The World Bank Report No: ISR14454 Implementation Status & Results OECS Countries Eastern Caribbean Energy Regulatory Authority (ECERA) (P101414) Public Disclosure Copy Operation Name: Eastern Caribbean Energy Regulatory Authority (ECERA) Project Stage: Implementation Seq.No: 5 Status: ARCHIVED Archive Date: 07-May-2014 (P101414) Country: OECS Countries Approval FY: 2011 Product Line: IBRD/IDA Region: LATIN AMERICA AND CARIBBEAN Lending Instrument: Adaptable Program Loan Implementing Agency(ies): OECS Secretariat Key Dates Board Approval Date 16-Jun-2011 Original Closing Date 31-Dec-2016 Planned Mid Term Review Date 09-Jun-2014 Last Archived ISR Date 30-Oct-2013 Effectiveness Date 21-Jun-2012 Revised Closing Date 31-Dec-2016 Actual Mid Term Review Date Project Development Objectives Project Development Objective (from Project Appraisal Document) The objective of the Project is to establish and operationalize a regional approach to the development of the electricity sector inParticipating Countries by supporting the establishment of the ECERA. Has the Project Development Objective been changed since Board Approval of the Project? Yes No Component(s) Component Name Component Cost Setting up the ECERA 2.61 Operationalizing ECERA 2.99 Overall Ratings Previous Rating Current Rating Public Disclosure Copy Progress towards achievement of PDO Moderately Satisfactory Moderately Unsatisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Unsatisfactory Overall Risk Rating Substantial High Implementation Status Overview The Project was approved by the Board on June 16, 2011 and became effective on June 21, 2012. Since effectiveness, the OECS Secretariat has completed the hiring of the key staff for the Project Implementation Unit. The Regional Energy Committee (governing body) of the ECERA project has met 7 times. In addition to Grenada and St Lucia, the following countries attended as observers: Antigua and Barbuda, St Kitts and Nevis, and St Vincent and the Grenadines. CARILEC and ECTEL also attended the meeting as observers. While the Project has been slow to kick off due to the delay in obtaining effectiveness, a number of activities are now underway covering a significant proportion of the Phase A Page 1 of 6 The World Bank Report No: ISR14454 deliverables. Key consultancies that are currently underway include the following: Self-financing mechanism: Key aspects of the consultancy include (a) recommendation on a sustainable mechanism to enable ECERA to be self-financing after three years of initial operation and (b) a review tariff methodologies to develop an efficient power pricing strategy. Work is expected to commence shortly. Public Disclosure Copy Consultancy to establish the legal basis for ECERA: key aspects of the assignment include (a) draft the legal treaty for ECERA; (b) review the ESAs for Participating Countries and determine changes, if any, required to allow ECERA to have appropriate legal authority to do its job. Work is underway. Consultancy to develop the tools and mechanisms to enable ECERA to function as a regional regulatory body (Expressions of interest currently under review): Key tasks envisaged under the consultancy are (a) prepare a 3 year business plan for ECERA; (b) develop administrative manuals for ECERA; (c) procedures, guidelines and model documents for ECERA core regulatory functions (including procedure for conducting tariff reviews, license approvals, utility investment plans, and IPP bids.) While the Project is starting to show progress, pressure to deliver concrete results this year has intensified. During the recent supervision mission in March 2014, the representatives from Grenada and St. Lucia both expressed doubt that there would be adequate rational to move the Project to Phase B unless at least two more participating countries join ECERA. In addition, for both countries, revision of their respective Electricity Supply Act (ESA) is a top priority. The slow rate of execution to complete this work has been a source of some frustration in both countries. Unless progress is made, they will have even stronger reservations that the Project is beneficial. The World Bank team will maintain close project supervision to ensure that this task is completed within the next three months. Implementing a strategy to encourase other countries to join the ECERA is a top priority for 2014. The main candidate countries are Antigua and Barbuda, St. Kitts and Nevis, and Dominica. The OECS will consider using its next Heads of Authority meeting (May 2014) as a forum to seek additional country commitments to ECERA. The Bank has begun to lay the foundation for an approach to secure additional ECERA member countries by presenting a preliminary briefing on this matter to senior government officials in St. Kitts and Nevis and in Antigua and Barbuda. Over the next two months, concerted efforts will be made to secure their participation, plus that of Dominica, at