The Belize Electricity Limited (BEL) is in the process of reviewing the initial decision that the Public Utilities Commission (PUC) has made on the company’s application for increases in electricity rates and certain reconnection fees and charges for power thieves.
Corporate Communications Manager for BEL, Dawn Sampson, said that BEL would not have any comment until it is done reviewing the decision, which should be some time this week.
On Wednesday, May 2, 2007, the PUC announced that it was disallowing BEL’s applications to increase the amount it bills customers for each kilowatt-hour of electricity used. BEL had also argued for an increase in reconnection fees from $10 to $25, as well as specific charges for persons found to have been tampering with their meters and stealing electricity by creating diversions from power lines.
Additionally, the PUC denied BEL’s request to have the service charge of $10 eliminated from the bills of residential customers – a promise the Prime Minister, Hon. Said Musa, made in this year’s budget speech. Instead, the PUC decided that the service should only be reduced to $5.
Today we tried to get some further explanation from the PUC on this and other areas of the initial decision. When we asked to speak with the man whose name appears on the PUC’s decision, PUC chairman, Roberto Young, the PUC’s public relations consultant, Anne Wade, told us that we would not be able to “interrogate” Young, because he is the chairman of the Commission, which is now involved in what she equated to a “judicial process.” She told us that we would have to interview “the technocrats” – Anna Rossington, the rate setting director, or Victor Lewis – the PUC’s electricity director, but that they would only be able to answer questions about “the process” of the rate review or explain things already in the decision.
When we asked Wade why the PUC did not approve BEL’s request to have the service charge of $10 eliminated altogether, she said that the decision explains that this was done to apply the savings that would have accrued to customers based on cost of power calculations. She said that the PUC decided that instead of changing the existing tariffs, the savings should be reflected by lowering the service charge by $5.
In the PUC’s decision, the average electricity rate is reduced by 0.9 cents per kilowatt hour, factoring in the reduction in the cost of power of 0.1 cents per kilowatt hour, and a reduction of $4.7 million on the actual cost of power in the current rate period, because the cost is estimated to be that much less than had been forecasted, according to the PUC’s report.
The full credit that would ordinarily accrue from this rate adjustment does not go back to customers, however, because a portion goes back to paying off the rate stabilization account. When the cost of power goes beyond the forecasted levels, BEL does not bill customers right away, but defers those charges to this rate stabilization account, and a portion of what customers pay on their light bills each month goes to reducing this account.
Also factored into the equation is a rate of return for BEL’s investors – that is, what investors gain from their investment in the company by means of profits.
The rate of return is not disclosed in the PUC’s decision, so we asked Wade what the current or actual rate of return is for BEL, and she referred us to the Full Tariff Review Proceedings documents of 2005. Those documents indicate that the rate of return should range from 10% to 15%. This year’s decision only gives a set of mathematical equations that the layperson cannot understand.
Despite the nondisclosure in the PUC’s decision of what portion of our payments goes to paying BEL’s investors themselves, we note that in its most recent annual report, BEL reported record profits of $26 million in 2006 against revenues of just under $150 million – that’s one in every six dollars collected, and shareholders are paying themselves $11 million for 2006.
The PUC stresses that the rate review process is not yet over, and the public can continue to participate. During this first phase, the PUC reported that it had received 11 submissions – the most feedback they have gotten in any review period, and they are very pleased about the level of participation this time.
The PUC is inviting further comments on its initial decision, and interested parties, representing users of roughly 10% of BEL’s power sales, have until May 15 to submit written comments and information to the PUC at 63 Regent Street, P.O. Box 300, Belize City or by e-mail to [email protected].
If no one objects, the initial decision immediately becomes final. However, if BEL or any interested party objects, the PUC will have to bring in an independent expert to conduct a review. That expert should have a maximum of 20 days to report back to the PUC.
Within 15 days thereafter, and no later than June 26, 2007, the PUC is expected to issue a final decision.