BEL Not In Full Support Of 6% Reduction In Electricity

On Fridays House Sitting the first thing on the Prime Ministers list of announcements was the reduction of electricity rates. The Prime Minister without a doubt sounded like a male protagonist as he welcomed the P.U.C’s initial decision to reduce electricity rates by 6% or .3 cents per kilowatt hour. When the Honorable Dean Barrow made the announcement it seemed as if the lowering cost in electricity rates was a done deal. Barrow went as far as to tell the Belizean people that the 6% reduction will come into effect on February 1^st. Here is a recap of what the Prime Minster had to say.

Prime Minister Dean Barrow

“Every sector of the public of the economy will benefit. The PUC's decision adds over 1,000 persons to the list of those that pay only a social rate for their electricity consumption. That social rate is currently an already low 26cents per kilowatt hour as opposed to the average of about 40 cents per kilowatt hour that the regular residential consumer pays. But that 26 cent social rate will go down even further now to 24 cents. And, as I said, the number of around 7,000 or so persons that pay only the social rate will increase to 8,000 persons. None of this would have been possible were it not for the bold history-making decision of the UDP to nationalize BEL. It is the case, Mr. Speaker that the former owners of BEL were never going to give us any reduction. In fact they tied up us in court and got injunctions to block any possibility of lower rates. Not only were they never going to take our light bills down, in fact and to the contrary they were determined and demanded to actually increase our rates, and in a major punitive way." 

On December 1^st 2011 the Government owned Belize Electricity Limited submitted a proposal to the Public Utilities Commission to lower the cost of electricity by 3.4%. But after reviewing a number of factors, including the company’s business plan, the P.U.C, which is regulated by the Government, decided to reduce electricity rates by 6.1%.

John Avery- Chairman Director Public Utilities Commission

"Like I said, one, the legal fees. Based on BEL figures that they gave us, legal fees total $7 million dollars over those two years. They called it "regulatory" expenses. But these weren't expenses that were forced by the commission. BEL voluntarily decided to take these things on, on its own, in what we felt was an inappropriate strategy - basically to hold the country ransom and demand that the government supersede the PUC, and legislate rate increases and that sort of thing. BEL reported operational expenditure below $20 million dollars right up until 2008 and then over the next two years it jumped to $25 million then to $29 million. That was like a 50% increase in over two years, in a two year period. Nothing that happened with respect to expenses, inflation, even the price of oil, could have forced that on BEL. This was because of the way they operated and, as I said, based on the details about $7 million dollars we determine were for legal fees - which we believe consumers shouldn't be burdened with that.  Basically it's either we burden consumers with that increased spending, or we burden the current management with whatever short falls they may face now because of that impudent spending." 

But all indications are that the 6% reduction is still in question. Meaning that, it is not a done deal as how the Prime Minister made it seem on Friday. All indications are that the Belize Electricity Limited is not in full agreement with the 6% decrease in electricity rates.

In a press release issued yesterday BEL’s Chief Executive Officer Jeffrey Locke states and we quote the "Lower rates to customers are possible and desirable however, the final rates to customers must also ensure that we can sustain the Company's operations to deliver the quality service and carry out the system improvement initiatives outlined in our Business Plan, as well as meet our obligations to Shareholders.” End of quote.

The release also states that it is critical for the company to gain an understanding of the PUC's basis for its initial decision and underlying assumptions and provide more information necessary to ensure all assumptions reflect the Company's operational reality.

And finally, BEL states that they will be seeking a meeting with the P.U.C and continue to work with the regulatory body as the initial decision is revisited. So, the 6% reduction rate which the Prime Minster says will come into effect on February 1^st is still in limbo. We will keep following this story and bring you the details as they unfold.

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