ECERA meetings (including REC and other workshops), and targeted missions may be organized to present the benefits of ECERA to potential country partners. SIDS DOCK Grant Funds: In parallel to the IDA funds, $1.5 million in Grant Resources from the SIDS Dock facility are to be used with the endorsement of the REC. These activities are designed to support the effective implementation of the ECERA. The REC has endorsed the initial set of initiatives for the SIDS Dock grant resources. While the implementation fate of ECERA remains uncertain, both Grenada and St. Lucia have indicated that they see value in the SIDS Dock activities regardless of the outcome of the ECERA. Initial strategy for increasing the participation of additional OECS countries in ECERA (Bank executed, completed). Success of ECERA as a regional regulator is critically dependent on expanding the participation of other OECS countries beyond Grenada and St Lucia. Recognizing this, the Bank engaged a consultant, Dr. Gary Jackson (former executive director of CARILEC) who has deep knowledge of the electric utility and regulation in the OECS. The strategy note is helping to guide outreach activities and stakeholder engagement. Strategy and business models for energy efficiency investments in the OECS countries (Bank executed, completed). Recognizing the need to improving energy efficiency and increasing investment in energy efficiency, the Bank engaged Econoler to identify the potential regulatory changes and commercial structures that would create incentives for the different OECS countries to favor the development and implementation of energy efficiency initiatives using the national utilities as a vehicle as the main drivers for implementation. Public Disclosure Copy The consultant focused on two potential areas of intervention: (1) Public sector facilities, including street lighting and (2) Private sector facilities, with a special focus on the hotel sector. Training (recipient executed, planning stage): training of energy sector staff in the OECS region to increase awareness of the benefits of independent regulation, outreach to other OECS countries to increase participation in ECERA and funding of Observers Participation. Support for regulatory forums (recipient executed, in progress): The Bank is collaborating with CARILEC (Caribbean Electric Utility Service Corporation) to provide support for the organization of three regulatory forums involving political leaders, policy makers, managers and owners of utilities. The first forum was in September 2013 (Barbados), the second event was held in April 2014 (St. Lucia), and the third event is tentatively scheduled for October 2014 (Grenada). Preparation of grid-codes and policies to promote renewable energy (Bank executed, proposals currently under review): the key tasks under this activity are to (i) understand the impacts (technical, economic, and financial) of increased penetration of variable and baseload renewable energy technologies in small, diesel dominated grids; (ii) determine the Page 2 of 6 The World Bank Report No: ISR14454 renewable energy procurement strategies that are most likely to be effective for the ECERA countries; (iii) prepare standard feed-in-tariff policies and renewable portfolio standards; and (iv) prepare a grid-code to support the safe and efficient use of geothermal, solar photovoltaics and wind resources. Preparation of model PPA and renewable energy experience stock-taking (Bank executed, RfP to be released shortly): the key tasks under this activity are to Review the experiences Public Disclosure Copy of Small Island Developing States (SIDS) with the procurement and implementation of grid-tied renewable energy in order to prepare an appropriately tailored model Power Purchase Agreement (PPA) for renewable energy technologies (RETs). RETs shall include wind, solar, geothermal, waste to energy, and bioenergy. Locations No Location data has been entered Results Project Development Objective Indicators Indicator Name Core Unit of Measure Baseline Current End Target Entry into force of the ECERA as theregulator Text Value No regional regulation or ECERA treaty being drafted, ECERA Treaty prepared and of Participating Countries electricity markets, regulator for the electricty and revised draft ESAs being ratified by member states and materialized by ratification in Participating sector prepared. countries of theECERA Treaty (corresponding Date 30-Jun-2011 14-Apr-2014 18-Aug-2014 to Part A). Comments Adoption of new licensing recommendations by Text Value Exisiting licences with Will be executed under SIDS Provisions for incorporating the Council of Ministers (corresponding to Part inadequate provisions for Dock grant best practices in the licencing B). promoting energy efficiiency, process renewables, IPPs and other recent best practices Date 30-Jun-2011 14-Apr-2014 30-Jun-2015 Comments Design and adoption of cost reflective and Text