View Full Opinion Editorial, March 25, 2015

Opinion Editorial, March 25, 2015
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’ 2013 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 15% on the non-fuel
portion of the bill and the environmental levy of $5 or $10 on domestic rates that are paid directly to the
Government and Solid Waste Management Authority respectively.
Current Average Residential Monthly Electricity Bill
$160
$140
EC$/kWh
$120
$100
$80
Gov. Taxes/Levy
$60
Electricity Charge
$40
$20
$0
Grenada
Barbados
St. Lucia
Dominica
Grand Cayman
Jamaica
The average household monthly bill is based on Grenada’s average residential monthly usage of 141 kWh/units. Data: 2015
1
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 15% on the non-fuel portion of the bill.
Current Average Commercial Monthly Electricity Bill
$1,800
$1,600
EC$/kWh
$1,400
$1,200
$1,000
$800
Gov. Taxes/Levy
$600
Electricity Charge
$400
$200
$0
Grenada
Barbados
St. Lucia
Dominica Grand Cayman Jamaica
The average monthly commercial bill is based on facilities with a demand of 10 KVA or 2500 square feet. Data: 2015
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.
Average Electricity Price per kWh
$1.60
$1.40
EC$/kWh
$1.20
$1.00
$0.80
$0.60
$0.40
$0.20
$0.00
Grenada Barbados St. Lucia Dominica
Grand
Cayman
Jamaica
Island of Bermuda U.S. Virgin
Hawaii*
Islands
The Average Electricity Price per kWh is calculated using the utilities’ 2013 gross annual revenue divided by
kWh sales. *The price per kWh for the Island of Hawaii is the average for all rate classes .
2
How Grenada’s electricity bills are formulated.
Electricity Charge
Fuel charge
Non-fuel charge
Taxes (VAT, Environmental
Levy, Customs Service
Charge)
Data: 2013
Fuel. More than 50% 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 20 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 15% 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 100% 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
Reliability Rating
100
Percentage
99.8
99.6
99.4
99.2
99
Grenada
Barbados
St. Lucia
Dominica
Grand Cayman
Jamaica
*The Average Service Availability Index (ASAI) is the industry reliability rating to measure electric service availability. Data: 2010-2013
Average Interruption Duration (Hours)
Average Outage Duration
2.5
2
1.5
1
0.5
0
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: 2010-2013
Electrical System Performance
System Losses (%)
30
25
20
15
10
5
0
Jamaica
St. Lucia
Dominica
Grenada
Grand Cayman
Barbados
Less Electricity Loss Results in Lower Costs
Data: 2013
4
Fuel Efficiency
kWh/Imperial Gallon
25
20
15
10
5
0
Jamaica
Dominica
Grand Cayman
Grenada
St. Lucia
Most Efficient
Data: 2012-2013
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 20 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, 2014. Data gathered from public sources,
utility annual reports, utility communications, and online resources.
5