ESA and Regulation
The absence of a single, clearly defined, regulatory body for the electricity sector in Saint Lucia has led some to suggest that the St. Lucia Electricity Services Limited (LUCELEC) is unregulated. However, that is not the case. The provisions for the regulation of the electricity sector are contained within the Electricity Supply Act (ESA), and these provisions are wide ranging. Everything LUCELEC does including how customers are billed for electricity usage, the generating capacity it must maintain to meet national demand, the guidelines for the placement of poles on customers’ properties, as well as which Government Departments are responsible for overseeing its operations is written in law and contained within that Act. This is also the case for the company’s minimum rate of return and the computation of the tariff and fuel cost adjustment factor (commonly called the fuel surcharge), formulas for which are outlined in various parts of the ESA and its related schedules and regulations. Let’s look at the basic function of providing new customers with electricity for example. You see, while LUCELEC provides electricity to customers, the company does not decide who can be given power. Anyone who has applied for a new connection will know such authorization must come from the Ministry of Infrastructure, Port Services and Transport specifically the office of the Chief Electrical Inspector, who must certify that the electrical wiring in the structure to be connected meets the required standards for safety. That Ministry is also responsible for the street lighting programme, determining where street lights should be placed. LUCELEC facilitates their instalment and maintenance and covers the costs of these services while the Government pays for the consumption. These arrangements are also defined in the ESA. The Ministry of Infrastructure is one of two Ministries with immediate Government oversight over LUCELEC. The second is the Ministry of Sustainable Development, Energy, Science and Technology. Part 4 Section 32 of the ESA mandates the company to submit annual audited accounts to its Ministers thereby ensuring that an independent source will provide Government with a clear picture of its operations. The ESA also makes provisions for a Certification Committee (Part 4 Section 37) and Review Board (Part 4 Section 38) to set benchmarks for LUCELEC to achieve in relation to various operating standards and to review tariffs respectively, in effect fulfilling two known functions of a regulatory body. Both entities are made up of three persons, one appointed by the Minister, another by the company and a Chairperson as agreed by both Government and Company. The Certification Committee sits for a term of two years and the Review Committee for five. These Committees are appointed at the instance of the Minister. In addition to complying with the ESA, LUCELEC has also imposed its own standards of service in a Customer Service Charter it has made available to customers. The Charter outlines the standards the company promises to meet in providing its services to customers. In many instances these standards the company has imposed on itself are better or more stringent than standards regulators have set for other utilities in the region. As wide ranging as the ESA is, it has not kept up with the pace of change in the operating environment and technology, as is often the case with legislation. There are areas where improvements can be made in the overall regulation of the electricity sector, including ensuring that the arrangements for such regulation are more clearly defined.