
Markets/Portfolio
Requirements
Renewables
Integrated
Planning

Policy
Targets

Alternative Regulatory Frameworks for
Setting Tariffs
1. Cost of Service (Traditional
Regulation) sets prices
2. Performance-Based Regulation
Multi-year framework
Price Cap Regulation (Inflation minus X or CPI-
X)
Revenue Cap Regulation (Inflation minus X) with
Performance metrics

8
Traditional Regulation
1. In most jurisdictions, regulators only set prices for
utility services
2. Consequently, the actual revenue that a company
collects depends on sales:
- Revenue = Price * Units Sold
- Utility makes money in two ways: cutting costs and increasing
sales
Marginal cost is almost always less than marginal revenue
This is called the throughput incentive
3. This means that changes in sales can have a powerful
effect on profits

9
Impacts of sales growth or decline on
earnings (investor-owned utility)
10
12.31% 11.88% $11,076,180 $1,176,180 $1,809,508 1.00%
13.61% 23.76% $12,252,360 $2,352,360 $3,619,015 2.00%
14.92% 35.64% $13,428,540 $3,528,540 $5,428,523 3.00%
16.23% 47.52% $14,604,720 $4,704,720 $7,238,031 4.00%
17.53% 59.40% $15,780,900 $5,880,900 $9,047,538 5.00%
11.00% 0.00% $9,900,000 $0 $0 0.00%
4.47% -59.40% $4,019,100 -$5,880,900 -$9,047,538 -5.00%
5.77% -47.52% $5,195,280 -$4,704,720 -$7,238,031 -4.00%
7.08% -35.64% $6,371,460 -$3,528,540 -$5,428,523 -3.00%
8.39% -23.76% $7,547,640 -$2,352,360 -$3,619,015 -2.00%
9.69% -11.88% $8,723,820 -$1,176,180 -$1,809,508 -1.00%
Actual ROE % Change Net Earnings After-tax Pre-tax
% Change
in Sales
Impact on Earnings Revenue Change
Least-Cost Service Should be the Most
Profitable
1. The throughput incentive is at odds with public policy
to supply electric power services at the lowest total cost:
- inhibits a company from supporting investment in and use of
least-cost energy resources, when they are most efficient,
- encourages the company to promote incremental sales, even
when they are wasteful
2. Ratemaking policy should align utilities profit motives
with public policy goals: acquiring all cost-effective
resources, whether supply or demand
3. The utilities throughput incentive promotes inefficient
outcomes, even where:
- there is no programmatic energy efficiency; and
- even with third-party administration of energy efficiency
programs.

11
Revenue Cap
Revenue cap regulation targets revenue
levels and decouples sales from margin or
profits.
Profits increase by managing costs.
Risks Reduced for Customers and Utility
Weather
Economy
12
12/27/10
3
The Essential
Characteristic of Decoupling
Traditional Regulation:
Constant Price =
Fluctuating Revenues
Decoupling:
Precise Revenue Recovery =
Fluctuating Prices
Revenues = Price * Sales Price = Target Revenues Sales
$0.1147
$0.1152
$0.1157
$0.1162
$0.1167
$114,800,000
$115,000,000
$115,200,000
$115,400,000
$115,600,000
$115,800,000
$116,000,000
1 2 3 4
Adjusted Revenues Adjusted Price Rate Case Price
$0.1147
$0.1152
$0.1157
$0.1162
$0.1167
$114,800,000
$115,000,000
$115,200,000
$115,400,000
$115,600,000
$115,800,000
$116,000,000
1 2 3 4
Actual Revenues Rate Case Rev. Req. Rate Case Price
Performance-based regulation in
concert with decoupling or revenue
cap regulation can
1. Remove disincentives to encouraging
in energy efficiency and distributed
generation;
2. Create incentives (through PBR) to do
the same;
3. Encourage the development of helpful
rate designs to encourage clean energy
and demand-side flexibility.
14
Several pricing regulations can be used
to support increased utility investments
in EE and RE
15
Graphic Image: Hawaii
Electric website
Several pricing regulations can be used
to shift loads for system benefit
16
Recommendations
1. Foster sound planning (e.g., IRP) and policy
targets, creative solutions to cost-effective clean
energy (renewables and EE).
2. Create regulatory framework that aligns utility
performance with least-cost solutions (PBR
Revenue-Cap Regulation);
3. Look integration strategies/optional retail
services to foster flexible loads to complement
variable energy resources

