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technologies and the introduction of regulation which In the past, independent regulation was needed only
reflects international trends. Regulatory reform can result when services were provided and there were monopolistic
in improvements of the electricity sector if designed conditions. Regulation would protect the rights of captive
effectively and provides productive outcomes for all customers to receive good quality service at a fair and
stakeholders. The regulation tendencies experienced in reasonable price and the rights of efficient service providers
the Caribbean are as follows: that needed to recover their costs and earn a reasonable
• Where competition is allowed, the single buyer return on investment. The effective application of regulation
model is applicable in all cases depended on the actual condition of the system where it
• There is minimum involvement of utilities with the was being implemented. In countries such as Australia and
development of an energy policy and regulatory framework the United Kingdom, the main drivers for regulation were
• Incentive based and/or performance based price sector reform, unbundling, incorporation of private sector
regulation, including setting performance targets on participation and operation efficiency. Initially, there was
reliability/quality limited focus on service quality and service sustainability,
• Introduction of competition in power production but subsequently the focus changed to improving service
by allowing Independent Power Producers (IPP) to bid quality and service sustainability. In addition, customer
for new generation. In addition, allowing building and access, good service quality and tariffs which are of
operating production facilities by IPPs utilizing Renewable importance to the consumers were not a major problem
Energy sources. in the past. However, in the Latin America countries the
• Interconnection policies for small self-generators sector reform, re-structuring and independent regulation
are developed with the following features: impetus was related to unbundling and incorporation of
o Surplus energy bought by the Utility at the avoided cost the private sector in the natural monopolies of transmission
o Surplus energy bought by the Utility at the Utility’s and distribution. The Utilities are responsible to deliver a
commercial retail rate reliable service and are to respond promptly to customer
o Self-Generator has to sell all energy produced to the problems. The regulator under the law develops standards
Utility at the avoided cost and buy the energy it consumes of service. Subsequently, audits and reviews should be
at the Utility’s retail rate conducted to maintain service quality, high efficiency and
o Feed-in-Tariffs is the price at which the Utility purchase low losses.
energy from a Renewable energy source at the estimated
cost of the production In the Caribbean, the tariffs are high compared to other
regions and in some instances poor service quality and un-
The regulation is designed such that the self-generators uniform access prevail. In Brazil, the reform process had to
generation capacity is set to a maximum, and a maximum address similar consumer concerns during their transition
is set for the total capacity connected to the national period. Additionally, regulation could not take place in
electrical network. Regulation are to be designed to isolation from institutional quality and enforcement of rules
provide symmetric incentives; incentives in the area of through good corporate governance. Transparency and
tariff setting and quality standards. Electric utilities should publicity of the regulatory process were the most important
not only be penalized for poor performance, but should lessons from the Brazilian process. The means by which
also be rewarded for good performance. transparency and publicity can be attained are: creating a
website and posting all documents on it; conducting public
There are currently 11 independent regulatory bodies consultations and hearings and receiving and responding
existing in the Caribbean region, 17 Government Ministry/ to contributions to proposals; publish Board decisions and
Department with regulatory responsibility and 5 Public monitor meetings online in order to solicit feedback and to
Utility Commissions. The establishment of the Eastern gain consumer confidence in the regulatory process.
Caribbean Energy Regulatory Authority (ECERA) is being
viewed as a regional flagship effort towards best practice Monitoring service quality is an important component of
regulation in the electricity sector. It is the intention that best practice regulation. The service quality monitoring
this body will become the electricity sector regulatory referred is the ability to monitor the frequency and duration
body for the OECS member states and may extend to of interruption on an individual basis for each customer
other CARILEC members. and compensate them when the standards were not
achieved. However, there could be more sophisticated
levels of the quality monitoring and evaluation process
BEST PRACTICE AND SUSTAINABILITY OF and compensation could be calculated in such a manner
REGULATION IN THE CARIBBEAN that it would incentivise the utility not to drop standards.

INDUSTRY JOURNAL 3