The Independent Regulatory Commission (IRC) has deferred Dominica’s sole electricity company, DOMLEC’s tariff review application, citing a number of reasons, among them: the 2015 constitutionally due general election.
Speaking at a press conference on Wednesday, Executive Director of the IRC Lancelot Mc Caskey, said that DOMLEC’s present license began on January 1, 2014, and according to Condition 33, the company should have submitted an application for review of its tariff on or before September 30, 2014.
“However, the commission has to be very mindful of its independent status now that general elections are likely to be held within the year,” he said. “Because of the mandated transparency requirements of the commission as well as the public interest which any price review generates, the conventional wisdom among regulators has been for them to avoid conducting public proceedings such as tariff reviews where the discussion itself would be politically charged and thus impact the objectivity of the inputs received.”
Mc Caskey also mentioned that the IRC took into consideration DOMLEC’s long term plans.
“The consideration and approval of the utility’s long term expansion plans and medium term investment program is a proceeding which the commission would wish to complete beforehand so that the related impact can be included in the tariff for submission,” he noted.
He also stated that greater clarity of the country’s geothermal generation development program and the consequential north-south transmission line infrastructure, “would help the process, and these issues will not and cannot be settled during this year.”
DOMLEC’s Transmission, Distribution & Supply (TDS) license and a mandated review of the tariff are expected every three years with annual adjustments for inflation, and because of “the impact of this major investments on capital requirements and on operational efficiency, it would be prudent to include these impacts in the tariff consideration,” according to Mc Caskey.
According to him, the commission is aware that the completion of the tariff’s review as soon as possible is desirable, but the risk of consumers of a tariff which does not include the anticipated efficiency gains and other improvements associated with the new investments is “undesirable.”
“It would be less risky to DOMLEC and consumers to continue with the existing tariff for another year than to introduce a new tariff based on incomplete and inadequate data,” Mc Caskey pointed out.
Because of these issues, Mc Caskey noted, a board meeting was held on May 22nd, 2014 and it was agreed to defer DOMLEC’s Tariff Review Application to May 1, 2015, however, the IRC “will continue to work with DOMLEC to determine the weighted Average Cost of Capital (WACC), the Asset Base and the long term expansion and medium term investment plans…”
“These are all critical issues for the tariff review which the commission hopes to conclude before the actual application is received,” he said.