A team of Canadian consultants who looked at the July 15, 2006 islandwide power cut has warned against political influence in the granting of licences for power generation by the minister responsible, and suggests instead, that the authority be transferred to the Office of Utilities Regulation (OUR).

In its report tabled in the House of Representatives on Tuesday by minister of industry, technology, energy and commerce, Phillip Paulwell, the team took note of the fact that decisions regarding both the granting and revocation of licences for power generation are made by the minister.

The team warned that when licensing decisions are made by elected officials, there may be a greater likelihood of political factors, rather than regulatory requirements influencing the decision.

They said that even in cases where the decisions of the minister are primarily made on the recommendation of the regulator, it is preferable to transfer the related authority to the regulator to improve efficiency in the regulatory framework and processes, as well as enhance openness and transparency.

“The licence is one of the most significant components of the electricity sector. The grant of a licence, essentially, determines who can participate in the electricity markets. As such, it is highly important that the system under which licensing decisions are made is seen as open, transparent and fair,” the report said.

“Under the present statutory framework, the minister makes decisions regarding the granting of a licence. Under the terms of the All-Island Licence, the minister, not the OUR, is the party who must approve licence modifications. The minister also makes decisions regarding revocation of the licence.

“When licensing decisions are made by elected officials, there may be a greater likelihood of political factors, rather than regulatory requirements, influencing such decisions. This may undermine transparency and stability in the electricity which may, in turn, lead to a perception of unfair or uneven treatment of market participants. A perception of unpredictability in or lack of understanding of decision-making criteria could also undermine investment in the electricity sector.

“Even in the case where the decisions of elected officials (ie minister) are primarily made upon the recommendation of the regulator (ie OUR), transferring the related authority to the OUR should improve efficiency in the regulatory framework and processes, in addition to enhancing openness and transparency,” the report said.

The team of Canadian power generation experts, known as the Power Outtage Review Team (PORT), comprised of experts from two Canadian firms – Gowlings Consulting Inc and Rusnov Associates Limited. The team was commissioned by the Government to conduct an independent probe into the blackout which was initiated by a lightning strike on the Bogue-Duncans transmission line.