Saturday, April 20, 2024

PEOPLE AND THINGS: Energy policy wobble


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It would not surprise readers to learn that there are very few policy positions of the Stuart administration that I am comfortable with. However, there are two notable exceptions and one of these now appears to be going badly off-track.

The other and less contentious one is the recent decision to terminate Days Of Our Lives, which has for many years been nothing short of a perverse joke. Those among us who do not enjoy Days are in the minority. However, we are nonetheless happy that the Stuart administration has lifted this burden from our collective shoulders.

The more substantive policy position I support relates to energy and is manifested in two specific initiatives. One speaks to the cost of fuel (used by vehicles) which was subsidised in the final years of the BLP administration.

The Thompson administration took a wise decision and eliminated these subsidies and introduced thereafter a level of spontaneity regarding the price of fuel at the pump which now matches the cost of the imported product.

The harsh reality is that fuel is expensive and the cost is increasing. In addition, it is an imported product that consumes copious amounts of foreign exchange. It is therefore prudent that one axis of our energy policy is to price fuel in a way that helps the consumer to appreciate the true cost of this product and which ought to impact on our consumption.

The other exciting axis of this energy policy is the introduction of photovoltaic energy with the simple logic that we can reduce the quantity of fuel we collectively need to purchase by relying on an alternative source which is abundant and free.

The consumers who invest in this facility will see an immediate benefit by way of a reduction in the amount of electricity they need to buy from the BL&P and the BL&P will, in turn, need to buy and pay for less fuel.

One major challenge to the acquisition of this technology is the considerable capital investment required which Government has effectively addressed by adjusting the taxes and duties on these products and by making it prudent for finance companies to provide loans.

This is similar to the strategy employed by the Sandiford administration with respect to solar water heating and ironically this was also successfully accomplished during a recession.

In an environment where both axes of this energy policy appear to be coming together nicely, it appears as though a proverbial “spanner” has been thrown in the works by way of the BL&P’s role in this programme.

The programme relies on the BL&P’s willingness to buy excess energy generated by homeowners along with an acceptance that bills will decline precipitously. One appreciates the sensitivity of the BL&P to its bottom line and also the importance of its financial viability to the country.

Therefore, we effectively now have a clash between a hugely popular Government policy and the legitimate interest of the BL&P. Such conflicts are challenging; however one assumes that the Government contemplated these issues as it devised this policy.

It is therefore unfortunate that the BL&P has been left with two facilities which can effectively frustrate the homeowner and derail the Stuart administration’s energy policy. One is the imposition of a “cap” on the quantity of energy that the BL&P is “forced” to buy back and the other is the reality that the BL&P has the option to “take its time” in connecting homeowners to the grid.

The “cap” is said to be necessary to assure the financial health of the BL&P but whether it is five megawatts or seven, it is counterproductive to the overall objectives of Government’s energy policy. As it stands, the incentives are attractive and make it easy for people to move in the direction of alternative energy. If the intention is to capture the largest number, then the imposition of a cap is both illogical and counterproductive.

The other facility available to the BL&P is the fact that it is only the BL&P which can connect homeowners and there is already evidence that it has been tardy in connecting applicants before announcing its intention to suspend connections until a major study is completed. In the meantime, homeowners who have invested in alternative energy systems are forced to wait and of course continue to pay significant costs to the BL&P.

We are at a stage now where a clear line has to be drawn between a hugely popular Government policy and an obviously less than enthusiastic BL&P. Government needs to be cognisant of the fact that there is not much else going well at this time and jealously guard this policy from both covert and overt derailment.

As time passes, it appears as though it will be left with little other choice but to incentivise the ability of the homeowner to come completely off the grid in much the same way that it has incentivised this partnership with the BL&P which is clearly not working.

• Peter W. Wickham is a political consultant and a director of Caribbean Development Research Services (CADRES).


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