How Grenada s electricity prices compare with other island nations

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1 EC$/kWh Opinion Editorial, March 2, 21 How Grenada s electricity prices compare with other island nations By Collin Cover, General Manager & Chief Executive Officer, Grenada Electricity Service Ltd.(Grenlec) There is a misperception that Grenada s electricity prices are higher than other small island nations in the Caribbean, as well as around the world. The following snapshot shows how Grenada ranks with other similar Caribbean islands and nations worldwide in regard to the price of electricity. We also compared reliability, outage duration, system performance, and fuel efficiency ratings for select Caribbean islands where information was available. We also want to explain what comprises the average electricity bill. First, we have provided a comparison of the monthly electricity bill for the average residential and commercial customer in Grenada, Grand Cayman, Dominica, Barbados, Jamaica and St. Lucia. Then, for an additional comparison, we calculated the average electricity price by dividing the utility companies 213 gross revenues by unit (kilowatt-hour) sales, and we include similar islands around the world the U.S. Virgin Islands, Bermuda, and the Island of Hawaii. Grenada s typical electricity bills are comparable to similar Caribbean islands. The Caribbean islands used for this comparison all have similar characteristics. Each island operates as a standalone electric system that s mainly dependent on imported fuel for generating electricity. Without indigenous or regional energy resources to draw upon in times of high energy demand or storm recovery, significant reserves must be on hand to ensure reliable electric service. Couple that with the relative small populations of these islands, and the resultant cost to maintain the electric system is higher per unit than in larger economies. Residential. In our comparison of the typical monthly bill for a home in Grenada, we use our average domestic consumption of 141 kwh (units) per month. Our customer s bill is comparable to similarly sized small island nations, and is lower than it would be in some larger islands. The monthly bill consists of costs for fuel, operations, and administration, as well as the mandated Value Added Tax (VAT) of 1% on the non-fuel portion of the bill and the environmental levy of $ or $1 on domestic rates that are paid directly to the Government and Solid Waste Management Authority respectively. Current Average Residential Monthly Electricity Bill $16 $14 $12 $1 $8 $6 $4 $2 $ Gov. Taxes/Levy The average household monthly bill is based on Grenada s average residential monthly usage of 141 kwh/units. Data: 21 1

2 EC$/kWh EC$/kWh Commercial. Again, our commercial customer s typical monthly bill is comparable to, and in many cases below most other islands. The comparison is based on the average commercial consumption of 1,369 kwh (units) per month, and includes VAT at 1% on the non-fuel portion of the bill. Current Average Commercial Monthly Electricity Bill $1,8 $1,6 $1,4 $1,2 $1, $8 $6 $4 $2 $ Gov. Taxes/Levy The average monthly commercial bill is based on facilities with a demand of 1 KVA or 2 square feet. Data: 21 Grenlec s electricity prices are also comparable with similar islands worldwide. Grenada s average electricity price is on par with most islands, even when compared to nations with larger populations. Again, these islands have similar characteristics with non-interconnected electric systems that are highly dependent on imported fuel. $1.6 $1.4 $1.2 $1. $.8 $.6 $.4 $.2 $. Average Electricity Price per kwh Grenada Barbados St. Lucia Dominica Grand Cayman Jamaica Island of Hawaii* Bermuda U.S. Virgin Islands The Average Electricity Price per kwh is calculated using the utilities 213 gross annual revenue divided by kwh sales. *The price per kwh for the Island of Hawaii is the average for all rate classes. 2

3 How Grenada s electricity bills are formulated. Fuel charge Non-fuel charge Taxes (VAT, Environmental Levy, Customs Service Charge) Data: 213 Fuel. More than % of Grenada s average monthly electricity bill is the cost of fuel that fluctuates based on world oil market prices. Over the last few months, Grenada s electricity bills have come down significantly because of lower fuel costs. However, we need to guard against future fuel price increases. That s why efforts to diversify Grenada s fuel mix have accelerated over the last decade to include more renewable energy and alternative resources. Reducing imports of foreign fuel is a critical component of Grenlec s Renewable Energy Strategic Plan and Grenada s National Energy Policy to bolster our nation s energy security and economic growth, as well as protect our environment. Non-fuel. The non-fuel base rate portion of the electric bill consists of the operational and administrative costs to generate electricity. With over 2 years of improvements and efficiencies, Grenlec s non-fuel base rate has decreased 23% when adjusted for inflation, saving Grenadians money. Tax and levy. Grenada has a Government Value Added Tax (VAT) of 1% on the non-fuel portion of electricity charges, and an environmental levy on domestic rates. There is also a 6% customs service charge paid on all fuel imported. Price and performance equal value. Grenlec is one of the most reliable electric utilities in the Caribbean, serving 1% of the nation with an industry-leading reliability rating of 99.94%*. Dependable electric service is available to all residents nationwide, including Carriacou and Petite Martinique, on a 24/7 basis. When storms or outages do occur, Grenlec restores power faster than most island nations. Grenlec compares favorably with utilities regionally for reliability, low down time, system performance and high fuel efficiency. 3

4 System Losses (%) Average Interruption Duration (Hours) Percentage 1 Reliability Rating *The Average Service Availability Index (ASAI) is the industry reliability rating to measure electric service availability. Data: Average Outage Duration Jamaica Dominica Grand Cayman Grenada Barbados Faster Restorations The Customer Average Interruption Duration Index (CAIDI) is the amount of time that the average outage lasts. Data: Electrical System Performance Jamaica St. Lucia Dominica Grenada Grand Cayman Barbados Less Electricity Loss Results in Lower Costs Data: 213 4

5 kwh/imperial Gallon Fuel Efficiency Jamaica Dominica Grand Cayman Grenada St. Lucia Most Efficient Data: How do we continue to increase performance and control electricity costs in the future? Grenlec is committed to working cooperatively with our Government to address the energy challenges Grenada faces, identify what we want to achieve, and then develop thoughtful solutions to help stabilize and eventually lower electricity costs, reduce our dependence on foreign oil, and increase generation of renewable energy. Rather than drastically disrupt and change our electricity sector, we want to build upon our worldclass, efficient, integrated electric system that s continuously improved over the last 2 years since privatization. Working together, we can accomplish mutual goals for the benefit of Grenada s economy, and the future prosperity of our residents and businesses. For more information, please contact Grenlec at grenleccurrent@grenlec.com. Sources: Castalia Strategic Advisors, LLC, 214. Data gathered from public sources, utility annual reports, utility communications, and online resources.