B.E.L. seeks 15% hike in electricity rates
Hard pressed consumers, already facing massive raises in the cost of milk, bread, eggs, tortillas and other staples, may soon be asked to bear a fifteen percent hike in the cost of electricity. The reason, not surprisingly, is the surge in world oil prices. Saying that it’s already absorbed more than it can bear, Belize Electricity Limited has applied to the Public Utilities Commission for the new rates under a procedure dealing with such “threshold events”. The request comes despite B.E.L.’s record profits of over twenty-one million dollars and promises of energy independence by 2010 when the VACA Hydro and Belcogen bagasse plants come on stream. According to B.E.L. C.E.O Lynn Young, his company had little choice.
Lynn Young, C.E.O., Belize Electricity Ltd.
“I know it’s difficult and it’s not something we’d like to do, it’s something that we tried our best not to have to happen but a lot of it is beyond our control. The rates that we get from Mexico has gone from—when we first signed up with Mexico—just three cents U.S. per kilowatt hour, that’s six cents Belize. The latest price from Mexico right now from Mexico is sixteen cents U.S. per kilowatt hour, that’s thirty-two cents Belize.”
Stewart Krohn
“That’s the off-peak rate?”
Lynn Young
“That’s the regular rate. They got rid of the peak and off-peak and they gave us a fixed rate now across the board and it’s sixteen cents U.S. it works out to. That’s for what we call firm power. They also offer us economic power which changes hourly. Sometimes it can be as high as twenty cents U.S., it might drop down. The lowest we say this month was maybe around eleven, twelve cents U.S. per kilowatt hour.”
Stewart Krohn
“So what you’re saying is that the entire fifteen percent increase that you’re asking for is merely a reflection of your increased cost that you have to purchase electricity. Which constitutes what, sixty percent of your …”
Lynn Young
“About fifty percent. We generate ten percent in diesel. Right now we’re paying, I think it’s close to six dollars and fifty cents a gallon for diesel. We get about twelve kilowatt hours per gallon so when you work out the diesel economic it’s over fifty cents per kilowatt hour just for diesel alone. So that’s higher than we are even charging customers so generating the diesel is even out of the question. People ask why don’t we use the local diesel. We’ve been trying for the last two years. it has to be refined, it has to be processed but the best prices that we getting are also tied to the market prices. The best we will probably get for local diesel is maybe a twenty or thirty percent below the market price which is still higher when you convert it to electricity than what we are charging customers.”
Stewart Krohn
“By your own publications, however, Mr. Young you’ve got your VACA facility coming on stream in 2009, you’ve got Belcogen in 2009 or 10 I think it is.”
Lynn Young
“I hope in 2009.”
Stewart Krohn
“Can’t you look at those two projects and say you know what, let us hold on a little bit because we know electricity prices are gonna come down at that point. Why not give the consumers a little break seeing that it will only affect your cash flow and profit in the short term and you will make up for it later?”
Lynn Young
“As a matter of fact, that’s been our thinking all along. That’s why we have the rate stabilisation account where we differ excess cost of power in the idea that we’re gonna recover it later as we get down our cost. The rates stabilisation account had built up to twenty-nine million dollars, then we were in serious trouble and we had to go and ask for a rate increase. When we brought on Chalillo online—which was delayed significantly—we brought it online and last year we had some savings in 2007 and we brought down the rate stabilisation account to about nineteen million dollars. We did our forecast based on sixty-five dollars a barrel for oil in last year. It averaged higher than that so that this year its running one ten, one eleven, one twelve. In January we paid two million dollars more than budget from C.F.E. In February it was three point six million dollars. In March it will be more because of the oil price, C.F.E.’s prices index oil prices. So if you work that out at three, four million dollars a month extra cost times twelve that’s forty-eight million dollars for the year. So unless … if we had some indication that oil prices are gonna step back down, we could hold the fort. But all indications are that it’s not gonna step down below one hundred and ten dollars a barrel for the rest of this year. There is no way we can absorb that amount of cash differential and that’s the problem that faces us.”
Stewart Krohn
“In his campaign, in the U.D.P. manifesto, Prime Minister Dean Barrow made it very clear that one of the most important parts of his manifesto was the pledge to not only maintain stable electricity rates but to actually bring down electricity rates. Have you bucked head yet with Mr. Barrow on this issue?”
Lynn Young
“You know it’s interesting, we’ve never bucked heads with any governments over that issue because we feel the same way. I think every government, whether it’s a U.D.P. or a P.U.P. government in any country right now, the most important thing is to get energy costs down—whether it’s fuel, whether it’s electricity—at the end of the day electricity is just a conversion of fuel into electricity. Mexico, they convert gas, diesel, whatever, we spent all the money on hydro projects to try an keep it down but still we have sources that start to fail. I can’t blame any politician for saying they wanna bring down the price of electricity and we are gonna work with them to try and do that but we’re gonna have to try and do it in whatever realistic ways that we can. I think—I have met with the Prime Minister, I have met with Minister Hulse and we’ve laid out to them what the situation is and they are gonna do what they can on their end to see if they can help. But at this point in time in the short term, with the kind of costs that we are seeing from Mexico, we’re gonna have to change right now.”
At this point about the only way to avoid at least some increase in electricity rates would be for the Government of Belize to intercede with Mexico for a reduction in what the Comision Federal de Electricidad charges B.E.L. for power. The final decision on the rate request will be made by the Public Utilities Commission, which, according to a spokesman, will consider all factors—including the public interest—in arriving at its recommendation.