17
Suggested Reading and Reference Materials
Allen, R., Migden-Ostrander, J., The Role of a Power Sector Regulator to
Strengthen Sector Performance in Puerto Rico, RAP, Feb 2014,
http://www.raponline.org/document/download/id/7043
Lazar, Jim; Teaching the Duck to Fly, RAP, Feb 2014, available at
Schwartz, L., Hogan, M., Lamont, D., Meeting Renewable Energy Targets in the
West at Least Cost: The Integration Challenge, RAP, Jun 2012, available at
Linville, C., Shenot, J., Lazar, J., Designing Distributed Generation Tariffs Well,
Nov 2013, http://www.raponline.org/document/download/id/6898
Lazar, J., Weston, R., Shirley, W., Revenue Regulation and Decoupling: A Guide to
Theory and Application, Jun, 2011,
Salvatore, J., H1 2014 Levelized Cost of Electricity Update, BNEF, January 2014,
www.bnef.com
Lazard Associates, Lazards Levelized Costs of Energy Analysis, Version 7.0, August
2013,http://gallery.mailchimp.com/ce17780900c3d223633ecfa59/files/Lazard_Le
velized_Cost_of_Energy_v7.0.1.pdf

18
12/27/10
4
About RAP
The Regulatory Assistance Project (RAP) is a global, non-profit team of experts that
focuses on the long-term economic and environmental sustainability of the power
and natural gas sectors. RAP has deep expertise in regulatory and market policies
that:
Promote economic efficiency
Protect the environment
Ensure system reliability
Allocate system benefits fairly among all consumers

Learn more about RAP at www.raponline.org
Email: rallen@raponline.org
About RAP
The Regulatory Assistance Project (RAP) is a global, non-profit team of experts that
focuses on the long-term economic and environmental sustainability of the power
and natural gas sectors. RAP has deep expertise in regulatory and market policies
that:
Promote economic efficiency
Protect the environment
Ensure system reliability
Allocate system benefits fairly among all consumers

Learn more about RAP at www.raponline.org
Extra Slides
Lazard Associates, Lazards
Levelized Costs of Energy
Analysis, Version 7.0
22/04/2014
1

Sustainable Regulation of Energy and water Services.

A Case Study on Jamaicas K-Factor for the Water
Sector
By: Sashana Miller
English Speaking Caribbean country
Land area of 10,990km2.
Total population approximately $2.9M
living in 14 administrative districts
called parishes.
Like most Caribbean island there is the
availability of water to meet demand,
however the resource is unevenly
distributed.

Introduction
Brief Background Of Jamaica
Background of Jamaicas Water
Sector
Water Regulatory Agency in Jamaica
Case Study Of Jamaica K-Factor
Programme
Conclusion

NWC is the largest provider of potable
water and sewerage services.
There are also fourteen(14) small privately
owned water and/or sewerage providers
In addition; the Parish Council
(government owned) also provide some
portable water to rural areas mainly
through springs, catchments, wayside
tanks etc.

The Water Sector is governed by a number of
agencies:

The Office of Utilities
Regulation

The Ministry of Water Land
Environment and Climate
Change

Ministry of Health
The National
Environment and
Planning Agency

Water Resources
Authority

22/04/2014
2
The K-factor is a variable established by the
OUR for the NWC to fund capital intensive
projects :

that will not generate
any significant
increase in revenues
but are necessary for
systems
reinforcement.
Of efficiency
improvement
inclusive of mains
replacement and
other Non-
Revenue water
activities
To connect the major
city in Jamaica to a
central sewer system.
In (1999) the K-factor was introduced to:
fund the replacement of meters and pumps as
part of a rehabilitation project.
K-factor percentage fixed at 4% of customers
monthly bills
Collections from K-factor was placed in a
separate bank account to fund the
designated programme.
The execution of the programme was
successful so the K-factor programme was
extended into subsequent tariff periods and
the scope of the project was increase.

