Options Analysis for the Caribbean Water Utility Insurance Company (CWUIC)
The IDB Group, through the assistance of K&M Advisors LLC (K&M) and Alliant Insurance Services (Alliant), has completed the initial development of the proposed Caribbean Water Utilities Insurance Company (CWUIC). CWUIC will be a mutual insurance company for water utilities in the Caribbean. In this phase of development, CWUIC’s main components, governance framework, potential sources of funding, and target members have been largely defined. As a result, the IDB Group plans to submit a proposal to the Green Climate Fund (GCF) requesting funding for CWUIC. Before the IDB Group submits the proposal to the GCF, it must define the entity—whether an existing one or one to be created—in which CWUIC will be established. The K&M team is advising the IDB on the best alternatives for establishing CWUIC
FortisTCI was negotiating its regulatory framework with the Turks and Caicos Islands Government (TCIG) while the Government was also considering developing a multisector regulatory agency. FortisTCI hired K&M to assist them in writing a response to Kairi Consultants, a consulting firm hired by TCIG to assess the existing regulatory frameworks for public utilities. K&M prepared a Report on Reform of the Regulatory Framework Applicable to FortisTCI. This report described FortisTCI and its applicable regulatory framework, benchmarked regulatory frameworks in other Caribbean jurisdictions, and provided recommendations for the relevant framework for regulating FortisTCI.
The IDB has contracted K&M to provide a report for publication on water utilities in the Caribbean. This report will include benchmarking the key operational and financial indicators for water utilities in the Caribbean, exploring the scope of benefits from implementing Non-Revenue Water (NRW) reduction projects, assessing the impact on COVID-19, and identifying levels of resilience to natural disasters. This report will also provide recommendation to governments and water utilities on actions they can take to improve performance and resiliency of water utilities. K&M will: • Benchmark the operational and financial performance of water utilities in the Caribbean. This will also include benchmarking access to water and sanitation, quality of service, operating efficiency, and affordability of tariffs.
• Complementing the work IDB has recently been doing to assist water utilities in the Caribbean with reducing NRW, we will highlight utilities that have had success in reducing NRW (for example, NWC in Jamaica, BWS in Belize, and WSC in The Bahamas) and show how that success has contributed to improved operational and financial performance.
• Describe the impact of COVID-19 has had on water utilities in the Caribbean, including an assessment of the impact on demand, revenues, collections, operating expenses, and liquidity.
• Detail the physical and monetary damages that water utilities in the Caribbean have incurred from natural disasters in recent years.
• Provide recommendation to governments and water utilities on actions they can take to improve performance and resiliency of water utilities.
The Inter-American Development Bank (IDB) contracted K&M Advisors to develop financial simulations that have been used to assess the impacts of COVID-19 on water utilities in the Caribbean, and to identify measures and/or instruments that can be put in place in the short term to mitigate those impacts. The Ministry of Public Utilities (MPU) of Trinidad and Tobago has requested that a financial model and accompanying user manual be prepared by K&M Advisors specifically for Trinidad and Tobago’s Water and Sewerage Authority (WASA). In addition to modeling the impacts of COVID-19, this financial model will also consider the regulatory framework, economic structure, water and sanitation sector in Trinidad and Tobago, as well as the structure of WASA. The financial model will be used to make strategic operating and policy decisions related to improvement of the utility and provide support the government in its re-negotiation of desalination contracts. In particular, the model will help WASA and the MPU prepare a plan to be submitted in November 2020 to cabinet level officials of the Government of the Republic of Trinidad and Tobago.
FortisTCI Limited (FortisTCI)—the electricity utility in Turks and Caicos with an aggregate generation capacity of 90.7MW and over 15,000 customers—has retained K&M Advisors to conduct a vigorous cost of service study. FortisTCI has seven service areas with multiple customer categories. Working closely with the FortisTCI team, K&M will develop a dynamic financial model that will calculate the cost of service and establish cost reflective rates by customer category for each service area. The model will calculate the cost of service on a historical basis and on a forward-looking basis using projections for 2021 to 2025. K&M will present the cost of service and proposed rates by customer category to the executive team at FortisTCI and provide recommendations resulting from the work undertaken.
For the United States Agency for International Development (USAID) and International Development and Energy Associates (IDEA), K&M provided a performance evaluation of the $20.5 million Conventional Energy Technical Assistance (CETA) project. The project’s primary purpose was to provide developing countries with technical assistance in exploring and evaluating their indigenous conventional energy resources and facilitating their access to technology, services, and capital investment.
K&M served as technical and financial consultant to the US Agency for International Development (USAID) and the Center for Privatization of the Government of the Dominican Republic. K&M evaluated the opportunities for and impediments to independent power producers in the Dominican Republic. Incorporating technical, financial, legal, regulatory issues, K&M evaluated private sector options for power generation. This effort resulted in the eventual development of the private power law enacted by the Dominican Republic in 1990.
K&M was engaged by USAID to provide the Government of the Dominican Republic with technical assistance on the institutional design and development of the Directorate for Development and Regulation of the Electric Power Industry (DDRIE). This agency was deemed necessary for the country’s development of the over 700 MW of power needed to achieve sustainable social and economic growth. DDRIE’s mission was to develop the power sector on a private basis.
K&M’s work included assisting DDRIE to: interpret existing legislation and to produce rules and regulations for reform of the power sector; develop its organizational structure; develop an institutional design for the Financing Guarantee Fund; provide training for the DDRIE personnel; and prepare complete set of guidelines and manuals for: accounting, tariffs, project proposal solicitation, evaluation and award, concessions, performance monitoring, operation of private sector participants, and enforcement procedures.
K&M served as technical and financial consultants to the Government of the Dominican Republic (GoDR) on behalf of the US Agency for International Development (USAID) under subcontract to RCG/Hagler Bailly. K&M provided the GoDR with a format for reviewing and evaluating Independent Power Project (IPP) proposals submitted by private developers. Subsequently, K&M assisted in drafting the enabling legislation. Law No. 14-90, ratified on February 1, 1990, became the cornerstone for implementing the proposed sector reform program and established the framework for encouraging private participation and investment. The law also set forth procedures for creating a new agency, the Directorate for Development and Regulation of the Electric Power Industry, to plan, coordinate and regulate the power sector.
K&M was contracted by the World Bank to evaluate the options and requirements needed to improve the institutional and regulatory framework of the power sector in the Dominican Republic. K&M provided recommendations regarding 1) installation of technical systems, document preparation, formation of project evaluation parameters, and development of an institutional design for a Financing Guarantee Fund, 2) development of new power sector regulatory agency’s organizational structure, project evaluation policy, project modeling techniques and policy for private sector participation, 3) bid solicitation and evaluation guidelines for private power projects, and 4) a model RFP for the country’s first private power project solicitation.