John Avery, chairman of the Public Utilities Commission (PUC), today issued a decision, dated January 12, 2012, declaring that electricity tariffs would be decreased an average of 6.14%, as early as February 1, 2012, if there is no serious objection.
A social rate customer using what is now the maximum for that category would save a dollar every month. However, a residential customer using 200 kilowatt hours would save $5.50 a month.
Prime Minister Dean Barrow has signaled in his New Year’s Day message that he intends to urgently bring into force new legislation to give the rate reduction immediate effect. A statutory instrument signed by Public Utilities Minister Melvin Hulse is due to be tabled in the House of Representatives tomorrow, Friday, January 13, 2012.
Barrow said in his New Year’s address: “The ease to the consumer, the ease in the cost of living, the ease to business and industry and agriculture, cannot wait.”
In mid-November, BEL chairman Rodwell Williams, SC, had told us that a new agreement for the purchase of power from the state-owned Mexican company, Comisión Federal de Electridad (CFE), BEL’s primary source of power, was already in effect, and it gives BEL a 6% reduction in rates.
BEL’s rate application, which asked for a 3.4% reduction, is for the Full Tariff Period (FTP) spanning July 1, 2012 to June 30, 2016, and the rates would normally become effective on July 1.
Barrow told our newspaper earlier this week, in response to our question as to whether a greater rate reduction would be put in place, that he “would be absolutely shocked and flabbergasted if it does not go down even more.” He also said that the number of social rate customers, who would receive the biggest benefit, would be increased, as the ceiling for persons to fall into that category would be increased.
In reviewing the PUC decision issued late this evening, we observed that this ceiling for social rate customers has been expanded from 50 kilowatt hours per month to 60 kilowatt hours, which means that more customers will qualify, and the rates are being reduced by 7.8%, from 26 cents per kilowatt hour to 24 cents. Meanwhile, residential customers will see rates drop in the region of 6%.
Commercial customers are also getting an ease with reductions in tariffs of about 7%; and while Government’s streetlight bill will be calculated at the same rate of 55 cents per kilowatt hour, industrial customers will see their rates drop between 4% and 6%.
“If this initial decision meets no objections from the licensee and/or interested parties representing users of at least 10% of electricity supply by January 27, 2012, it will be adopted as the final decision,” said the PUC announcement issued this evening.
“If this initial decision is adopted as the final decision, then the rates outlined in schedule 8 attached will become effective February 1, 2012,” it further stated.
As the Prime Minister has indicated, though, he hopes to enable the PUC to give the new tariffs immediate effect with the new SI to be tabled Friday.
Since the Belize Electricity Limited is now owned and controlled by Government, it is unlikely that the company will object.
BEL, under the ownership of Fortis Inc. until 2011, had been in a longstanding dispute with the PUC over rates. However, when Government acquired majority stake in the company, the litigation that was barring any change in rates was abandoned.
We recall that in 2009, the PUC had ordered a 15% reduction in rates, which did not take effect due to the legal wrangling.
In 2004, the company requested an increase of 8.6%, saying that it had not requested an increase in its rates since 1984, which, at the time, caused the rate to soar to 43 cents per kWh.
In its December 2011 submission, said the PUC, BEL proposed mean rates of 42.3 cents per kilowatt hour for 2012 to 2013, 42.1 cents for 2013 to 2014, and 43 cents for 2014 to 2016.
The approved rate for 2009-2012 is 44.55 cents per kilowatt hour and that is now being reduced to 41.81 cents per kilowatt hour, on average.
According to the PUC decision, BEL would be allowed a rate of return of between 9 and 12% on investments for the full tariff period 2012 to 2016, with a target value of 10%, the same as the Fortis era.
The schedules to the decision indicate that BEL’s revenue could be reduced from $195 million in 2011-2012 to $180 million for 2012 to 2013—about 7.7%—but improve by 2015-2016 to reflect revenues of over $200 million.