“We en­joy the cheap­est rates in the Caribbean and per­haps among the cheap­est in the world be­cause they’re heav­i­ly sub­sidised. We don’t re­al­ly pay the true mar­ket price of elec­tric­i­ty gen­er­at­ed.”

Trinidad and To­ba­go’s 1.4 mil­lion cit­i­zens are about to learn how decades of sub­sidised elec­tric rates are go­ing to cost them dear­ly. For decades, the twin-is­land re­pub­lic’s once abun­dant sup­ply of nat­ur­al gas has been used to gen­er­ate elec­tric­i­ty for res­i­den­tial, busi­ness and in­dus­tri­al cus­tomers at far be­low mar­ket prices.

Be­gin­ning in the 1970’s, suc­ces­sive gov­ern­ments dis­count­ed Trinidad’s elec­tric­i­ty costs to every­one. It proved in­cred­i­bly pop­u­lar among vot­ers. To­day, it is be­ing sold to res­i­den­tial cus­tomers at a mere US$0.05 per kWh. That low­est tier price is among the cheap­est rates in the world.

There have been un­want­ed con­se­quences as the sub­si­dies dis­tort­ed the mar­kets. Per capi­ta con­sump­tion is the high­est in the Caribbean. In­vest­ments in al­ter­na­tive en­er­gy sources are near­ly non-ex­is­tent. The politi­cian,s who must raise rates in recog­ni­tion of wan­ing sup­plies of nat­ur­al gas, are con­fronting dif­fi­cult choic­es which will un­doubt­ed­ly im­pact every­one. Even if they don’t get a high­er elec­tric bill at home, prices for com­modi­ties like food, cloth­ing, ap­pli­ances and elec­tron­ics could in­crease as re­tail busi­ness­es face high­er over­head costs.

It will fall on the politi­cians to try to soft­en the blows, ad­just pric­ing tiers to pro­tect those least able to af­ford it. They may make ad­just­ments to as­sist in­dus­tries pow­er­ing the econ­o­my. How all of that will be bal­anced, who will pay the most and oth­er ques­tions have yet to be an­swered. Politi­cians and stake­hold­ers say what is clear is that change and high­er prices lie ahead.

There are few ri­vals to such gen­er­ous elec­tric­i­ty rates in this part of the world. The cost on­ly in­creas­es as you go up the Caribbean chain. St Kitts and Nevis pays five times more than Trinidad and To­ba­go while An­tigua and Bar­bu­da pays more than sev­en times that rate. Dr Cur­tis Boodoo, a con­sult­ing en­gi­neer on the Unit­ed Na­tions De­vel­op­ment Pro­gramme’s Com­mu­ni­ty So­lar Project, said, “When you look at the Gulf states, oil and gas pro­duc­ers with rel­a­tive­ly low pop­u­la­tions, it is per­haps bet­ter to com­pare our elec­tric­i­ty rates with them.” [In Sau­di Ara­bia, ac­cord­ing to Glob­al Petrol Prices, house­holds pay $US0.048 kWh. Qatar is slight­ly low­er at $US0.032.]

Trinidad and To­ba­go’s low rates aren’t mag­ic. Bren­don James, a sus­tain­able en­er­gy and risk man­age­ment pro­fes­sion­al,

who has worked in the en­er­gy in­dus­try for more than two decades, says it’s a con­fi­den­tial arrange­ment be­tween the Na­tion­al Gas Com­pa­ny (NGC) and T&T Elec­tric­i­ty Com­mis­sion (T&TEC). That arrange­ment is de­fined by how much the gov­ern­ment is will­ing to dis­count its nat­ur­al gas hold­ings.

Low rates en­cour­age

in­creased con­sump­tion

For years, en­er­gy ex­perts and the gov­ern­ment’s own an­a­lysts have warned low elec­tric­i­ty rates were en­cour­ag­ing con­sumers to con­serve less and, in ef­fect, keep the lights on. The US En­er­gy In­for­ma­tion Ad­min­is­tra­tion sta­tis­tics show Trinidad and To­ba­go res­i­dents con­sume mul­ti­ple times more elec­tric­i­ty than their Caribbean coun­ter­parts.

