B.E.L. warns of blackouts if rates don’t rise 25 percent
Belize Electricity Limited has been making its case for months—first with a special application and shortly afterward under its annual rate review—that skyrocketing oil prices have necessitated an increase in electricity rates. On both occasions the Public Utilities Commission has stood steadfast against the requests. It’s not clear how much of the P.U.C.’s attitude was politically inspired gamesmanship and how much was good forensic accounting, but last night B.E.L. engaged in some gamesmanship of its own, in the form of some characteristically blunt talk from H. Stanley Marshall, C.E.O. of B.E.L.’s majority owner, the Canadian power company, Fortis. In his address to last night’s annual general meeting of shareholders, Marshall, while lauding the company’s progress, pointed to the sizeable obstacles it had to overcome, namely the damage caused by hurricanes, the delays attributed to environmental protests and the rising cost of copper and aluminum wire. The most serious impediment he cited, however, is the failure of Belize’s regulatory system.
H. Stanley Marshall, C.E.O., Fortis
“Last December, the government of Belize enacted revised tariff regulations that settled some outstanding matters related to the regulator’s June 2007 final decision on our tariffs. In March of this year, the new government of Belize repealed those regulations and the Public Utilities board, as I said earlier, denied our application for a fifteen percent increase in rates, which is needed to recover the higher costs of purchase from Mexico and from B.E.L.’s own diesel generation.”
“Despite the continued increase in the price of oil and hence purchased power costs from Mexico, the Initial Decision issued by the P.U.C. on May second, this month, also failed to increase rates, putting B.E.L. in a financial crisis. If B.E.L. is to continue to meet its obligations to serve its customers, the Public Utilities Commission must flow through the full cost of power to our customers and enable B.E.L. to earn a reasonable rate. The latest decision does neither.”
“Now I must say that on a personal basis, Belize has been the most rewarding jurisdictions of any place that Fortis serves. Through our investment, B.E.L. has become a leading company in this country and has made significant progress towards becoming the best utility in the whole region. Fortis has delivered, as I say, on its commitment to the people of Belize.”
“But on a corporate level, Belize has been the most frustrating jurisdiction I’ve ever experienced in my almost thirty years in the business. There have been repeated failures to deliver on what has been committed to the company as a strategic investor in the country. I’m saying to you tonight regulatory issues must now be resolved and electricity prices must be increased to reflect the true cost power before Fortis will make any additional investment in B.E.L. We will not do, this time, what we did back in 2006. I also will highlight for you, highlight the gravity of the situation that if this is not done, B.E.L. will not have the cash to purchase power from Mexico in the coming months. Without power from Mexico, B.E.L. will be forced into rotating blackouts. Immediate action is required.”
“I cannot understate the seriousness of the situation. If you look at the magnitude of the numbers involved there, in my mind, is simply no alternative. The situation has been aggravated considerably by the refusal of the Public Utilities Board to recognise the reality. And I stand here tonight with oil prices based upon one hundred twenty-nine dollars a barrel, the ordered magnitude of increase required is approximately twenty-five percent.”
Marshall added that in the absence of positive news on rate increases, those blackouts could begin within weeks. Under the established regulatory procedure the P.U.C. has engaged an expert consultant to evaluate B.E.L.’s application and upon consideration of the expert’s report, will make its final decision. Any rate changes would become effective July first.
