Grenada/Saint Lucia: Energy Consumers to Benefit from Improved Service Delivery and Greener Sources

June 16, 2011

WASHINGTON, June 16, 2011 — The World Bank Board of Directors approved today two zero-interest credits for a total of US$5.6 million to help Grenada and Saint Lucia establish the Eastern Caribbean Energy Regulatory Authority (ECERA). As a regional entity, ECERA will improve electricity service delivery and diversify sources of energy generation, including renewables, benefiting electricity consumers across the Organization of Eastern Caribbean States (OECS) countries.

“ECERA will maximize economies of scale among OECS Participating States in establishing and operationalizing a regional policy approach for the development of the electricity sector, enable better use of scarce skilled human resources, and increase the capacity of OECS countries to implement regional arrangements for electricity supply,” said Len Ishmael, OECS Director General.

Demand for electricity in the OECS countries has been growing at an annual rate of 3-4 percent, driven mostly by commercial and residential sectors in tourism-led economies, while electricity prices are among the highest in the world. The high tariffs are due, in part, to the countries’ insular and small electricity systems, an almost complete dependence on diesel, as well as insufficient regulatory enforcement.
In order to ensure a reliable energy supply in the OECS, regional electricity utilities need stronger and more efficient regulation to improve oversight, tame the growth of electricity costs, diversify energy supply away from fossil fuels, and attract cost-effective investments in electricity generation.

“This initiative will make it easier for OECS Members to provide incentives to save energy, reduce electricity costs to consumers, and, in the longer term, lower electricity price volatility by relying less on diesel,” said Françoise Clottes, World Bank Director for the Caribbean.
Specifically, the Eastern Caribbean Energy Regulatory Authority Program will finance the following activities:

  • Setting up ECERA. This includes carrying out the legal and consultative process leading to the formulation and ratification of the ECERA treaty, defining options for the ECERA self-financing mechanism, reviewing tariffs, and examining incentive mechanisms to promote renewable energy.
  • Making ECERA operational. This component will fund ECERA’s initial three years of operation, including day-to-day operations and execution of core regulatory tasks, such as tariff and investment plan reviews, and definition of a regional licensing framework for electricity market participants.

The OECS Heads of State officially endorsed the creation of ECERA at the 44th OECS Authority Meeting in January 2007. The World Bank, in collaboration with the OECS Secretariat, and in consultation with a range of stakeholders, has been accompanying the Governments by assessing the feasibility of ECERA and developing a comprehensive proposal. OECS Member States confirmed their commitment to set up ECERA at the 49th Meeting of the OECS Authority in Tortola, in May 2009. The endorsed proposal specified that ECERA is to be located in Saint Lucia.
The first phase of the ECERA program will launch the process with Grenada and Saint Lucia. Other OECS members have expressed interest in joining ECERA at a later date.
The two US$2.8 million zero-interest credits from the World Bank’s International Development Association (IDA) are repayable in 35 years, including a 10-year grace period.


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