Focal points of the Energy policy
The government of Curaçao applies a number of focal points for the policy to be conducted in the energy sector with regard to the provision of electricity, water and fuel.
An enumeration of the focal points for the policy in the energy sector:
- To execute a transparent and stable system for the determination of the energy tariffs within the country
- To apply a reliable and effective management- and steering mechanism for the implementation of the public and private tasks in the energy sector
- To offer energy provisions whereby, to the extent as possible, sustainable sources of energy generated by the country itself, are used
- A drastic reduction of the consumption of energy per capita, resulting in energy saving
Spheres of activity and market players
Within the sector Energy the provision of electricity, water and fuel are counted among the tasks of supervision and regulation, allocated to BT&P, by an assignment from the government of Curaçao. The supervision and regulation are related to the production and distribution of electricity, water, fuel products Mogas95 (gasoline), Low Sulphur Diesel (LSD), Liquefied Petroleum Gas (LPG), Gasoil (HSD), Diesel (MDF), Marine Fueloil (MFO) and Bitumen.
The regulation of the sectors which are subject to the Energy market, is by design almost identical in many aspects, because of the similarity in a heavy duty infrastructure and the distribution network. These sectors have in common that they all have a technical network, which facilitates the supply to the end-user.
BT&P focuses its supervisory and regulatory authority on the main producers and suppliers of electricity and water and fuel products, to wit: Aqualectra and Curoil N.V. Its pertinent task in this respect is to cause these parties to operate and function as efficiently and transparently as possible in the interest of the consumers. With this objective in mind it supports the government in developing policy and supervisory frameworks, regarding electricity, water and fuels and in addition it is entrusted with the implementation of these frameworks pursuant to instruction from the government.
Areas for attention of market regulation
The areas for attention of BT&P in the regulation of the energy market, are to be distinguished as follows:
- Price regulation
BT&P has an advisory function to the government regarding adjustment of the prices, based on the existent guidelines or regarding tariff proposals submitted by market parties. The main principles applied therewith for a monopolistic market are non-discrimination, objectivity and transparency in order to prevent abuse of market power. On the other hand in a monopolistic market the principle of cost-orientation is driving the market, by simulating a competitive market.
The present markets on Curaçao are highly monopolistic, however. By the absence of competition there is relatively little pressure on the prices. With fuels for example the market development is promoted through regulation based on a simulation of a competitive environment.
- The development of policy and regulation frameworks
The factors which control the determination of policy- and regulation frameworks are the market structure, the concessions, the procedure for allocating a concession, -prescriptions and -restrictions, the terms of delivery between the concession-holder and the client, the applicable tariff for the provision, the economic and technical quality of the provision, the organizational and regulatory function and the extent to which the policy is suitable for implementation.
- Application of economic and technical quality regulation
The quality of the provisions is tested by applying technical, as well as economic criteria. For electricity the technical criteria, among other things, include the mains voltage of current, the frequency, the strength of the network and the speed with which faults and disruptions in the service are solved.
The economic criteria include, among other things, the terms of delivery, the conditions of the concession, the speed with which connections are completed, the procedures at disconnections of users and the processing of complaints.
- Granting a concession
The energy policy results in the allocation of a concession to the providers in the market. Currently this is only applicable in the field of electricity provision (Aqualectra). The concession represents the contractual rights and obligations between the government and the concession-holder. Departing from the concession, various other aspects can be substantiated which are relevant for the specific provision for which the concession is granted, for example the tariffs.