In response to Energy Fiji Ltd’s (EFL) application to revise tariff rates, this submission offers a comprehensive and objective analysis of the proposal’s potential consequences.
EFL’s request includes the introduction of a two-tiered tariff structure and increased rates.
While I understand the importance of ensuring EFL’s financial sustainability and supporting renewable energy projects, there are several critical issues that must be addressed before considering any tariff adjustments.
Background
ENERGY Fiji Ltd (EFL) maintains a monopoly on power generation and sale in Fiji.
The current energy generation mix comprises approximately 50 per cent diesel and 50 per cent renewables, primarily hydroelectric plants. EFL’s application to FCCC seeks a 32 per cent increase in electricity tariffs over the next four years to support their 10-year Power Development Plan and other objectives. Below are our objections:
EFL’s Key Points
EFL has presented several key points in support of its tariff rate increase proposal, including: The last tariff review in 2019.
• A requirement of approximately $4.3 billion investment in the power sector.
• A two-tiered tariff structure to share costs and encourage efficient consumption.
• Alignment with FCCC objectives, including affordability, efficiency, and sustainability. Opposing Points:
•Impact on consumers
1. EFL’s proposed fixed charge may impose a significant financial burden on consumers, particularly lowincome households. & We are concerned that this fixed charge structure might disproportionately affect those with limited financial resources, potentially leading to decreased access to electricity.
2. This objection is in line with global standards for ensuring equitable access to essential services. And in many developed nations, there are regulatory mechanisms in place to protect vulnerable consumers from disproportionate financial burdens associated with utility tariffs. For instance, income-based subsidies or targeted assistance programs are common tools used to safeguard affordability. It is crucial for Fiji to consider such mechanisms to prevent energy poverty, which can have adverse socio-economic implications.
•Lack of competitive alternatives
1. The lack of competition in Fiji’s energy sector be EFL’s monopoly raises questions about consumer choice and market fairness. Globally, regulatory bodies prioritise competition to promote innovation, cost efficiency, and consumer benefit. Countries often implement measures like unbundling utility services or encouraging the entry of independent energy providers to introduce competition.
2. Fiji should explore similar strategies to ensure consumers have access to affordable and diverse energy options, aligning with international best practices. This approach aligns with international best practices, ensuring that consumers have choices and benefit from competitive pricing, ultimately fostering a more dynamic and consumer-centric energy sector.
•Transparency and accountability
1. Transparency and accountability are fundamental principles in utility regulation worldwide. A detailed breakdown of fund allocation is essential to gain public trust and ensure that tariff increases are justified.
2. International best practices emphasise the importance of providing consumers with clear and comprehensible information about how their payments are used to improve the energy infrastructure. This transparency fosters a sense of ownership and understanding among consumers, promoting cooperation between utilities and the public. Investment in renewable energy
•EFL’s proposed approach
EFL’s proposal outlines the need for tariff rate increases to support their 10-year Power Development Plan, focusing on infrastructure investments and power supply reliability. However, there is room for improvement in their approach.
•Embracing global best practices
1. Direct Investment in Renewable Energy: Fiji should consider adopting global best practices by encouraging EFL to invest directly in renewable energy projects, such as solar farms and microgrids. Direct ownership of renewable assets can lead to significant cost savings, eliminating the need for tariff increases.
2. Offsetting Tariff Changes: Investing in solar renewables and micro-grids allows EFL to generate clean energy efficiently, reducing reliance on costly thermal fuels. By expanding renewable energy capacity, EFL can offset the need for tariff changes and ensure affordable electricity for consumers.
3. Promoting Sustainability: This approach aligns with global trends, where utilities are actively transitioning toward renewable energy sources to mitigate climate change. It showcases Fiji’s commitment to sustainability and environmental responsibility.
Financial benefits of direct investment
1. Cost Efficiency: Direct investment in solar renewables and micro-grids offers cost advantages over capital-intensive hydroelectric projects. It enables rapid deployment and efficient power generation, ensuring a stable energy supply.
2. Stable and Predictable Costs: Shifting focus toward renewable energy reduces the vulnerability to volatile diesel prices. Solar farms provide stable and predictable costs, mitigating financial risks associated with price fluctuations.
3. Long-Term Sustainability: Investing in renewables reinforces Fiji’s position in the global movement toward sustainable energy. It sets the stage for long-term sustainability, aligning with international goals to reduce carbon emissions.
