CUC denies conflict, blames licensing obligation
(CNS): Caribbean Utilities Company (CUC) has claimed it is not conflicted over the bidding process for the generation of renewable power, even though it worked with OfReg to shape the bid. Officials have said that under CUC’s Transmission and Distribution (T&D) Licence, it is obligated to assist the regulator with the facilitation of competitive bids “to ensure… there is adequate supply of generation capacity and energy” to deliver a reliable service.
In a recent freedom of information appeal, the Office of the Ombudsman raised concerns about CUC’s role in forming the request for proposal when it is also competing in the bid.
In Ombudsman Sharon Roulstone’s ruling, she ordered OfReg to release two reports created by CUC. However, she also pointed out that CUC, which holds a monopoly on the sale of electricity on Grand Cayman, was helping to design the specifications of the bid in which they are an interested party.
“In my mind, this has the appearance of a conflict of interest,” Roulstone stated in her written decision. “It is not clear how OfReg intends to safeguard equitable competition principles in the evolving electrical power generation landscape, in the first instance in relation to the RFP which — as both OfReg and CUC stated — is jointly being prepared between them.”
Roulstone said the RFP involves highly technical matters, and OfReg may “very well have to rely on outside help to formulate as complex an RFP as this”. However, she noted that releasing the documents OfReg is attempting to withhold could “enhance, effective and fair competition, given that one party already seems to have an advantage”.
In a statement following the publication of the FOI appeal decision by the OMB, the power provider said that to ensure a comprehensive understanding for qualified bidders to calculate their anticipated costs for bid submissions, CUC shares detailed technical information in advance of the process with OfReg.
CUC said that as part of that process, it was required to develop a draft Power Purchase Agreement (PPA) for OfReg to review and approve for inclusion in the bid. If a party other than CUC is successful in the bid, the draft PPA would be negotiated into a final supply contract between the winning bidder and CUC.
“Despite perceptions of a conflict of interest surrounding these technical submissions, it is essential to clarify that they are not designed to provide CUC with an unfair advantage in the bidding process, but rather to provide an equal bidding opportunity,” the CUC statement claimed.
“It is imperative that bidders have a draft PPA to understand the starting point in any such negotiations and to anticipate their eventual contractual commitments if they are successful in their bid.”
The power company also claimed that the Cost of Service Study, used by CUC to justify hiking electricity costs, is about “re-balanced and restructured rates” based on the consideration of rate classes and various relative characteristics, such as the number of customers, energy sales, impact on peak demands and revenues.
The statement said the exercise was “revenue-neutral” for CUC and did not result in any additional earnings, but the adjustments are made across rate classes to maintain fairness and equity in pricing.
CUC is already guaranteed a significant profit margin in its licence deal with the Cayman Islands Government, which was first negotiated in 2008 when it had less than 25,000 customers compared to the 33,611 it now has. In its year-end results for 2023 unveiled this week, the company’s net earnings of $38.7 million had increased by 17% compared to 2022. Sales had increased by 8%, partly due to a rise in temperatures and 492 new customers.
Regardless of its licensing obligations, CUC has a clear advantage in the current bidding process, which is intended to increase the amount of energy generated from renewables. However, CUC said that OfReg holds authority over the approval of utility-scale solar projects, and it is fully prepared to participate in the process to advance large-scale renewable energy initiatives.
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Category: Business, Energy, Science & Nature, utilities
Bury the powerlines.
11:20 pm, would you pay the millions to bury the power lines ?
We already have. CUC posts record profits YOY.
use the profit money!
We the people need OTHER options! CUC can’t remain the only option for power on this island!
CUC and OfReg are working in collusion to block deployment of solar and other renewables. What does Jennifer Ahearn have to say about that?
Do ya think? Really…
Ask your MP about their CUC shareholding or look at how many Caymanians enjoy a CUC dividend to understand there is no political will to upset the equilibrium. Given that model CUC profit will win over the environment every time to block all energy alternatives and import more diesel.
Has anyone factored in the net generating capacity JUST TO CHARGE ELECTRIC VEHICLES? At 100% EV usage, power capacity just to charge these vehicles alone will require 800%-1000% increase in generating capacity!
