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Joined: Jan 2008
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CFE Cancels Guaranteed Power Supply to Belize

Comisiόn Federal de Electricidad (CFE) has advised Belize Electricity Limited (BEL) that it is cancelling the guaranteed power supply contract (Firm Contract) with BEL, due to Force Majeure reasons. This contract was to expire in December 2010.

CFE has stated that their generation capacity has been significantly limited, as a result of problems with gas availability, generation equipment and shortfall in hydroelectric production.

While CFE is canceling the firm contract due to Force Majeure reasons, they are proposing to negotiate a new contract to provide up to 50 MW of economic and emergency energy to Belize. The rates under this new contract are expected to be higher than they were under the former contract.

There is sufficient local generation to meet Belize's energy demand without supply from CFE. Since CFE's initial notice in April, advising that it needed to suspend guaranteed power supply to Belize through to September 2009, BEL has been able to maintain power supply to Belize by relying on local generation sources, including the hydroelectric facilities at Belize Electric Company Limited and Hydro Maya Limited; the heavy fuel plant at Belize Aquaculture Limited and BEL's own Gas Turbine Unit.

Joined: Nov 2002
Posts: 2,536
Mexico Cuts Off BEL's Power Supply

When was the last time you heard good news from BEL? Seems that every time we get a release from one the highest earning companies in the country, it's another tale of doom and impending calamity. This time though, it's not just Canadian wolf-crying...this time, there's real reason for alarm.

That's because CFE, the Mexican power company - which provides a good third of BEL's power supply has cancelled its power supply contract with BEL. According to a release from BEL, CFE is cancelling the guaranteed power supply contract with BEL, due to what's called Force Majeure reasons - force majure means an act of God or other unexpected uncontrollable events.

So what is this unforeseen event? CFE says that its generation capacity has been significantly limited, as a result of problems with gas availability, generation equipment and shortfall in hydroelectric production. CFE has, though, opened the door for a new contract to provide 50 Megawatts of economic and emergency power to Belize. Needless to say, this power would be more expensive and what costs BEL more always ends up costing you more, so�

But the good news is that BEL does have enough local generation power to meet Belize's energy need without CFE. In fact, since CFE started with its problems in April, BEL has been able to maintain by juggling local generation sources, including the Hydro Maya Limited; the plant at Belize Aquaculture Limited in the south and BEL's Gas Turbine Unit at mile 8.

We were unable o get further comment from BEL or the PUC to discuss how long local sources can hold up.

Live and let live
Joined: Nov 2002
Posts: 2,536
B.E.L. purchases energy from local sources

[Linked Image] The Comision Federal de Electricidad from Mexico, last week announced it was canceling its firm contract for electricity supply to the Belize Electricity Limited, one of the biggest utility companies in Belize. B.E.L. responded saying that it had the capacity to fulfill the energy demand. According to its C.E.O., Lynn Young, the Mexican supplier has been experiencing problems with gas supplies. This morning Young sat on the couch on Open Your Eyes and explained that B.E.L. is purchasing energy from local sources when the prices are cheaper, but it is still purchasing from C.F.E. on a daily and hourly basis.

Lynn Young, C.E.O., Belize Electricity Limited

"The contract that we had with C.F.E. is based on gas and because they're having these problems with their gas plants, they've decided to claim force majore, which is to say things have happened outside their control and they don't anticipate that they will resolve these problems before the end of next year. Gas power generation right now is running about six cents Us per kilowatt hour, whereas when you generate with diesel heavy fuel it might be fifteen cents US per kilowatt hour. What we have been doing is that, especially on weekends, we would buy power from Mexico as much as we can and not use our gas turbine or BAL or some of the more expensive sources that we have."

"We expect BELCOGEN, the bagasse plant to come online in December. Right now we are taking test energy from BELCOGEN but they are generating with heavy fuel right now so it's kind of expensive right now. But when they start burning the bagasse, which will be in December, the price of that should come down a little bit. What we are aiming at and we are in that position now is to have enough supply in-country that we can supple all our own power. We can do that right now with the equipment that we have and when BELCOGEN comes online and the Vaca Dam comes online we will have about thirty percent reserve capacity in-country. So we can be totally independent of Mexico. What we will negotiate with Mexico is strictly an economic arrangement where we will buy power from them when that power is cheap enough. But on top of that we are doing some studies to find ways that if they drop off the system, it doesn't collapse our entire system."

Live and let live
Joined: Nov 2002
Posts: 2,536
B.E.L.'s CEO takes on Public Utilities Commission

In respect of its challenges with the Public Utilities Commission, Young explained that B.E.L. has not been able to sit down in the past year with the P.U.C. and that all issues are taken to the courts for settlement. Young also spoke of the report of an independent expert who found that the P.U.C. was wrong on reversing a decision taken years ago by B.E.L.

Lynn Young

"Finally, the court has appointed the same independent expert to come back and give a report to the court. There were about sixteen questions put to the independent expert and all sixteen questions the expert found that the P.U.C. was wrong. It could be again that the court may decide yeah the P.U.C. was wrong but they could do what they did legally. He said-because the expert is not pronouncing on whether or not what the P.U.C. did was legal. What he is saying is that this is not the way to regulate an electric utility; to make up these back charges that go back seven years to reverse charges that had been approved, for example the hurricane rehabilitation and different issues. He is saying you can't do that to a utility because the utility gets its financing based on the decisions from the regulator. So when we go and we borrow fifty million dollars, forty million dollars to do projects we are showing the banks that this is how much cash we expect to make and it is based on these decisions. And if seven years later you come back and say oh I don't like that decision, reverse it, you have to pay it back then obviously it destroys the basis for you to finance the operation. So that is what he is explaining in his report."

"The ironic thing is that there is no need for an increase in rates now and we've already made the P.U.C. and the government know that because the Chalillo project actually over produced last year. On top of that oil prices dropped drastically last year. Now it's on the way up back again but with BELCOGEN coming online and Vaca coming online, which are insulated from oil prices, we think we have things under control."

Young says that in the past two years, no dividends had been paid to shareholders.

Live and let live

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