Scope of the K-Factor increased to:
achieve a breakthrough in Non- Revenue
Water Reduction or efficiency
improvement
To fund capital rehabilitation projects that
will not yield any significant amount of
revenue
to expand the collection network for
wastewater
How was the K-factor Calculated
Based on the NWC
estimated Project
profiles for Capital
investments over the life
of the projects
The K-factor is to be calculated on the
monthly bill balance.
NWC accounts for the deemed K-factor cash
inflow calculated on the basis of 95% of the
K-factor billing.
A separate bank account is instituted to
accommodate the cash flows from the K-factor
monthly report of balances and changes are
sent to the Office within 45 days of each
reporting period.

K-factor Billing and Collection
K-factor-revenues are deemed collected
within 45 day after billing.
The schedule of K-factor has continue across
tariff regimes to ensure funds are available to
service loans.

22/04/2014
3
Scope remains the same
K-factor variable reduced to 14% throughout
the tariff period
Billing and collection remains the same
NWC now report directly on the NRW
reduction achieved on each discrete K-Factor
project that has been implemented to date.

Monitoring of the K-Factor
Memorandum of understanding signed in
October 2010 between the OUR and NWC
because of challenges that occurred with the
administration of the fund.
The OURs approval is required for each project to
be funded by the K-Factor prior to its execution.
NWC is required to report directly on the NRW
reduction achieved on each discrete K-Factor
project that has been implemented to date.

The NWC shall also demonstrate the impact of
the program on overall NRW reduction.

The format for the NWC report now involves
reporting on achievements and milestones
and not in number of projects completed.
Results from implementing the K-
Factor
As at February 2014 K-factor account stands at
$US 7.29M

Total project completed was approximately 39
of which 51% is NRW and 49% sewerage

Increase in sewerage and water access in
areas where K-factor projects were initiated.
Increase in NWC ability to borrow loans.

Any special fund developed must have rules
attached.
Regulators must be in a position to enforce
sanctions if funds are mishandled
Regulators must make every effort to
clearly monitor projects approved and
ensure that the Utility adhere to timelines
set

22/04/2014
4
Thank You!

Efficient Pricing and Tariff Regulation
Efficient Affordable and Sustainable Pricing and Tariff Regulation

Carmine Piantedosi
March 26, 2014

1

The Act
... empowers the Regulator to regulate service standards and
prices; and
...ensure compliance with Contracts

Object of the Act

... to ensure provision of safe, reliable and affordable electricity and
water services

... to maximise access to electricity and water throughout Vanuatu

... to promote the long term interests of consumers

2
Contract provisions

...Allocation of Risk

...Access to Services

...Affordability - customer service and management

Renewable energy or energy efficiency

Tariff setting and pricing

Tariff and Pricing under the Contract

3
Tariff and Pricing under Regulation

Key Challenge
Balance conflicting objectives
...Level of Service
...Affordability
...Increasing Access
...Lower Prices

Promoting the long term interest of consumers

4

What did we aim for?

To find the right balance between the interests of consumers, the Utility
and the Government.

5
6
What did we do?

Key Challenges

1. Capital Asset Pricing Model Building Block approach and
methodology to setting prices

2. Change in Tariff Structure

3. Capital Investment Plans

4. Output Based Aid

5. Pre-payment meters

6. Tariff setting without concession contract

Key Message

Our current problems create challenges which good governance and
regulation will address.

The try everything approach effectively implemented, will work but cheap
electricity cheap politics remains a barrier.

