(CMR) The Utility Regulation and Competition Office (OfReg) has described the Caribbean Utilities Company's decision to implement load shedding when its reserve reaches a certain level as ‘illogical.'
Last week, CUC said its generation reserve margin, the difference between total installed electricity generation capacity and peak customer electricity demand, is presently at lower than normal levels. This increases the risk of having to shed customer load in the event of any unplanned loss of generation.
In a lengthy response issued on Friday, OfReg said, “This seems to be illogical since there are many places around the globe that get by on a 5-10% reserve margin and, in any event, CUC has not provided any valid explanation as to how even a precipitous dip towards the bottom of their reserve margin of 35% would automatically result in blackouts and/or CUC having to engage in load shedding.”
According to the release, OfReg's board said members have carefully considered recent statements from CUC and have determined that OfReg publish information to fully and accurately inform the public about the matters raised by CUC and assure the public that OfReg is fully cognizant of its duties to the public and committed to properly discharging the same.
The Board said they are “concerned that the recent press release has left the public with the impression that the situation that CUC has found themselves in now is because OfReg has failed in some way to do its job, when in fact OfReg simply wishes for CUC to perform in accordance with the obligations in its license, so as to avoid the Board having to take any necessary steps to protect the stability of the supply of electricity in Grand Cayman.”
“The Board will now also consider whether and to what extent the issues raised by CUC will inform its ongoing review of CUC’s T&D Licence,” OFReg said.
OfReg pointed out that CUC is responsible for procuring adequate generation, either by producing or buying firm power and supplying that electricity to consumers through its exclusively owned grid. It can also supply any complement of renewable energy generated under an arrangement authorized by OfReg.
It further stated that it is the CUC’s sole responsibility to forecast what power is needed. Where such forecasting predicts additional firm electricity capacity will be needed in the future, CUC is required to issue a Certificate of Need (CON) to OfReg, which will then trigger the competitive “Generation Solicitation Process.”
However, OfReg said that since its inception in 2017, it has never received a CON from CUC, despite the ongoing construction boom since then, with larger-than-ever developments coming online at a faster rate than was seen between 2008 and 2011 (when the first CON was issued by CUC to the ERA).
According to OfReg, in predicting load growth, it is industry standard for CUC to monitor, among other things, the number and magnitude of planning permissions granted, which information is readily accessible to the public, and to use that information to calculate the projected load growth long before construction commences on any development approved by the CPA.
It is, therefore, hard to understand how CUC could not have foreseen the significant increase in electricity demand in the past 10 years, sufficient for it to be obligated to issue a CON. CUC’s failure in that regard would, therefore, appear to be a fundamental breach of its obligations under its T&D Licence, which has now led to the situation that they have put themselves in, OfReg continued.
It further stated that CUC’s attempt to blame OfReg for the failure of a bid for renewable energy in 2019 is unfounded. That bid was not for firm power, and even if it had been granted, that would not relieve CUC of its obligation to forecast the additional capacity of firm power needed to ensure that it could provide consumers with such firm power as and when needed, OfReg explained.
Speaking of CUC's obligations, OfReg said it now seems apparent that CUC has publicly admitted to failing to discharge those obligations. Accordingly, the Board will now be constrained to consider the ramifications of that admission, as well as all other statements made by CUC, in determining what action, if any, is appropriate for their apparent failure to perform in accordance with their license, OfReg stated.
See the full release from OfReg below: