P.U.C. grants water co. 15% rate hike
The Public Utilities Commission has reached what it calls its “initial decision” on an application by Belize Water Services Limited for a raise in water rates. And while the P.U.C. did not approve the thirty-two percent hike the company requested for the five-year period beginning in 2004, it did grant a tariff structure that will result in average increases of fifteen percent effective April first, 2004. Those higher water bills will be paid predominantly by medium and large customers. In a press conference held this morning, P.U.C. Chairman Dr. Gilbert Canton described the exercise as a complex process that balanced the competing interests of all concerned.
Dr. Gilbert Canton, Chairman, Public Utilities Commission
“We are very comfortable with the decision that we will make right now. We strongly believe that we have provided for revenue sufficiency of the company, to do what they think needs to be done over the next five years. We don’t think that we have given away more than is needed. And we know that we have some sticking points in terms from a shareholder perspective, what they expect out of their investments, and we’ll have to deal with those issues as they come forward. And we also looked on the other side of the coin and say well, how does it affect the consumers. What is the affordability issue, the fairness issue, those kinds of things, and we think we have come up with a decision that fairly balances all these concerns. We made an effort to make sure that when we did the tariff structure, that the impact on the larger percentage of the population at the lower end was not significant of large enough that it becomes a affordability issue.”
Canton made it clear that the function of the P.U.C. involves more than just ruling thumbs up or down on rate increases…and that the commission must now get involved in working with the utilities to provide the best service at a fair price.
Dr. Gilbert Canton
“Under the type of regulation that we have for the water sector, this is the way that we have about doing the job of regulating. Because we have guaranteed them a rate of return of twelve percent over the twenty-five year period, it’s now up to us to monitor to make sure that all the investments, all the expenditures are prudent. One can look at it and say, well why is the company gonna have to worry about operation efficiencies when they are guaranteed a return. So this is the thing that we have to do and to make sure that also an excessive burden is not placed on the consumer. In this situation we have on board right now, all the requirements for capital expenditure, all the requirements for increased operation expenses comes directly from tariff revenues because of the way the company is geared, the high debt burden, things like that. So until that is worked out to a certain extent, anything they do now it goes directly to tariffs. We want to be sure that this thing is managed to an extent that we are not putting an undue burden on the consumer.”
Stewart Krohn
“Is it now mandatory that they follow your advice, specifically in relation to their capital expenditure plans and their fees paid to expatriate staff and management fees?”
Dr. Gilbert Canton
“Yes, the way it is set up is that the business plan, during this review…based on the business plan we review it, amend it and approve it, and that approved business plan is what they implement over the next five years. So, yes they have to implement what we put in there. And then we also have the performance standards that we monitor them against.”
The increases range from five point five percent for those using under one thousand gallons per month, to fifty-six percent for those using over six thousand gallons per month. While the new rates are scheduled to come into effect on April first, the process allows for comments by B.W.S. and representatives of large consumers by December thirtieth, after which the P.U.C. will deliver a final decision.
