Electricity Bill Tabled, Consultation To Follow

Minister of Economic Development Dr Grant Gibbons provided an overview of the draft Electricity Bill in the House of Assembly today [July 17], saying it is being tabled as a consultation document with the intention of soliciting further input prior to submitting a final Bill.

Dr Gibbons said, “The draft Electricity Bill tabled earlier today closely parallels the recently launched Electricity Sector Policy for Bermuda. It also follows a period of extensive consultation with key stakeholders and the general public.

“It is being tabled today as a consultation document with the intention of soliciting further input from these groups during the summer parliamentary recess prior to submitting a final Bill early in the next session.

“In brief, the draft Electricity Bill focuses on the electricity sector and will enable the Regulatory Authority [RA] to independently regulate electricity production, transmission, distribution and sales for Bermuda. In due course, we will also be addressing other elements of the energy sector.

“It will be apparent that the utility features strongly in the draft Bill, because it must. As the owner of the infrastructure and plant which is now responsible for delivering 98% of our electricity, it is critical that the draft Bill ensures fairness and best practices for all, including BELCO.

“We have considered economics very carefully in our deliberations and believe that there is no economic efficiency to be gained by encouraging other participants to provide transmission, distribution and retail services. In return for that sole provider status, BELCO will be carefully regulated to ensure accountability.

“Broadly stated, the draft Bill sets clear boundaries between electricity sector participants, and it defines the roles of the Minister, the Regulatory Authority, the utility, independent power producers, bulk generators, and distributed generators. All have a part to play and all will have regulated responsibilities of some kind.

Dr Gibbons encouraged the public to give their thoughts on the draft Electricity Bill and provide feedback in writing to the Department of Energy, at energy@gov.bm, by August 31st, 2015.

“We believe that public and stakeholder input is an important tool in the development of effective energy legislation and regulation,” added Dr Gibbons.

The Minister’s full statement follows below:

Mr. Speaker, the draft Electricity Bill tabled earlier today closely parallels the recently launched Electricity Sector Policy for Bermuda. It also follows a period of extensive consultation with key stakeholders and the general public. It is being tabled today as a consultation document with the intention of soliciting further input from these groups during the summer parliamentary recess prior to submitting a final Bill early in the next session.

In brief, the draft Electricity Bill focuses on the electricity sector and will enable the Regulatory Authority [RA] to independently regulate electricity production, transmission, distribution and sales for Bermuda. In due course, we will also be addressing other elements of the energy sector.

Mr. Speaker, It will be apparent that the utility features strongly in the draft Bill, because it must. As the owner of the infrastructure and plant which is now responsible for delivering 98% of our electricity, it is critical that the draft Bill ensures fairness and best practices for all, including BELCO.

Mr. Speaker, we have considered economics very carefully in our deliberations and believe that there is no economic efficiency to be gained by encouraging other participants to provide transmission, distribution and retail services. In return for that sole provider status, BELCO will be carefully regulated to ensure accountability.

Mr. Speaker, another feature of the draft Bill is the requirement for an Integrated Resource Plan [or ‘IRP’] process to facilitate future planning for electricity supply and demand. Some have interpreted the IRP process in the policy statement as being “BELCO’s process.” It is not. While it is true that the IRP process will be initiated by BELCO, it will, however, be directed by the Regulatory Authority. The RA will manage the public comments and will also encourage challenges to the IRP by the public and independent power producers. Only after the iterative public process and only after the RA is satisfied that it represents the best interests of the public, will it be approved. It is also worth noting that it is not just the IRP plan itself that will be regulated and scrutinized, but also the procurement of the generating assets. In other words, the utility will not be allowed to simply do it all themselves. They must demonstrate that power generating assets and demand side services will be procured in a transparent, least-cost fashion in compliance with the IRP. This will mean that other entities will have the opportunity to enter the electricity market by becoming producers of electricity, and providers of demand-side services.

Mr. Speaker, broadly stated, the draft Bill sets clear boundaries between electricity sector participants, and it defines the roles of the Minister, the Regulatory Authority, the utility, independent power producers, bulk generators, and distributed generators. All have a part to play and all will have regulated responsibilities of some kind. The role of the Minister will be in setting policy, which will be implemented by the Regulatory Authority. The oversight and regulation of providers will be handled by the Regulatory Authority. The draft Bill makes no provisions for achieving a set percentage of renewable generation by a certain date, but it does provide an enabling framework for renewable energy utilization and development. The goal is to facilitate the use of renewables because they make good economic sense for Bermuda and not through the extensive subsidies which exist in some other jurisdictions.

Mr. Speaker, At this stage offenses and fines are absent from the draft Bill This is one of several refinements that the Department of Energy will be developing over the summer for inclusion in the final draft of the Electricity Bill, following public input.

Mr. Speaker, Other elements of the proposed legislation that will be developed during this time frame are the consequential amendments to the Regulatory Authority Act 2011 and authorization fees. Now that the RA has been fully operational for more than two years, certain procedural issues have also come to light, making it necessary to amend the Regulatory Authority Act in order to improve its operations. The RA Act will be carefully examined in collaboration with the Regulatory Authority and the Department of Telecommunications to ensure that any amendments made benefit all regulated sectors.

Mr. Speaker, I would like to take this opportunity to encourage the public to give us their thoughts on the Draft Electricity Bill and provide feedback in writing to the Department of Energy, at energy@gov.bm, by August 31st, 2015. We believe that public and stakeholder input is an important tool in the development of effective energy legislation and regulation.

Mr. Speaker, In closing, I wish to extend my thanks to the Department of Energy and the broader team that made this possible, in particular the guidance received from the Attorney-General’s office, our electricity policy experts, Castalia Advisors and Legislative Drafting Services. I would also like to thank the Bermuda Energy Working Group and the stakeholders, who have invested much time and effort thus far and who continue to help support us in our efforts. Their input has been invaluable.

Thank you Mr. Speaker.

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