And while the daily reality is we like regulation when it protects; we dislike
regulation that obstructs

As a regulator Sometimes you have to put aside your principles and do
whats right

7

THANK YOU
Carmine Piantedosi
cxpiantedosi@gmail.com
10


12/27/10
1
The Regulatory Assistance Project www.raponline.org
Water-Energy Nexus
Organized by Asian Development Bank (ADB) and
Secretariat for the Pacific Community (SPC)
Fiji, 25-27 March 2014
Presented by J. Riley Allen
RAP, Global Research Manager
March 26, 2014
Topics
1. Multiple Avenues of Overlap
2. Electricity Water Requirements
3. Energy Requirements of Water
4. Potential Solutions

2
Water Use Varies Widely Across
Regions
3
Electric
generati
on is
typically
80% of
industrial
use
Water and Electricity
4
Source: U.S. Department of Energy, Sujoy Roy
Variable Energy Renewables and Energy
Efficiency Use Least Amount of Water
5
Water and Energy Modeling Runs
(Electricity water cooling in BCM over time - Texas)
6
0.25
0.3
0.35
0.4
0.45
0.5
2010 2015 2020 2025 2030 2035 2040
B
illio
n
s

Baseline High Wind Cost WaterLimit High EE CO2CAP
Source: CNA, Paul Faeth
12/27/10
2
7
Source: Original from
BNEF, 2012, box by
RAP
The Many Strategies Available for Improving
Access and Efficient Use of Scarce Water
In electricity sector, you can
add
- switching to less water
intensive technologies;
- Alternative cooling
technologies;
- and energy efficiency.
Sample of End Use Energy and Water
Efficiency Investments in Household

Low flow shower heads
Efficiency washers
Faucet Aerators
Efficient Toilets

About 13% of electricity in the US and 19% of it in
California is associated with moving and processing water.
Potential Solutions to Spur More
Efficient Cooling
Price water
Carbon restrictions
Water and energy efficiency programs and
strategies;
Invest in renewables
Revisit plans for thermal generation
9 10
Questions?
References
BNEF, Leadership Forum Results Book
2012; www.bnef.com
Faeth, Paul; Forthcoming Water and
Electricity Report, CNA

Energy Efficiency (water showerhead)
12
Appendix (extra slide)

Energy and Capital Savings
Energy used to heat the water in the water heater
Capital and Energy used to process the waste water before returning to
streams
Capital and Energy used to pump the water to the home
Capital and Energy used in water treatment facilities to create potable water
Capital and Energy used to pump the water or desalinate the water (3.5 kWh
per cubic meter)
Parasitic energy required for cooling thermal generation to produce the power
for (1) through (5).

Water
Water used directly for end user needs
Water lost in transport
Water consumed in the water treatment process
Water used for cooling thermal generation that provides the generation listed
above.
Civil Society Perspective: Engaging consumers and civil society
The focus of my contribution will be on water as the majority of my professional
work experience in the Caribbean has been centred on water and not the other
utilities.
Potable water, inclusive of its regulation in the Caribbean and its relationship to
the society is a complex mosaic of Peoples perception, politics and problems.
It makes pricing and regulation a challenging if not hazardous exercise.

PEOPLES PERCEPTIONS
Water falls from the sky free of cost and is a human right. Why do you want
us to pay so much of it?
This is possibly now being further clouded by unintentional mixed messages
resulting from the promotion of rainwater harvesting to augment the domestic
water supply, the regional technical agencies. However, citizens have a challenge
in appreciating that harvesting, treating and distributing water is a costly exercise.
The water bill is the lowest on the utility priority payment scheduling.
From my observation it appears that the telephone/internet, electricity, gas etc.
follows and water always brings up the rear. This need to be examined more
carefully as it may give some insight into why the importance of quality potable
water from a public supply is undervalued. Coincidently we are far more willing to
purchase imported bottled water at top dollar without complaining.
The water utility company manages water and is to be blamed for any issue
related to outages or quality.
Despite efforts at raising awareness about water conservation and integrated
water resources management, the general population is not involved in its
management of water. Hence citizens owning lands in critical watershed areas do
not necessarily see themselves as being involved in the water management
process. The same is true of some farmers and agrochemical pollution. Even the
consumer at the end of the tap does not seem to appreciate that they have a vital
role in the management of water resources. I draw your attention to a youth KAP
study undertaken on Integrated Water Resources Management in the Caribbean.
The study indicated that over 75% of the young citizens interviewed were aware of
water conservation practices but 40% of the respondents admitted that they do
adhere to such practices.