While some coun­tries are speak­ing about cli­mate change and an in­crease in tem­per­a­tures in the Caribbean, da­ta shows Trinidad and To­ba­go res­i­dents’ con­sump­tion of elec­tric­i­ty con­tin­ues to in­crease. The res­i­den­tial us­age of elec­tric­i­ty in the twin-is­land state in 2010 stood at 28.7 per cent. By 2021, that fig­ure had jumped to al­most 40 per cent. As a heat­wave gripped the coun­try in Sep­tem­ber, T&TEC record­ed a new record in de­mand for elec­tric­i­ty.

At the same time, in­dus­tri­al use of elec­tric­i­ty has de­creased from 60 per cent to 48 per cent be­tween 2010 and 2021 ac­cord­ing to En­er­gy Cham­ber sta­tis­tics.

Last year, Trinidad and To­ba­go con­sumed 107,269 kWh per capi­ta, ac­cord­ing to a study done by the US En­er­gy In­for­ma­tion Ad­min­is­tra­tion. The EIA says Ja­maica with a pop­u­la­tion of 2.8 mil­lion peo­ple, con­sumed an av­er­age of 12,236 kWh per capi­ta in 2021. In the same year, Bar­ba­dos con­sumed 23,026 kWh per capi­ta.

Chief Ex­ec­u­tive Of­fi­cer (CEO) of the En­er­gy Cham­ber T&T, Dr Thack­wray Dri­ver, has been vo­cal on the need for cit­i­zens to pay a fair­er price for the elec­tric­i­ty they con­sume.
“There is no rea­son why the state should sub­sidise some­body to have a cen­tralised air con­di­tion­ing, swim­ming pool pumps. There are peo­ple in Trinidad who ac­tu­al­ly have elec­tric heaters for their swim­ming pools. Why should the state be sub­si­dis­ing some­one who has an elec­tric heater for their swim­ming pool? If they want to have it, it’s fine but they should pay the full cost of the elec­tric­i­ty for some­thing like that,” Dri­ver said.

Sub­si­dies un­der­mine al­ter­na­tive en­er­gy

The gov­ern­ment of T&T has long been aware of the eco­nom­ic, so­cial and en­vi­ron­men­tal ad­van­tages of a tran­si­tion to al­ter­na­tive en­er­gy. The So­lar House, built eight years ago on the Uni­ver­si­ty of Trinidad and To­ba­go’s Point Lisas cam­pus, still stands as a pro­to­type. But the re­al­i­ty is that with the his­toric avail­abil­i­ty of nat­ur­al gas there’s been lit­tle or no in­vest­ment in­to the res­i­den­tial so­lar mar­ket.

Unit­ed Na­tions De­vel­op­ment Pro­gramme con­sult­ing en­gi­neer, Dr Cur­tis Boodoo, who re­mains en­gaged with the So­lar House project, ac­knowl­edges the coun­try’s en­tire en­er­gy tran­si­tion has failed to ma­te­ri­alise.

The nec­es­sary pol­i­cy changes have not been im­ple­ment­ed. In April last year, Prime Min­is­ter Dr Kei­th Row­ley broke ground for the con­struc­tion of a util­i­ty-scale so­lar plant at Brechin Cas­tle mak­ing a com­mit­ment that changes to reg­u­la­tions would be in­tro­duced with­in months but it is yet to hap­pen.

“Our view would be that, no, we haven’t moved fast enough in this di­rec­tion. There are some things that are putting us on the right path­way but we’ve got to move a lot faster. We have this large in­vest­ment so­lar project from BP and Shell in Point Lisas, Brechin Cas­tle and the one in Or­ange Grove so there are two in ex­e­cu­tion,” said Dri­ver. (Both are ex­pect­ed to be op­er­a­tional in late 2024).

