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Home Features BEL makes submission to PUC as required by SI 116 of 2009

BEL makes submission to PUC as required by SI 116 of 2009

“Cost of power has increased more than 30 per cent” – BEL

Belize Electricity Limited (BEL), in accordance with Statutory Instrument (SI) No. 116 of 2009, section 7, and in compliance with the Public Utilities Commission’s (PUC) Rate Setting Methodology bye-laws, is making a submission to the PUC showing that cost of power has increased more than 30 per cent above the PUC’s approved reference cost of power. This significant increase in cost of power has been occurring since July 2012 due to various challenges faced by the three largest independent power producers that supply BEL with electricity.

According to the Law, BEL’s submission is to occur no later than 21 days prior to January 1, 2013, which may trigger a review for the period January to June 2013. In its January 25, 2012 press release on the PUC’s Full Tariff Review ruling, BEL noted that “…the proposed reductions [in the electricity rates] will only be sustainable if the actual cost of power remains at the projected level or lower.

“BEL is committed to doing all within its control to meet its cost of power projections and seek ways to lower it even further. BEL will be working closely with the PUC in this regard, and meetings on this matter have already commenced”.

Therefore, BEL is providing all the necessary information to the PUC to help inform their decision.

As BEL had reported in its October 10, 2012 press release, the increase in cost of power since July 2012 is attributed to the uncharacteristically low rainfall levels at the onset of the rainy season, which resulted in considerably lower hydroelectric production.

This, coupled with production problems at Belize Cogeneration Energy Limited (Belcogen), forced BEL to purchase more power from Mexico, at an average cost of 42.9 cents per kilowatt hour (kWh) compared to the PUC’s reference cost of 26.2 cents per kWh. Comisión Federal Electricidad (CFE) of Mexico significantly increased its cost of power, after it experienced problems with its natural gas supply from PEMEX and its hydroelectric plants in Mexico are experiencing similarly lower rainfall levels.

To reduce the burden to customers, BEL is appealing to the PUC to net the recent increases in cost of power against the $30.2 million that BEL owes customers as ruled by the PUC in February 2012 in its FTRP Decision. BEL is also proposing to temporarily reduce its mark-up, Value Added Delivery (VAD), until its energy suppliers have recovered from their present challenges.

In effect, this would result in a lesser adjustment to the electricity rates and in return BEL will pay off customers over a one-year period instead of the 4-year period prescribed by the PUC. After these adjustments, the unrealized earnings would be expected to be recovered in the next Full Tariff Review Proceeding or when cost of power falls to more manageable levels. This arrangement is possible since BEL has already secured the financing required to absorb this spike in cost so as not to increase rates in 2012.

“We have been managing this situation towards minimizing impact on customers,” said BEL’s Chief Executive Officer Jeffrey Locke. “We have kept the lights on and also paid back customers at a much faster rate than the PUC had prescribed. We have a very competent workforce and management team who have been working diligently to manage these circumstances.”

As BEL continues to address the extreme challenges faced by its electricity producers, customers can also help manage their electricity cost by practicing energy conservation at home and work. BEL will be collaborating with the Ministry of Energy in promoting energy conservation initiatives aimed at offsetting the anticipated increase in electricity rates. Visit the company’s website at www.bel.com.bz for practical ways you can save money by saving energy.

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