POLITICS
Water is still being used as a political carrot
Votes are still often attached to promises of water accessibility to communities. In
addition, where water is readily accessible, politicians are after asked and
frequently do pay monthly water bills of constituents.
Public and media reaction to water service disconnection
Once information about water disconnection at a household of a poor family, a
single parent family or an elderly person becomes public knowledge, the situation
is often so publically discussed in the media that politicians or political operatives
often step in seeking leniency. This unfortunately though sends the wrong
message to the public as it undermines the management authority of the utility.
The absence of strong consumer bodies in the Caribbean
I cannot find an example of a consumer organisation in the English-speaking
Caribbean that continuously monitors and documents matters arising from water
distribution and management. It is a significant failing of civil society.

PROBLEMS
Usage of water
We learn from what we see and we accept standards that are at times foreign to
our culture. We see how water is used on TV, from Ernie and Bert splashing in the
bathtub on Sesame Street, to the maintenance to lawn etc. but have you seen a
single television show where the stars are reading water meters or talking about
water conservation? Perhaps that is why most citizens of the Caribbean do not
read their water meters and only become aware of problems after receiving
horrendously high bills.
Cultural concerns
Recycling waste water is viewed as not being acceptable. So for example in a
water scarce country like Barbados, it is an acceptable practice to treat waste
water and then discharge it out to sea, whether than use it to recharge aquifers.
Pricing
In all countries in the Caribbean, the true cost to produce potable water is far
below what the water company recovers from consumers. Therefore some entity
has to subsidise the additional costs and this is seen as a social good.
The lack of rapidity with which water mains are fixed.
This could be a management-related problem, an approach to undertaking work
problem or an availability of labour and materials problem. It in nonetheless a
public relations hurdle as it gives the impression that water is not a scarce
commodity or that it is costly to distribute. This could, in part, be reinforcing the
undervaluing of water.
Unaccounted for water/non-revenue water
Aging distribution systems are thought to be the main cause of this, in Barbados
for sure. Some reports quote leakage as high as 30%. This is tragic as the
electricity costs are high and is a kin to pumping water into the ground. Since the
electricity is produced by the utilisation of Bunker C fuel, this has implication for
the country carbon foot print.
Private usage
What is the cost to the country of water extracted from private wells, as is the
case with the Barbados Turf Club, some other sporting institutions and agricultural
concerns across the island? How are these regulated and should they be asked to
pay a cost?
Clearly understanding usage - Use of water in education institutions for
example
I have done some thorough desk research looking for studies on water usage in
the education sector in the Caribbean. I am yet to find one that clearly identifies
the volume of water used by schools at the national level.
Not enough focus of encouraging students to conserve water or promote water
audits as part of the experiential learning process. Hence it is not unusual to visit
schools and recognise the amount of water wastage that occurs.
Varying water quality and quantity
In many Caribbean territories after heavy rainfall the quality of water deteriorates
as a result of turbidity and it is not uncommon for the distribution system to be
shut down or operate minimally until the problem subsides.
Privatisation of water
The is a fear that if water is managed by a private sector entity that this entity
would be interested only in making profit and would not be interested in whether
poor citizens can pay the price for water or that the quality of water would be
inferior. So government must manage the process or we will vote you out.

Pacific and Caribbean Conference On Effective and Sustainable Regulation of Energy and Water Services: Tanoa International Hotel, Nadi, Fiji 25-27, March 2014

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