Dr Dri­ver went on to say “we need to move much faster but to do that we need to get the reg­u­la­tions amend­ed.” It’s a com­mon cho­rus from in­dus­try ex­perts.

Get­ting the reg­u­la­tions amend­ed, says Dri­ver, it will give a clear way for the pri­vate sec­tor and in­di­vid­ual house­holds to put so­lar pan­els in place and have a sys­tem where their elec­tric­i­ty bill will be off­set.

“At the grass­roots lev­el where cit­i­zens can par­tic­i­pate in this is re­al­ly what is need­ed now to em­pow­er the cit­i­zen to con­tribute to our own Na­tion­al­ly De­ter­mined Con­tri­bu­tions (ND­Cs). To do that, just like the large-scale in­vest­ment, we need a prop­er en­abling en­vi­ron­ment. One crit­i­cal part of that en­abling en­vi­ron­ment is the feed-in tar­iff pol­i­cy.” With such a pol­i­cy, or­di­nary cit­i­zens can in­stall so­lar pan­els and gen­er­ate elec­tric­i­ty. Any ex­cess could be sold back to the util­i­ty.

Dr Boodoo points out it re­quires a US$430 li­cens­ing fee that can take more than nine months to ac­quire. He says the cur­rent ver­sion of the re­new­able en­er­gy li­cense form re­quires the sig­na­ture of the Min­is­ter of Pub­lic Util­i­ties.

“The in­ter­nal process­es that are cur­rent­ly in place around so­lar en­er­gy, they are serv­ing as a bar­ri­er to the pub­lic in its adop­tion,” Dr Boodoo said. He fur­ther point­ed to the con­flict of a util­i­ty com­pa­ny such as T&TEC be­ing the gate­keep­er to en­able the use of re­new­able en­er­gy. “It’s nat­ur­al for the util­i­ty not to en­cour­age the adop­tion of re­new­able en­er­gy be­cause if peo­ple gen­er­ate their elec­tric­i­ty at home then they’re not pay­ing for that elec­tric­i­ty.”

Boodoo says it is nat­ur­al for a body like T&TEC not to en­cour­age the adop­tion of re­new­able en­er­gy.

It is why Dr Boodoo be­lieves there needs to be “in­sti­tu­tion­al change” in the grant­i­ng of re­new­able en­er­gy li­cens­es and its adop­tion. He says in­stead of the Min­istry of Pub­lic Util­i­ties, it should be led by the Min­istry of En­er­gy, which he be­lieves is “pro­gres­sive” to­wards more green­er forms of en­er­gy.

Over the last decade, the Min­istry of En­er­gy has an­nounced a num­ber of fis­cal in­cen­tives to en­cour­age the move to­wards re­new­able en­er­gy. For in­stance, im­port du­ty ex­emp­tions were grant­ed for ma­chin­ery, equip­ment ma­te­ri­als and parts for the man­u­fac­ture or as­sem­bly of so­lar wa­ter heaters. Al­so, 0-rat­ed VAT was grant­ed for so­lar wa­ter heaters, so­lar PV pan­els and wind tur­bines.

How­ev­er, Ku­mars­ingh is adamant very lit­tle will come of the in­cen­tives un­less much of the red tape is cut out.

“Fis­cal in­vest­ments wouldn’t mean any­thing un­less the en­abling en­vi­ron­ment is there. You can have all of the amount of mon­ey be giv­en to you through grants and loans and so on, it would mean noth­ing if you can’t im­ple­ment the ac­tions that it is meant to achieve. It’s about get­ting the first step cor­rect that will fa­cil­i­tate the ac­tions that are need­ed,” said Ku­mars­ingh.

He has al­so long ad­vo­cat­ed for the feed-in tar­iff pol­i­cy to be im­ple­ment­ed al­low­ing con­sumers to sell ex­cess back to the util­i­ty. Ku­mars­ingh said: “What that will do, ba­si­cal­ly, is buffer the im­pacts of any rate in­crease.”

