Prime Minister's Press Secretary
Thursday, December 22, 2005 - The House of Assembly on Tuesday voted to
amended the Electricity Supply Act (ESA) to, among other things, legislate for
the company to share any profits it earns over 10% with consumers and ensure
that the average price of electricity in Saint Lucia remains one of the lowest
in the Caribbean.
The Act, which was first introduced by the then UWP administration in 1994, had
already been amended three times.
The first amendment was made by the John Compton administration in 1996, to
introduce a charge by government on fuel purchased by the company.
The second amendment, undertaken by the Labour administration in 2001, was to
reduce future electricity tariffs, while the third, in 2003, sought to restrict
future shareholder investments to no more than 20% of the company's equity, to
ensure majority local ownership of this vital public utility.
Tuesday's sitting sought, among other things, to further amend the Act to reduce
the minimum return on equity capital from the current 15% to 10% and the equal
sharing, with certain yet unspecified sectors of the economy of any profits that
are above a return on equity capital of more than 7% above the cost of
government's long-term debt.
Admitting that the amendments to the bill was a complex matter, the Prime
Minister explained that it was not yet decided who the profits should be shared
He said, however, that there was a proposal by some that “the accrued profits
should be shared with the productive export sectors of industry and tourism.”
Proponents of this view, he said, advocated that it would be justified, “because
they are heavy users of electricity who need to compete with foreign
competitors, particularly as we approach the CSME; because they are currently
faced with tariffs that are 45% higher than for domestic consumers; and because
the level of subsidy that they provide to other consumers is out of line with
what prevails in the region.”
The Prime Minister said the proponents of this approach say that “all of Saint
Lucia is expected benefit from the arrangement, as the island's export
industries are likely to be strengthened to increase output, foreign exchange
and employment, which is what the economy needs to improve the standard of
living and quality of life of citizens.”
In their view, he said, “the country has no choice but to reduce the unduly high
energy cost burdens on our foreign exchange earners of tourism and industry,
whose energy bills could be as high as 15% of their cost of production.”
“To do otherwise,” he further explained, “would be to reduce our own domestic
ability to pay for electricity.”
Dr Anthony said it was also expected that “since WASCO, as an industrial
enterprise, will also be a beneficiary of the amendments to the Act, there will
also be some marginal relief to water consumers, who constitute all the citizens
of Saint Lucia.”
He indicated, however, that a final determination has not yet been made.
According to the PM: “The jury is still out on this and the matter will have to
be resolved in the new year.”
Meanwhile, citing the average price of electricity in Barbados, Grenada, the
Cayman Islands, Bermuda, St. Vincent and the Grenadines and Dominica in the year
2004, the Prime Minister noted that Saint Lucia had the fourth lowest price --
very close to Grenada and the Cayman Islands -- and local prices were 26% lower
than the highest-priced supplier among the countries cited.”
The Prime Minister pointed out, however, that when one considered that “Dominica
and St. Vincent use a combination of hydro and diesel fuel, while the facilities
in St. Vincent and Antigua are state owned, the proposed initiative should make
the average price of Saint Lucia's electricity the lowest, after Barbados, among
the countries cited.”
The Prime Minister said the amendments were being proposed at this time because
it was necessary to reflect the changes in the new financial year of LUCELEC.
The Government, he explained, has had lengthy discussions with LUCELEC and it
has taken some time to refine the provision of the bill.
He also said it was being presented at this time because the government wanted
the provisions to begin to have their impact from the beginning of 2006, which
is also the proposed commencement of the CSME.
Dr. Anthony said: “We want our productive export enterprises to be even more
ready for the challenges of the CSME and liberalization.”
The Prime Minister notified his parliamentary colleagues that “this initiative
is also the beginning of other reforms and amendments to the ESA, to further
improve LUCELEC's performance, to maintain it as a best practice institution and
to keep it at the cutting edge of developments in the power sector.”
Tourism, Commerce, Investment and Consumer Affairs Minister Philip J. Pierre, in
his contribution to the debate said the latest developments “follow a pattern of
reform of the public utilities sector” that has been in evidence since 1997.
He recalled that while the initiatives of the present government in the
telecommunications sector initially attracted negative response, they eventually
“led to lower cost of telephone calls generally and an explosion in the cell
phone market, which has benefited all Saint Lucians.”
Mr. Pierre noted that similar planned reforms also followed soon after in the
water sector, “resulting in the new WASCO Act.” Now, he said, “it is the turn of
the electricity sector.”
The MP for Castries Central, Mrs. Sarah Flood-Beaubrun, at the commencement of
her contribution, said she would vote against the amendment. But when the final
vote was taken on the third reading, she did not protest her objections.