B.E.L. not thrilled with expert’s recommendations
When Belize Electricity Limited made its annual rate application, the company said skyrocketing oil prices mandated a thirteen point four percent increase in the price of power. The P.U.C., in an initial decision that may have had more to do with politics and public opinion than math, said an emphatic no to any rise in rates. Now that the independent expert, appointed under the regulatory rules, has recommended a seven point nine percent hike, where do we stand? Today News Five sat down with B.E.L. Chief Executive Officer Lynn Young to ask if he could live with the expert’s plan.
Lynn Young, C.E.O., B.E.L.
“Actually, no. and if you read the details of his recommendations, he was basically saying that the reductions really are due to the reduction of in the rate stabilization account, which he didn’t agree with, but he said he was restrained by the rate setting methodology which was put into effect during the process and which he also disagreed with changing the rate setting methodology in the middle of the process. Ultimately, he also warned that by making these short term decisions to reduce race, that we may end up hurting consumers and hurting the service in the longer run because what he is saying is that the present system—which is something that we have been saying before the present P.U.C., we’ve been saying it for the last four or five years that the present rate setting system, it’s difficult, it’s complicated and it’s going to lead to more and more problems. My understanding is that the P.U.C. feels the same way. So he has given some recommendations for us to simplify the methodology so that people can understand how the rates are set. He’s also recommended that, because of the volatility of fuel prices going kinda crazy right now, that what we have in place with the rate stabilization account won’t work and so he suggested that we should do maybe monthly or quarterly adjustments. So we want to sit down with the P.U.C. and see if we can work out some solutions that will make the adjustments smaller and more timely.”
And while a solution to the price question may lie in less drama and more flexible pricing, we asked Young if there was any mechanism to give consumers some relief.
Lynn Young
“That’s what the rate stabilization system was trying to do; to kinda spread out the need for these increases over a larger period of time but the increase have just been too fast and too big. So all of us have to start thinking about the realities and thinking about the question of trying to keep costs down and the question of trying to maintain good service. Striking that balance is the difficulty that faces B.E.L. and the P.U.C. We have some disagreements on some of the issues and we’re gonna have to try and work through them but the business is a business that requires a lot of capital expenditure and the country economy continues to grow rapidly. In bigger economies where the electricity demand is growing by one percent or one and a half percent, there is not as much demand to keep building new lines etcetera. As long as we have that kind of demand, we’re gonna have to keep borrowing more money or keep getting more investment and so trying to reduce the return to a point where we can’t attract capital is going to be disastrous for the country in the bigger picture.”
As we reported yesterday, B.E.L.’s lowest income consumers will not see any rate increase under the expert’s recommendations. The Public Utilities Commission does not need to follow the expert’s suggestions but will be looking at his report in detail. Tomorrow the P.U.C. and B.E.L. will hold discussions on the way forward.