Enhanced energy security
1. Reducing Reliance on Diesel: Transitioning to renewable energy sources, such as solar and wind, enhances Fiji’s energy security by reducing the country’s dependence on costly and volatile diesel fuel imports.
2. Micro-Grid Development: Investing in microgrids in areas prone to power outages can significantly improve energy security, providing a reliable power supply even during adverse conditions. Conclusion Encouraging EFL to invest directly in solar renewables and micro-grids is a strategic approach that can benefit both the utility and consumers. It offers financial advantages, enhances sustainability, and contributes to Fiji’s global commitments. This approach can help EFL meet its objectives without imposing tariff rate increases, ensuring that energy remains affordable for all Fijians.
Government subsidies
1. Global trends show that government subsidies play a pivotal role in accelerating renewable energy adoption and ensuring equitable energy access. Subsidising high-income users who invest in renewables can be a sensible approach to distribute the costs more fairly
2. This practice aligns with global efforts to create incentives for private investments in clean energy and reduce the dependence on fossil fuels. Fiji should consider implementing such subsidies to promote renewable energy adoption while maintaining consumer affordability.
Consumer education
1. Consumer education on responsible energy usage is a recognised global strategy to promote efficiency. In various countries, utility companies invest in public awareness campaigns, energy-saving tips, and technology education.
2. Promoting energy literacy empowers consumers to make informed choices about their energy consumption, reducing waste, and potentially mitigating the need for tariff increases. Fiji should adopt global best practices in consumer education to enhance energy efficiency awareness among its population.
Environmental impact
1. In the context of global environmental trends, reducing carbon emissions is a shared goal. EFL’s proposal should be evaluated in light of its direct contribution to environmental sustainability and the global transition to renewable energy. Many nations have set ambitious targets for renewable energy adoption, and Fiji should align its strategies with these global commitments to mitigate climate change and achieve long-term sustainability. This approach reflects Fiji’s commitment to global environmental initiatives.
Debt management
1. International utility companies often employ diverse financial strategies to meet their funding needs without imposing significant tariff hikes. These strategies include seeking international financing at favorable terms, leveraging public-private partnerships, and exploring revenue-generating opportunities.
2. Fiji can adopt global best practices in debt management to strike a balance between financial sustainability and consumer affordability. This approach ensures that the burden of financing is not disproportionately placed on consumers, aligning with international standards.
Government oversight
1. Global utility regulation emphasises the role of government oversight in safeguarding consumer interests. Robust oversight ensures that tariff changes are reasonable, transparent, and in alignment with national energy goals.
2. Fiji should consider strengthening its regulatory framework to ensure that any tariff changes proposed by EFL serve the best interests of all stakeholders, uphold transparency, and align with global regulatory standards. This approach fosters consumer confidence and ensures that utilities operate in the public’s best interest.
5. Unsustainable Power Supply and Blackouts
• EFL already struggles to provide a sustainable and reliable power supply, leading to an increasing frequency of blackouts and huge reliance on diesel generators. This issue directly impacts the daily lives of Fijian citizens and the country’s economic stability and reduction in carbon emissions.
•The root cause of these blackouts lies in EFL’s poor demand forecasting and planning, which urgently requires attention and rectification to ensure uninterrupted power supply. Globally, efficient demand forecasting is essential for maintaining a reliable power grid, and EFL should benchmark against international best practices. Inefficiency of Hydro-Electric Projects and EFL’s 10-year power production plan heavily relies on capital-intensive hydroelectric projects. While hydroelectric power is considered a renewable energy source, it is important to note that climate change is adversely affecting the efficiency of these projects. Increased dry spells and unpredictable weather patterns reduce their viability and long-term sustainability.
• Globally, there is a shift towards assessing the vulnerability of hydroelectric projects to climate change impacts. Many countries are diversifying their energy portfolios to include more resilient and climate-adaptive renewable sources.
High capital costs and risky financing
• Hydroelectric projects come with exorbitant upfront capital expenditures. These projects often require substantial loans, and the repayment period can span many years.
• EFL’s reliance on international funding exposes the company to currency exchange rate risks, which can significantly impact the costeffectiveness of these projects. International best practices recommend robust risk mitigation strategies, including hedging mechanisms, to safeguard against such risks.
