Initial Date: June 2015

Type: Final Decision and Commission Order

Date: October 2022

Overview:

These revised regulatory guidelines for power purchase costs is an important issue since power purchases constitute one of the major cost elements for the utilities. Like almost all regulatory issues, regulators must balance consumer and investor interests. Since in Vanuatu, customers have no alternative electricity suppliers, they obviously would want the utility to purchase efficiently on their behalf. Ideally, customers would prefer the utilities to have a mix of long term and short term purchases at the lowest possible cost. The utilities, on the other hand, would want assurances that the costs of past and future power purchases can be recovered in the tariffs that they charge to their customers and that they are provided with incentives to engage into efficient PPA’s.

In tandem, it is also important, that the tariff is designed to reimburse the IPP’s capital investment in plant, cover fixed and variable production cost and provide a return to the equity holders. Therefore, the genesis of this paper is to revise the previously issued regulatory guidelines (Case U-0003-14) that satisfy these competing interests.