The Belize Electricity Limited (BEL) has responded via a press release to charges made earlier this week by the Public Utilities Commission (PUC) that the company is being “disingenuous” and misrepresenting its financial position, while blaming the PUC’s June 2008 tariff decision for what it says is a financial crunch.
“BEL calls on the PUC to desist from making these serious and unfounded allegations against the company,” says BEL’s release.
Citing statements made on Tuesday, March 3, 2009, by PUC Chairman, John Avery, the company says it is “…very concerned that the PUC continues to make such bold and unfounded accusations when it is aware that BEL’s financials are audited annually and reviewed quarterly by an independent, internationally affiliated auditing firm.”
BEL says that its financials meet Canadian Accounting Standards, which are internationally recognized.
“With its accusations, the PUC is not only attacking the integrity of BEL but also, its independent auditors, bankers and the Certified Public Accountants employed by the company who are responsible for preparing these statements,” the company added.
The company claims that for 2008, it booked a loss of $10.8 million, as “…a direct result of the PUC’s 2008 Final Decision.”
BEL has filed a law suit against the PUC, challenging that same 2008 Final Decision, but beyond that, the company only recently succeeded in getting the Supreme Court to stay a PUC decision for new tariffs that would reduce rates by 15%, retroactive to January 1, 2009.
The rate revision, according to the PUC, is in line with the fall in world oil prices, which have fallen substantially since their record peak in July 2008.
“As the PUC stated, the cost of power is a direct pass through by law. However, in early 2008 when the cost of power increased significantly, the PUC refused to adjust the rates to reflect the increase in the cost of power, forcing the company to absorb almost $18 million in extra costs. As a result, one of the company’s bankers withdrew its credit facilities and another put the company on notice that its facilities were being reviewed,” BEL’s release adds.
The company further states that, “It was only through the support of the Government of Belize who paid some of the company’s loans and put a letter of credit in place to allow the company to get extended credit from Comisión Federal de Electricidad that BEL was able to maintain supply.”
Thanks to record hydro production and a reduction in oil prices at the end of 2008, says BEL, it was finally able to meet its debts and maintain power supply.
The company claims that the PUC’s most recent decision again puts the company in a tight spot, “where it would again have difficulties meeting its debt servicing requirements and paying suppliers.”
BEL again calls on the PUC “to engage the services of an independent expert or panel of experts who can provide impartial and independent evaluation, assessment and advice.”
For his part, PUC Chairman John Avery contended on Tuesday that even while BEL was arguing that it was cash-strapped, it actually ended up with a positive cash flow of $36 million.
“We cannot see how this represents any kind of dire financial crisis that they can’t pay their bills and they can’t do what they need to do to provide the services they are required by law and by their license to provide,” said Avery.
Consumers are due a rebate of at least $20 million, Avery told us.