Delayed power for growth
• Fiji’s growth, new investments, and the well-being of its citizens require immediate access to reliable power within the next 1 to 3 years. However, the proposed hydroelectric plants have extended construction timelines of approximately 4 to 7 years, making them unsuitable for meeting the pressing demands of the nation.
• Globally, rapid infrastructure development is a key focus to support economic growth. Delayed projects can hinder a country’s competitiveness and growth prospects, making it imperative to explore faster alternatives.
Urgent transition from diesel to renewables
• While diesel generation may be necessary in the short term, EFL must expedite the transition to renewable energy sources such as solar, wind, and battery backups. This transition is vital for sustainability, reducing greenhouse gas emissions, and reducing reliance on costly thermal fuels.
• International trends emphasize the urgency of transitioning to renewables. Many countries are setting ambitious targets to phase out fossil fuels and embrace clean energy sources, aligning with global efforts to combat climate change.
Cost-effectiveness of solar vs hydro
• Mini solar farms offer rapid deployment and cost advantages over capitalintensive hydroelectric projects. Solar energy is scalable and can be integrated into existing infrastructure more efficiently.
•Globally, the decreasing cost of solar technology has led to its widespread adoption. EFL should reconsider its investment priorities to align with these cost-effective alternatives, mirroring the trends in renewable energy adoption worldwide.
Direct investment in renewables
• EFL should consider direct investment in renewable energy projects instead of relying solely on independent power producers (IPPs). Direct ownership can lead to significant cost savings and operational control, eliminating the need for tariff increases.
• Many countries encourage direct investment in renewables by utility companies to ensure efficient resource allocation and minimise consumer costs. Mitigating diesel price volatility
• Diesel fuel prices are notoriously volatile, and EFL’s heavy reliance on diesel generators makes it vulnerable to price fluctuations. Shifting to solar farms would offer stable and predictable energy costs, reducing financial risks.
• Global energy markets recognize the unpredictability of fossil fuel prices. Transitioning to renewables is seen as a strategic move to achieve cost stability.
Lack of substantial solar uptake
• EFL’s concerns about increased private sector uptake of solar rooftops, the basis for their tariff change application, lack substantiated data. Currently, there is insufficient evidence to warrant tariff changes, and EFL’s application remains unjustified.
• Internationally, robust data analysis is a fundamental requirement for policy changes in the energy sector. Decisions should be evidencebased and transparent to ensure the best interests of consumers. Need for Comprehensive Data and Analysis
• EFL’s application lacks critical data and detailed analysis of competition from private rooftop solar power. Without factual reasons and supporting evidence, their tariff change request should be rejected outright.
• In the global context, regulators and policymakers emphasize the need for comprehensive data and analysis when considering changes in tariff structures to safeguard consumer interests.
Modernising the grid for sustainability
• EFL must prioritize grid modernisation to enable smarter infrastructure capable of accommodating micro-solar grids and wind farms. A modernised grid will facilitate the integration of renewable energy sources as primary power suppliers, fostering sustainability and reducing reliance on traditional, less efficient methods.
• Worldwide, grid modernisation is recognised as a crucial step in enabling a seamless transition to renewable energy sources. Smart grids enhance energy efficiency and resilience while accommodating distributed energy resources.
Promoting solar rooftops and feed-In tariffs
• EFL should actively encourage the use of solar rooftops that can complement the grid through feed-in arrangements with these renewables. Such an analysis, comparing the costeffectiveness of solar rooftops with diesel generation, needs to be made available to the public.
• Many countries worldwide have successfully integrated rooftop solar as part of their energy mix, reducing reliance on centralised generation and promoting distributed energy generation.
Encouraging rooftop solar installations
Increasing rooftop solar installations is a global trend and a meaningful strategy being adopted to transition towards sustainable energy systems. Many nations worldwide are actively encouraging and supporting private sector involvement in rooftop solar installations.
This approach not only reduces the carbon footprint but also empowers consumers to become prosumers, generating their own electricity and contributing to the grid.
However, instead of fostering the growth of rooftop solar installations and leveraging this renewable energy source to reduce or counter the utilisation of fossil fuels for power generation, EFL’s current proposal takes a different approach.
