Second Chamber debates on islands' energy tariffs, subsidy

The amounts of the water and electricity tariffs in Bonaire, St. Eustatius and Saba, and the energy subsidy of the Dutch Government dominated the debate in the Second Chamber of the Dutch Parliament on the Caribbean Netherlands Electricity and Potable Water Law Thursday evening.
This law proposal, which regulates the production and distribution of electricity and drinking water in Bonaire, St. Eustatius and Saba, aims to realise dependable, sustainable and affordable electricity and potable water services on the three islands.

Member of the Second Chamber Roelof van Laar of the Labour Party PvdA said he found it unacceptable that residents of Bonaire, St. Eustatius and Saba paid much more for their electricity and water than people in the Netherlands. Referring to St. Eustatius and Saba, and the recent drought, he said that every Dutch citizen had the right to proper, affordable drinking water.
According to Van Laar, the law proposal in no way arranged lower prices for the people on the islands, especially for those that lived under the poverty line or depended on a minimum wage. He said that this contradicted one of the main intentions of the law proposal, namely to secure affordable electricity and drinking water services.

Van Laar said that for the low income families it was very hard to pay the high water and electricity prices, and that sometimes the energy bill was higher than the house rent that they paid. “The tariffs have to be reduced,” he said. He spoke of the “working poor,” people with often two jobs trying to make ends meet. He also referred to the conclusion of the Caribbean Netherlands Evaluation Committee that poverty was on the rise.

Van Laar therefore submitted an amendment to the law to introduce a special tariff for the normal, average use of water and electricity for low income families which would reduce their monthly energy bill. In his opinion it was very well possible to introduce this special tariff.

Minister of Infrastructure and Environment Melanie Schultz van Haegen, in absence of Minister of Economic Affairs Henk Kamp who was in Japan on a working visit, advised against Van Laar’s amendment.

Schultz van Haegen said that the legislation proposal wasn’t designed to regulate the aspect of people’s income versus the energy bill. She said that there were other ways to address poverty.
Besides, she said, lower energy prices would be achieved in the near future through the gradual introduction of sustainable energy on the islands: solar panel parks in St. Eustatius and Saba, and (more) windmills in Bonaire. Solar panels on private homes and businesses will be possible with the new law.

In the Explanatory Note, Ministers Kamp and Schultz van Haegen acknowledged the high cost of drinking water and electricity for Caribbean Netherlands residents while the average income level is low. They explained that the price of a liter of water on the islands was five to thirty times as high as in the Netherlands. Aside from the taxes, people in the Caribbean Netherlands pay twice as much for a kilowatt hour compared to the Netherlands.

“These high tariffs can hardly be afforded by many people in the Caribbean Netherlands. It is desirable that the services are affordable for all.” Because an acceptable affordability was not possible without subsidy, the possibilities for granting subsidy were included in the law proposal. The subsidy would go to the distributor to cover part of the transport of water and electricity.

Annual subsidy
The anticipated subsidy for the electricity networks of the three islands has been set at a maximum of US $6 million on an annual basis, equalling 15 per cent of the total electricity bill. The combined subsidy for drinking water has been calculated at about US $2 million per year, or 15 per cent of the total drinking water bill. The subsidy will be evaluated two years after the law has been implemented. Minister Schultz anticipated during the debate that some sort of subsidy would remain necessary for the next ten years, but that the amounts would be decreased over the years.

Member of the Second Chamber Reinette Klever of the Party for Freedom PVV criticised the granting of subsidies for the islands to keep the energy prices affordable. She said the islands were a “burden” for the Dutch tax payer and referred to the annual US $8 million subsidy as a “form of development aid.” She reiterated that the PVV wanted to get rid of the islands as soon as possible. Klever presented a motion to stop the subsidies.

The Explanatory Note that accompanied the law proposal of November 2014 provided many details on the intention of the legislation, namely to regulate dependable, sustainable and affordable electricity and potable water services. “A proper service is of great importance for the public health, the wellbeing and prosperity of the community. It concerns vital public services that are part of a specific government task,” it was stated in the document.

“Drinking water and electricity are primary necessities. Disruption of these services can cause disturbances to the community and damage the public health. Affordability is a top priority, aside from quality and dependability,” according to the Explanatory Note.
Dependability was qualified as security of delivery and safety. Affordability was indicated as transparent, efficiency and effectiveness. The law defines the tasks and obligations of the utilities companies. The companies must be completely transparent, nondiscriminatory and cost effi cient since the companies manage monopolistic, public infrastructure.

The legal framework differs from that of the Netherlands, eventhough the objectives of dependable, sustainable, affordable and high-quality electricity and drinking water services are the same as in the Netherlands. This mainly has to do with the limited size of the islands’ market.

Dutch supervision
The monopoly companies on the islands that are in charge of the production and distribution of electricity and drinking water will be supervised by two Dutch entities: the Netherlands Authority for Consumers and Markets (ACM) and the Human Environment and Transport Inspectorate ILT.

The ACM will supervise the economic aspect of the electricity and water production and distribution, including the tariff regulation, while the ILT will supervise the technical and public health aspects of the drinking water.

The law proposal was a “necessary improvement,” because the current Electricity Concessions Law BES and the Drinking Water BES are insufficient, stated Ministers Kamp and Schultz van Haegen in the Explanatory Note.

The existing laws could not prevent the serious problems with the distribution and affordability of electricity in Bonaire a few years ago. The production was deliberately ceased and had to be restarted with the assistance of justice authorities, while the water and electricity company WEB almost went bankrupt in the conflict with electricity producer Ecopower.

In the context of St. Eustatius and Saba, the law proposal should be seen as a necessity after the privatisation of the electricity companies from the Windward Islands utilities company GEBE, and the establishing of the St. Eustatius Utility Company and the Saba Electric Company per January 2014. “Per 2014 there is a concrete necessity for a regulatory framework.”

The St. Eustatius Utility Company produces water at its desalination plant. Water is distributed via the drinking water network since 2013. In Saba, there are two private companies that produce potable water which is distributed by truck by a third party.

The process of getting this legislation through the Second Chamber has been a rather lengthy affair. The legislation proposal, “Wet electriciteit en drinkwater BES,” was submitted to Parliament in November 2014. The plenary handling was scheduled several times, but postponed time after time due to the overly crowded schedule of Parliament.

More on the debate of Tuesday evening in the next edition of The Daily Herald.

The Daily Herald.