P.U.C. Chairman Explains New Electricity Rates

The Public Utilities Commission on Thursday announced its final decision in respect of the 2020 Full Tariff Review Proceeding for B.E.L.  In January of this year, B.E.L. made a submission for a Full Tariff Review Proceeding, recommending an increase in the mean electricity rate from forty-one cents per kilowatt-hour to forty-five cents per kilowatt-hour.  The P.U.C. denied B.E.L.’s request and approved a general decrease of two point five-seven percent to kick in on January first 2021 through June thirtieth 2024.  According to B.E.L., its original request for an increase was based on the need to recover fifty million dollars in revenue shortfalls due to higher than expected cost of power experienced over the period 2018 to 2019.  B.E.L. says that the reduction in prices for energy from C.F.E. Mexico between April and July had already pointed to the need for downward revisions to the projected cost of power as the pandemic depressed world market prices for fuel.  However, the P.U.C. denied B.E.L.’s request and proceeded with an Independent Expert review that recommends critical investments in the cost recovery over the next four years. Chairman John Avery of the P.U.C. explains.

John Avery

John Avery, Chairman, P.U.C.

“The independent expert submitted his report. The P.U.C. of course reviewed it, looked at things that have transpired since the initial decision and we made some revisions to our initial decision. For this period that we are looking at we all know that during that time we had some very high cost of electricity from Mexico and so there was a short fall and basically the total that B.E.L. needs to recover from customers for those shortfalls is thirty five point three-six-eight million dollars. That hasn’t changed from the initial decision because that is for a period that is already completed. One of the things that B.E.L. objected to when made our initial decision is that we had deferred consideration of certain proposed investments pending B.E.L. providing cost benefit analysis or justification for those investments. Those were things that B.E.L. included in its objection and for the most part the expert agreed that the things that B.E.L. were asking to look at it would only be proven for them to justify the cost to the commission before the commission approve them and pass on those cost to customers. When we reviewed the regulated asset value that we had approved for the initial decision and based on the comments from the experts there was one item that we had said that we removed and we put back in the approved investment plan for B.E.L. That was ten point two million dollars for some system over the four years. We had taken out, again deferred consideration, not disallowed, of expense or investments having to do with automatic meter infrastructure. All in all, I think there was about twenty odd million dollars that B.E.L. had proposed. That was one of the items we said we need justification before we approve it. We want to see what the benefits will be to the customers. Because the cost of power from Mexico because the others are fixed by contracts, the prices from Mexico have dropped significantly. And so we had already projected much lower costs than B.E.L. had forecast and that is one of the main reasons why the rate that we approved was about three cents less than what B.E.L. had asked for. We had already projected lower energy cost particular from Mexico and now with the COVID situation the prices from Mexico have been reduced even further than we had anticipated. Basically over the four year period we have adjusted the forecast cost for power downward by in excess of sixty million dollars.”