P.U.C. chairman says B.E.L. is being insincere
Last Wednesday, the Supreme Court granted Belize Electricity Limited an injunction which effectively barred the Public Utilities Commission from implementing its new reduced rates until the matter has been settled in court. This afternoon the Public Utilities Commission took B.E.L. to task for statements made after the injunction including one, that they are experiencing a financial crisis and two, that there are no bylaws authorizing the PUC to amend its final decision. According to P.U.C. chairman John Avery, B.E.L. by bringing up that latter matter the utility is being insincere because C.E.O. Lynn Young had already agreed to the commission instituting the changes.
John Avery, Chairman, P.U.C.
“We felt the C.P.R.S.A. and the TERP and all of that were not responsive enough to address the increasing prices and could in fact have a serious impact on the utility so we offered at that time to B.E.L. that the commission would be willing to implement a new mechanism to deal with the cost of power that would review the cost of power monthly and make any necessary adjustments to the rates so as not to cause any problems to the utility. Mr. Young agreed, said they would offer no objections. Their position is very disingenuous because you are aware of the reason why the bylaws haven’t been changed. They haven’t been changed to accommodate your rights and your protections that the law affords you and then you use that same position to take to the court to charge that the commission is acting illegally. So we are now in a position where do we make the amendments and risk perhaps offending the court or do we not make the amendments and then we restrict our ability to do our job and basically render ourselves incompetent—I don’t want to use the word…well, impotent. We render ourselves impotent. We are in that position now and we need to find a way forward and so the commission will meet tomorrow to make a final determination on what that action will be.”
Avery’s other bone of contention is the persistent comments from B.E.L. that they are experiencing a financial crisis and suffered a ten million dollar loss in 2008.
John Avery
“These are numbers basically that were excerpted from unaudited monthly income statements that B.E.L. provides to the commission. What B.E.L. has been doing is saying okay, you approve these tariffs, we charge the consumers, we generate this amount of revenues, but we will again deduct the corrections from the revenues and basically underreport the revenues we have collected. That is what B.E.L. is doing here. And so the commission is saying—if you go to the third column this is our position—we are saying that your revenues were not a hundred and forty point six million dollars, it was actually a hundred and seventy-six point eight million. Then if you follow the actual figure through, that would result in a profit of twenty-five point four million at the end of the year, instead of this loss of ten point eight million that B.E.L. is reporting. B.E.L. was planning to operate on a profit of twenty-nine point eight million dollars. We are saying, considering all of yours costs, with the correct treatment of your revenues your actual profit is twenty-five point four million. So that’s a reduction of four point four million dollars. We cannot see how that reduction in profits creates such a financial crisis for B.E.L. that it cannot pay its bill and operate.”
Avery says the P.U.C. is seeking an independent auditor to verify the figures.
But Avery says he is confident that the commission will be vindicated in the courts and that consumers and the utility will soon reap the benefits of the new mechanisms.
John Avery
“Despite those challenges and any ruling from the Supreme Court in that matter, the point is cost of power by law is a direct pass through and whenever the judge rules on these cases, after that certainly the reduction in cost of power will be reflected in some form or the other on consumer’s bills. I just wanted to make that clear, that the benefits from the cost of power have been delayed but not eliminated. Consumers will eventually enjoy those benefits.”
“The judge has committed to hear these cases as soon as possible and we believe that once they are heard everything will come to light and these rulings will be made in our favour. All of these actions by B.E.L. is hurting them because look at it this way, if you look at our rate setting methodology, the profit that B.E.L. is allowed—or the potential to generate a profit—is tied directly to the investments that the company makes. That comes out of the return portion of the rates. The more B.E.L. refuses to make investments and seh ih can’t mek investments because ih noh have cash flow and ih noh have no money, the more their Regulative Asset Value will depreciate and reduce. And the more that reduce, when we apply the twelve percent rate of return, the return allowance will reduce which means their profit potential will reduce. The longer B.E.L. keeps this up, it will hurt its shareholders and then it’s a matter for the shareholders to decide listen, we gotta move forward and increase our ability to generate a profit and run the business properly… or are we going to fight and fight and fight?”
B.E.L. has so not made its Full Tariff Review Proceeding submissions, which were due at the end of January. Avery, however, says the event will eventually proceed whether or not the utility joins in. As for BEL’s grounds that the disagreement should be referred to an independent expert, the PUC contends that it cannot do because that would be acting out of their scope as the sole authority to regulate utility providers.