Pow­er, pain and pol­i­tics

The key ques­tion for Trinidad and To­ba­go’s cit­i­zens is not whether their elec­tric­i­ty rates are go­ing up. The ques­tions are “When?” and “By How Much?”

So-called “Draft” rate struc­tures have been float­ed since late in 2022 and raised eye­brows when they were re­port­ed in the me­dia. In the first year alone, res­i­den­tial cus­tomers could see a 20 to 33 per cent rate hike de­pend­ing on their kWh con­sump­tion. Fur­ther in­cre­men­tal in­creas­es would be im­posed over a five-year span.

Busi­ness and in­dus­try could face a 68.5 per cent rate hike in the first year alone.

Those steep hikes mean cost in­creas­es for food and oth­er es­sen­tials as busi­ness­es are forced to pass on their op­er­at­ing ex­pens­es to con­sumers.

It comes as no sur­prise that all of Trinidad and To­ba­go’s po­lit­i­cal par­ties that be­stowed the gift of sub­si­dies on their elec­torates are now timid about an­nounc­ing the ac­tu­al end to them. The op­tics are ter­ri­ble. It’s as if San­ta Claus will be vis­it­ing every house­hold to make the chil­dren pay for the presents of Christ­mas past.

A re­view of the coun­try’s rates has been com­plet­ed and has been sub­mit­ted to Cab­i­net. Be­tween six and eight per cent of the coun­try’s nat­ur­al gas sup­ply is used for elec­tric­i­ty con­sump­tion, a re­source that in­dus­try ex­perts be­lieve is bet­ter di­rect­ed to the petro­chem­i­cal sec­tor and gas ex­port mar­kets.

“It has been a long time com­ing. A num­ber of key stake­hold­ers and glob­al events have as­sem­bled for us to be ready to make some se­vere and sig­nif­i­cant de­ci­sions in the en­er­gy sec­tor,” said Boodoo.

Min­is­ter of Pub­lic Util­i­ties, Mar­vin Gon­za­les, con­firmed the price hike rec­om­men­da­tion on a ra­dio pro­gramme. He told a morn­ing ra­dio talk show, “As Min­is­ter of Pub­lic Util­i­ties I can tell you from what I have seen, there will be an in­crease in rates. There will be a new rate struc­ture. I sus­pect it could be any time.”

Res­i­dents of Trinidad and To­ba­go seem ready for the tran­si­tion. A UNDP Pub­lic Aware­ness Sur­vey on Re­new­able En­er­gy, En­er­gy Ef­fi­cien­cy and En­er­gy Pric­ing last year showed 81 per cent of peo­ple sur­veyed say they are in­ter­est­ed in in­stalling so­lar pan­els in their homes.

For a coun­try that has been in the oil and gas busi­ness for more than a cen­tu­ry, T&T is at an­oth­er en­er­gy cross­roads when it comes to en­er­gy.

Boodoo re­called, “In the ear­ly days of the nat­ur­al gas sec­tor [the 1970’s] when Pro­fes­sor Ken Julien would have led that, some­body my age or a lot of younger per­sons would be led to be­lieve that nat­ur­al gas was the ob­vi­ous choice but if you lis­ten to Pro­fes­sor Julien, there was some re­sis­tance. I see par­al­lels in the en­er­gy tran­si­tion now. We are now at that stage where we need to take that risk and some­body has to make the de­ci­sion and take the risk.”

The po­lit­i­cal lead­er­ship is yet to of­fer a de­tailed roadmap for the en­er­gy tran­si­tion. How will they han­dle the risks? How much are they pre­pared to in­vest in al­ter­na­tive en­er­gy? How will they en­gage in­ter­na­tion­al agen­cies such the UN and the World Bank to ex­pand the po­ten­tial of so­lar and wind? The fail­ures of the past are clear. What Trinidad and To­ba­go cit­i­zens want now is a vi­sion for their fu­ture.