BELIZE CITY, Mon. Jan. 10, 2022– In the next 10 days, consumers will know whether they will be saddled with higher electricity rates following a review by the Public Utilities Commission of a possible increase of the Mean Electricity Rate (M.E.R) from 39.9 cents to 41.5 cents that could be effected for the period extending from January to June of this year. Last week, AMANDALA reported that BEL, the monopoly electricity company in Belize, had submitted information which outlined to the PUC higher-than projected costs incurred (and to be incurred) by the company in the purchase of power at the end of 2021 and in the upcoming months. The regulator later moved to table an increase in the M.E.R. following an extended exchange of correspondence with the company, and at the end of the day, the PUC determined that it would be prudent to apply the increase to electricity rates at the current time, rather than risk an increase in the future which would result in a heavier burden for the consumers.
“We saw it strange that there [was] no direct request for a rate increase but at the same time, they are telling you that there is a projection that the customers will owe BEL this amount of money. So, we here at the commission have to present this scenario to the commissioners and the commissioners have to do their decision, and basically, they can decide to go ahead and make the adjustment now or adjust it later. Now, adjusting it later, because of the regulatory process, the next opportunity for adjustment is basically on the rate review period 2023-2024, and at that time you don’t know what the variant in cost of power will be, if it will balloon bigger, and would become a bigger hit for the customer. So, in that decision for the commission, with our recalculation and everything, we concluded that it is prudent now to adjust the 4.5 million dollars by 1 and ½ cents now than procrastinating and leaving it for, that is a commission decision in the best interest of customers,” Ernesto Gomez, Director of Tariff Compliance and Standards at the PUC, told local media in a press conference last week.
The final decision will be released by the PUC on January 20, following the consultation period, which ends on January 15. Gomez said that normally, a request to increase rates to recover the added cost of power would have been annexed to such a submission from BEL, in which higher costs are outlined. These externalities that are to be recovered from customers through higher rates are estimated to be almost 5 million dollars, according to the projections on the cost of power from January to June. But the PUC indicated that this could have been anticipated and averted if the company had accounted for the realities of climate change and the unnatural weather patterns that the world is experiencing due to the global crisis.
Last week BEL informed the public that they had made an earlier decision to acquire power from BECOL, since the dam at that location was near spill levels due to an increase in rain in late August. If the spill had occurred, the company would have incurred spill charges, which would have been passed on to customers. The rains, however, did not continue, and the power from the BECOL plant was dispatched until the water in the dam had sunk to low levels. This water is not expected to be released until the projected rains in February, forcing the company to purchase power from other sources like CFE Mexico and other domestic independent power providers. Gomez said that if the rains had continued, the company’s decision would have been prudent, but the rains ceased. He said that if elements of climatology had been used in BEL’s projections, they would have probably made the right decision to purchase cheaper power from CFE in Mexico and to save the potential power from the Fortis-owned BECOL.
“Since 2014 to 2015 patterns have been changing due to climate change and the way you manage the water has to be with the best future information, the next day ahead, week ahead, month ahead, and maybe the next quarter ahead. Because, relying on past information can be tricky, especially since the climate is not really following history. So, what happened there is that in August, about the 25th of August, they did get a lot of rain and they actually built up about 8 meters of water in the dam. When they saw that, it was obvious to think that there is a lot of rain coming, so they better use the dam. But it didn’t rain anymore, and the regional forecast from the Caribbean was basically that Belize is supposed to be on a drought watch, and they didn’t forecast any rain; actually, they are not forecasting any rain until February,” Gomez said.
He said that, based on historical information, the actions of BEL are in a way understandable — drying the dam to avoid spillage that would result in millions of dollars in charges, but by late September those waters in the dam reached such low levels that they could not be used.
“While they were draining the dam, they were foregoing some very, very cheap prices from Mexico. In my opinion, a little bit of climatology there could have moved the decisions better, and those variances could have been much more improved. So, that decision eliminated the water from the dam, which is a resource that we need, so there is no more for October, no more for September, and as a result, the problem is extended all the way until the rain comes.” Gomez stated.
The PUC representative said that they hope independent power providers like Santander and BELCOGEN can provide additional power, due to the commencement of milling, to supplement the shortfall left by the lack of hydropower from BECOL. He maintains that the dispatch decision by BEL could have been made differently if they had paid some attention to the unpredictable weather patterns brought on by climate change.