It seeks to increase tariffs rather than using the expanding renewable capacity to offset power generation costs from fossil fuels. This approach appears to be at odds with global trends and the broader push towards sustainability and environmental responsibility.
In an era where clean energy adoption is a focal point of national and international agendas, aligning strategies with these global trends would not only benefit Fiji but also ensure its standing in the global drive towards a sustainable energy future.
It is important to consider alternative pathways that encourage, rather than discourage, the proliferation of renewable energy sources like rooftop solar installations.
Alternate available solutions
1. Grid Management and Integration:
• Implement advanced grid management systems to monitor and manage distributed energy resources (DERs), including customer-owned solar panels and wind turbines.
• Develop grid integration strategies that allow for seamless integration of customer-generated renewable energy into the grid.
2. Customer Engagement and Education:
• Educate customers about the benefits of grid reliability and the role of the utility in maintaining a stable energy supply.
• Highlight the value of grid connection for backup power and reliability to encourage customers to remain connected.
3. Regulatory and Policy Support:
• Work with regulatory authorities to establish fair compensation mechanisms for customergenerated renewable energy that ensure the utility remains financially viable.
• Advocate for policies that promote grid stability and resilience while supporting customer adoption of renewables. Net metering and feed-in tariffs:
• Establish net metering programs that enable customers to feed excess energy back into the grid and receive compensation or credits for their contributions.
• Consider feed-in tariffs that offer incentives for customers to sell surplus renewable energy to the utility. Time-of-use (TOU) pricing:
• Implement TOU pricing structures that encourage customers to consume electricity during periods of high renewable generation and reduce consumption during peak times.
Demand response programs:
• Launch demand response programs that incentivise customers to reduce their energy consumption during times of high demand or low renewable generation in exchange for cost savings or credits.
Energy storage solutions:
• Invest in energy storage infrastructure to store excess renewable energy and sell it back to customers during periods of low renewable generation or high demand. Energy
Services and Value-Added Products:
• Diversify revenue streams by offering energyrelated services and products, such as energy audits, energy efficiency upgrades, and home energy management systems. • Develop partnerships with local businesses to offer joint services that benefit both the utility and customers.
Microgrid development:
• Explore microgrid projects in areas where customers are more likely to rely on distributed renewable energy sources. These microgrids can be managed and operated by the utility. Long-term planning:
• Develop a long-term strategic plan that anticipates the shift toward decentralized renewable energy and outlines steps to maintain the utility’s financial health. Financial sustainability measures:
• Diversify revenue sources, including exploring opportunities in renewable energy project development, energy services, and infrastructure investment. Community partnerships:
• Collaborate with local communities to find mutually beneficial solutions, such as community solar projects or shared renewable energy facilities.
Conclusion
While the FCCC has requested comments on the proposed rates, I have a sincere concern that it may be leaning towards predetermined rate revisions through its initial statement.
My submissions underscore the need for a more comprehensive analysis, emphasising the necessity of providing relevant data and projections.
The absence of such information raises questions about the justification behind any tariff adjustments It is undeniable that EFL’s proposed tariff adjustments stem from genuine concerns and objectives aimed at securing Fiji’s energy future and transitioning towards renewable sources.
However, it is equally undeniable that these adjustments carry the potential for profound and far-reaching consequences.
These consequences extend beyond financial burdens and economic considerations; they touch upon the very essence of accessibility, environmental responsibility, and the well-being of Fijian citizens.
As a concerned stakeholder, I earnestly implore the FCCC to delve into the heart of these concerns, recognising that the decisions made today will ripple through Fiji’s communities, homes, and industries for years to come.
The path towards sustainable energy systems, like any significant journey, should be marked by careful consideration, meticulous planning, and the utmost dedication to inclusivity.
• In light of this, I kindly urge the FCCC to weigh the objections raised here with the utmost gravity. The potential impacts on vulnerable populations, the overarching goal of environmental stewardship, and the pivotal role of consumer trust in this equation are all deserving of profound reflection. By doing so, the FCCC can pave the way for a brighter, more sustainable energy future for Fiji — one that respects the past, safeguards the present, and fosters hope for generations yet to come.
• ARVIND MAHARAJ is a former FNU Deputy Chancellor and VP of Fiji Chamber of Commerce. He is also a FCEF board member, businessman and entrepreneur. The views expressed are not necessarily the views of this newspaper.