Value Tariff setting process depends Being prepared as part of Independent tariff setting performance based tariffs in Participating on countries and provisions in design consulting contract to process reflecting costs and Countries (corresponding to Part B). exisiting licences and policies begin execution shortly performance adopted from time to time Date 30-Jun-2011 15-Apr-2014 30-Jun-2015 Public Disclosure Copy Comments Intermediate Results Indicators Page 3 of 6 The World Bank Report No: ISR14454 Indicator Name Core Unit of Measure Baseline Current End Target Draft treaty establishing the ECERA prepared, Text Value No agreement or institution in ECERA treaty being drafted, ECERA treaty establishing a for approval of the Heads. place for regulation of the ESAs revised regional regulator is prepared Public Disclosure Copy electricity sector for approval Date 30-Jun-2011 14-Apr-2014 27-Jan-2014 Comments Treaty establishing the ECERA ratified, by Text Value No ECERA Treaty ECERA treaty being drafted, ECERA Treaty ratified Participating Countries. ESAs revised Date 30-Jun-2011 14-Apr-2014 18-Aug-2014 Comments Amendments to domestic legislation Text Value No legislative basis to In progress Legislation operationalizing tooperationalize the ECERA at a national level operationalize ECERA at the ECERA adopted in member prepared, for review by the respective national level countries Attorneys General. Date 30-Jun-2011 14-Apr-2014 15-Dec-2014 Comments Full complement of staff for the ECERA hired. Text Value No staff for the ECERA Recommendation on optimal Staff hired. staffing strategy will be prepared by the design consultancy Date 30-Jun-2011 14-Apr-2014 07-Jan-2013 Comments Commissioners appointed. Text Value No Commissioners. Commissioners to ECERA appointed. Date 30-Jun-2011 15-Apr-2014 30-May-2014 Comments Data on Financial Performance (as of 09-Apr-2014) Financial Agreement(s) Key Dates Public Disclosure Copy Project Ln/Cr/Tf Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date P101414 IDA-49350 Effective 16-Jun-2011 23-Sep-2011 21-Jun-2012 31-Dec-2016 31-Dec-2016 P101414 IDA-49360 Effective 16-Jun-2011 23-Sep-2011 21-Jun-2012 31-Dec-2016 31-Dec-2016 P101414 TF-16770 Effective 17-Oct-2013 05-Nov-2013 05-Nov-2013 31-Aug-2014 31-Aug-2014 Disbursements (in Millions) Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P101414 IDA-49350 Effective USD 2.80 2.80 0.00 0.50 2.28 18.00 P101414 IDA-49360 Effective USD 2.80 2.80 0.00 0.50 2.26 18.00 Page 4 of 6 The World Bank Report No: ISR14454 P101414 TF-16770 Effective USD 0.30 0.30 0.00 0.00 0.30 0.00 Disbursement Graph Public Disclosure Copy Key Decisions Regarding Implementation The core challenge for ECERA prior to its becoming operational is to secure other countries to join. The main candidate countries are Antigua and Barbuda, St. Kitts and Nevis, and to a lesser extent Dominica. The other OECS country, St. Vincent and the Grenadines has officially stated that it is not interested in joining ECERA. The Participating Countries agreed that, in an effort to increase the number of participating countries, the opportunity to join ECERA at no cost will be presented to candidate countries. The details of this offer have not been articulated but would be negotiated with the additional countries should they express and interest. Its was decided during the supervision mission that the engagement strategy would involve parallel and joint efforts by the Bank and the PIU. In the near term, another critical priority for the Project is to ensure that the consultancy for the ECERA legal basis is implemented. In particular the component related to the reform of the Electricity Supply Acts (ESAs) in St. Lucia and Grenada. The participating countries noted that the ESA reform drafts need to be delivered by no later than July 2014. Public Disclosure Copy Given the urgency to complete the ESAs, the legal consultancy will continue under the understanding that the scope of work includes complete drafts of the ESAs, the legal basis for ECERA, and proposals for the necessary secondary legislation/regulation. Toward the conclusion of this consultancy, the ECERA management team (REC, OECS, World Bank) will review the recommendations for the secondary legislation/regulation and will determine the most efficient approach to execute this activity; including consider the potential to add this task and funding to the current consultant or engage another entity/consultancy to complete this effort. ECERA/SIDS Dock TA activities shall continue implementation as both Grenada and St. Lucia see value in these activities. (Some reduction in scope of the communications consultancy may be needed, or until clarity on the future of ECERA is assured). Restructuring History There has been no restructuring to date. Page 5 of 6 The World Bank Report No: ISR14454 Related Projects There are no related projects. Public Disclosure Copy Public Disclosure Copy Page 6 of 6