WASHINGTON — With funding from the Asian Development Bank, the National Association of Regulatory Utility Commissioners has launched a training series on the role Pacific regulators can play in ensuring effective power purchase agreements.
This series of six two-hour virtual trainings being delivered from April 14 to 23 is designed specifically for members of the Pacific Energy Regulators Alliance and regulatory staff in select utilities. It is part of an ADB effort to promote modern regulation of energy utilities in the Pacific through capacity-building, exchanging knowledge and skills and leveraging Pacific countries' limited resources to address common challenges. NARUC first engaged with energy regulators in the Pacific Islands in late 2018 to share international best practices regarding the development of regional regulatory associations.
The training will provide participants with the tools necessary to procure energy through long-term PPAs, with a focus on procuring renewable energy. Some of the topics discussed during the first session cover the purpose of PPAs and specific challenges with PPA regulation in Pacific Islands. The series also highlights the importance of transparency and disclosure in public-private partnerships and PPAs to increase private investment and public confidence, ensure value for money and reduce the risk of corruption.
Participants include the Renewable Energy Development Division, Office of the Prime Minister, Government of the Cook Islands; the Pohnpei Commission and Department of Resources and Development from the Federated States of Micronesia; the Fijian Competition & Consumer Commission; the Nauru Utilities Corporation and Department of Climate Change and National Resilience; the Palau Public Utilities Corporation and Palau Energy Administration; the Papua New Guinea Independent Consumer and Competition Commission and PNG Power; the Samoa Office of the Regulator; the Secretariat of the Pacific Community; the Solomon Islands Electricity Authority and Ministry of Mines, Energy, and Rural Electrification; the Tonga Electricity Commission; and the Vanuatu Utilities Regulatory Authority.
In addition to the technical training provider’s course instructors (Cadmus), regulators and expert panelists from Canada, Peru and the United States joined to share best practices.
The role of the regulator is to ensure that power is provided to consumers at lowest cost with good quality of service, while balancing the needs of the utility to be financially viable. A power purchase agreement is the contractual mechanism between a generator and utility that outlines the price, payment terms and service obligations. Because the utility is often backed by a guarantee from the national government, the government de facto is a key negotiator in the terms of the PPA.
“When PPAs are negotiated in non-transparent processes, without stakeholder consultation and regulatory review, the regulator is not able to effectively ensure that the needs of the consumer are protected, which emphasizes the need for transparency and certainty in power purchase agreements,” said NARUC Director of International Programs Erin B. Hammel during the training series’ opening remarks.
“ADB is pleased to support this training which provides a blueprint for transparent and competitive processes, along with sound, predictable regulatory involvement that can boost investors’ confidence and lead to all round improvement in the energy sector,” said Mukhtor Khamudkhanov, director of ADB Pacific Department’s Energy Division. “The training will also positively impact consumers through the creation of reasonable rates, improved service quality and increased access.”
After the training, NARUC will prepare a user-friendly manual to build on the knowledge shared through the web-based trainings and help ensure that new knowledge remains active within the regulatory institutions.
NARUC is a non-profit organization founded in 1889 whose members include the governmental agencies that are engaged in the regulation of utilities and carriers in the fifty States, the District of Columbia, Puerto Rico and the Virgin Islands. NARUC's member agencies regulate telecommunications, energy, and water utilities. NARUC represents the interests of State public utility commissions before the three branches of the Federal government.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.