Are we ready for THIS?
im ready
Major car manufacturers are halting production of EV’s. The market is simply not there as a replacement for ICE powered vehicles. Toyota have stated the ‘hybrid’ model is as far as they will go. After Ivan, many people had no power for over a month. An EV would have been useless
Toyota just launched two new EVs, will have six EVs by 2026 and already has two.
Toyota’s new CEO adjusts EV plans but sticks to a hybrid approach
https://electrek.co/2023/04/07/toyotas-new-ceo-adjusts-ev-plans-but-sticks-to-a-hybrid-approach/
The title is a pun (that went over your head, apparently). It is a pun because of the double meaning of the word ‘hybrid’ in this context. A ‘hybrid approach’ means two or more strategies. In this context, it is a pun because it combines the meaning of hybrid car with hybrid approach. It is referring to Toyota’s business strategy of continuing to make both hybrid and electric cars. You’re welcome.
From the article: “Hiroki Nakajima, executive vice president at Toyota, explained the company’s new electrification strategy, including 10 new battery electric vehicles by 2026, representing 1.5 million EV sales annually.”
Then explain why Toyota is investing heavily in ammonia powered engines? Yes it is a pun, but bottom line is that the market for EV’s is limited and Toyotas’ focus is on hybrids and alternate fuels for ICE. Toyota has a political strategy too remember. They rely heavily on exports so the manufacture of EV’s is largely so the export of ICE vehicles can continue. In other news, the mining and investment of lithium has been scaled back drastically. Take note of the indicators or keep believing the fiction that EV’s are the solution
And totally missed sales targets
Please stay off of facebook for your information on the electrical grid. Firstly there is never a situation where 100% of cars will be charging at the exact same time. Do you see all the cars in cayman filling up at the exact same time? No that would be chaos and the fuel reserves on island would deplete. Use some common sense.
Power capcity to charge EVs have a negligble effect on the electrical grid and it’s capacity for this same reason. It’s the same reason the introduction of ineffecient devices like microwaves, fridges, electrical stoves and so on didn’t have an effect on the grid as electrical suppliers simply adapted.
I’m really interested in the peer review study that says 100% ev adoption would increase electrical capacity demands by 1000%
You are almost right. When do you think most people will charge their cars?
Likely answer is overnight, so in a way it is like gas powered vehicles all going to the pumps at the same time.
Yes and no, while a good majority of people will charge overnight, peak demand is still falling as more effecient electrical products are adopted.
Like I said already, if all cars were suddenly switched to EVs and all charged at the same time demand would only increase by about 5%-10% and even so, countries across the world are adapting to these changing demands like they have before with wildly more ineffecient electrical products of the past.
The assumption that the grid just stays stagnant to changing demand, without any kind of adaption over the decades would mean we’d have frequent load shedding a long long time ago.
That’s nothing but a hypothetical though. Isn’t it? This small country is NOWHERE Near being 100% EV. This would take YEARS. By that time, we’ll have tons of options or more electrical infrastructure built.
Seriously! By way of the CIG monopoly contract CUC has taken advantage of the people and businesses of Grand Cayman for decades. Who else on Island is guaranteed the margins they enjoy regardless of how they perform. They have zero commitment to alternate energy sources and the environment.
its kind of like a negative profit Cayman Airways
Who remembers the positive impact we all enjoyed following the breaking of the Cable & Wireless monopoly? Such a privilege afforded to CUC has no place in 2024.
only way is go completely off grid…but greed has cost of batteries so high…out of reach of poor man…
CNS I think you should verify the comment about CUC being “guaranteed a significant profit margin”. As I recall that was removed many years ago to much political fanfare. Maybe when Arden McLean was the responsible minister.
True but when has OfReg ever denied them a rate raise?
I thought the “political fanfare” prevented it from being removed?
So who authorised CUC to convert to natural gas? This effort to import natural gas is also being pushed by those interested in building a gas import terminal.
Smash the CUC monopoly.
Split generation from distribution.
NET METERING NOW.
…..Only the old Soviet regeimes had 25 year deals…..
and pigs fly out of my ass
Yup