PUC threatens to pull BEL’s plug

Amid what has been described as a serious cash flow crunch, the Belize Electricity Limited (BEL) has more trouble on its hands as we go to press tonight. The Public Utilities Commission (PUC) has published a notice threatening to cancel the license of BEL, which permits the company to generate power and to distribute power to over 70,000 customers around the country.

The notice gives BEL a 30-day warning that the PUC intends to cancel the company’s license for not paying its fees for 2009 and 2010. The license was acquired in 2000 and is renewable in 2015 for another 10 years.

PUC Chairman John Avery told Amandala that BEL owes the PUC $2.1 million. The cancellation notice is for $1.88 million owed for 2009 and 2010.

Avery furthermore explained that BEL is disputing $235,000 in fees for 2007 and 2008, and this latter figure is not included under the notice.

BEL’s President and Chief Executive Officer, Lynn Young, told Amandala when we asked him for comment that, “Our priority is to pay the power suppliers at this time.”

Avery said that the PUC has its bills to pay, too!

“If the license is cancelled then we have to stop operating within 30 days. Hopefully the Government will have worked out the change of ownership by then, one way or the other,” commented BEL’s Lynn Young.

Avery said that if BEL does not pay its fees for 2009 and 2010, the PUC will proceed to cancel the company’s license.

Amandala understands that the 2010 payment was due in March. The fees are a very small percentage (a fraction of a percent) of BEL’s revenues.

Avery said that the monies BEL owes the PUC are supposed to go into the Consolidated Revenue Fund of Central Government.

Government has not gotten those payments, yet Government continues bailing BEL out, Avery added.

The Government of Belize has provided BEL with a letter of credit for $10 million under which BEL can get power from Mexico’s state-owned Comisión Federal de Electricidad (CFE). Over the course of the past few weeks, the Government has been prepaying its bill for street lighting to BEL.

This week, Government paid an advance of $4 million, but Prime Minister Dean Barrow has said Government won’t make any more prepayments, as a solution will be found one way or another before the country could lose its power supply from Mexico.

Last week, we had reported that the latest information from the PUC had indicated that BEL owes customers roughly $50 million. That information was obtained by one of our reporters, during an interview with BEL’s Lynn Young, who had said that the PUC was demanding a refund of $50 million for customers, which would push BEL into insolvency.

Today, Avery told us that the figure quoted by BEL is inaccurate, and there is no current assessment to indicate how much BEL owes customers. According to Avery, no accurate figure can be provided until a rate review is conducted.

Avery also told us that BEL’s cash flow situation is a self-created crisis, because the current electricity rates are “...more than adequate for them to operate quite comfortably.”

For its part, BEL’s majority shareholder, Fortis Inc. of Canada, issued a press release this week indicating that, “Three years ago, the Public Utilities Commission in Belize made changes to the rates that Fortis said ‘effectively disallowed the recovery of previously incurred fuel and purchased power costs in customer rates.’

“The decision also ‘set customer rates at a level that does not allow BEL to earn a fair and reasonable return.’”

Fortis noted that BEL has subsequently been in default of its lending agreements since 2008.

The Government has said it wants to acquire controlling interest in BEL from Fortis Inc.

Amandala