“Effective Energy Regulation”

Ing J.D. De Canha Director

Bureau of Telecommunications

Post and Utilities

Curacao, Dutch Caribbean

March 29th 2012

1. How it all started 2. The energy policy 3. The market model 4. Regulations 5. Small scale renewables 6. Certification 7. Implementation

Content

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1995: Bureau of Telecommunications was established

1997: the task as regulator for Postal Services was assigned

2009: the task as regulator for Electricity, Water and Fuels was assigned

2012: the task as regulator for Health Care was assigned

1. How it all started…….

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In 2010 the market and regulatory analysis was done for the electricity sector resulting in draft overall policies

February 16th 2011 the overall policy for Electricity was approved by the Government

November 16th 2011, the policy for small scale renewable Electricity production followed

The overall policy contains basis principles of regulations

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2. Regulation follows policy

Analysis showed major issues, which required immediate action: High prices, low quality No renewable energy No energy savings No market orientation Consumer interests need attention

2. Analysis of the Energy sector

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2. Principles of the new Policy

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Affordable prices for households and business Reliable services Sustainable energy production, minimum of

25% in 2015 Switch from oil to natural gas for at least

another 25%Energy savings first Market orientation for production (IPP’s) Introduction of feed-in and net-metering Consumer interest to be secured Independent regulatory body

Electricity market is split up into the following two segments: 1) Utilities Segment:

Electricity Production Electricity Distribution (feed-in, transmission & distribution) Electricity Supply

2) Market Segment: Customers consume 40% of the market demand Businesses consume 60% of the market demand

Regulations is set-up for these segments separately

2. Electricity market

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Production, distribution and supply to be regulated separately;

Multiple concessions for large scale production

Exclusive concession for the distribution company;

Supply will be part of the distribution concession for the time being;

Introduction of small scale renewable production.

3. New Market Model needed

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PRODUCER 1:

AQUALECTRA

PRODUCER 2:

RdK

PRODUCER 3:

NU Capital

PRODUCER 4:

Tbd

NETWORK COMPANY

(AQUALECTRA)

ELECTRICITY SUPPLIER

(AQUALECTRA)

PRODUCER 5:

Tbd

CUSTOMERS

OWN PRODUCTION

UP TO 1MW

Production Distribution Supply 3. New Market Model

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Concession regime with strong focus on requirements and reliability of production;

Concessions will be based on long term investments and guaranties including pricing;

Concessions will include transition to sustainable energy and natural gas;

First step is a formalization of existing situation via granting concessions to current producers; additional capacity after that.

Small scale renewable electricity

4. Regulation of Production *Durable 2012

Natural monopoly, to be granted to state-owned company Aqualectra;

Separate regulations on multiple subjects: Production and quality of power; Availability of power and maintenance; Capacity planning and investments; Net balancing; Terms and conditions; Safety and security;

If eligible, large and small scale producers have to be connected to the network;

Price regulations based on efficiency (LRIC)

4. Regulation of Distribution

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No natural monopoly, for the time being granted to state-owned company Aqualectra;

Consumer interests to be secured via requirements on:

Universal services, non-discrimination Terms and conditions Invoicing and debt collection Disconnection rules Complaints Prepaid services

Price regulations based on efficient operations

4. Regulation of Supply

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Small scale renewable electricity production allowed as of January 1st

Households up to 10kW, companies up to 1MW; Net metering for households, production tariffs for

companies.

Stimulation via tax regime (adjusted duty tariffs) and feed-in tariffs;

5. Small-Scale Renewables

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Cost orientation with a reasonable payback period between 5 to 7 years

No need for fossil fuel power generation in order to attain cost savings

Net metering for residential customers (domestic rates, excess production at 0,40ANG/kWh in 2012)

Net billing for businesses (at 0,42 ANG/kWh in 2012)

Tariff procedure to determine and adjust tariffs over time

5. Principles for Feed-In Tariffs

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Quality of installations needed for network stability

International Solar and Wind standards Certified products only (IEC standards) Certified installers only; Inspection of installations before

commissioning.

5. Quality of Small Scale Renewables

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Rules and Regulation

6. 1st Certification Class completed early 2012

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Practical Training

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6. 1st Certification Class completed early 2012

Inspector Training

6. Inspector Class completed early 2012

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The New Policy is just the beginning of the transition

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7. Implementation has already started in 2012