BEL Says Cost Of Power Crippling: Will It Ask For A Rate Increase?3 months ago, we gave you a brief preview of the financial difficulties that BEL was facing. The main problem then as it is now is the cost of power. Rainfall was low this year, so there hasn't been enough Hydro power; BELCOGEN has been producing under capacity, and energy from Mexico was selling BEL power for almost 43 cents per kilowatt hour - which is about what you pay for it! And everyone knows you can't sell a product for the same price you're buying it for!
In a press release sent out today, the company noted that since July of this year, their cost of power has spiked up to more than 30% since the rate reduction of January 2012.
So, what does all this mean for you the consumer? Well, BEL representatives spoke to us today saying that by law they are required to report the costs of electricity at the current period as compared to when the new rates were effected.
They told us that it is their obligation to report to the country and the PUC what their financial position is.
Here's what they told us about the financial difficulties they've been facing with the soaring cost of power:
Ernesto Gomez - Sr. Manager of Energy & Supply, BEL
"Under the law, the cost of power that BEL purchases for its suppliers, it's just a pass through to the customers. So, the expensive of the cost of power, if you remove that from the rate, BEL has just a small margin to operate on, like 30%. So, if the cost of power rises, it takes away from our everyday cash to be able to operate. BEL has used all its resource to be able to easily keep the lights on for the customers. And as a result, the customers do not even know that this thing is occurring, but as a result, we are committed by law to report these changes to the Public Utilities Commission for them to look at it. And they may or may not make decision. That's their prerogative. In January 25 of this year, BEL put out a press release to the public, just after they had given the initial decision for the full tariff, the PUC had given that. And, we had studied the decision and the rates, and we realized and decided that we can easily operate efficiently with those rates, if the cost of power would remain at the price that it was in January of this year. But since the price of power did not stay at that level, we are now obligated by law to make a submission to the PUC that would report them our actual cost power and our forecasted cost of power from the end of June, which tariff review period. That's what we're submitting, only that. The PUC will take that information, and they may decide if they will do any adjustments to the decision that they made in February of this year, or they may chose to go another direction, but at this moment, our submission is basically the submission of data, as required by law. At this moment that we have done our submission to the PUC, we have to be careful not to be scene suggesting to the PUC any decision that we would want them to take. As a result, I would not want to suggest anything to the media. I prefer the PUC keep their independence, and make their decision without any influence from us, the licensee. We believe that the problem has done a strain on our finances, and we have gone ahead sought short term financing, as you have seen, with debentures and what-have-you. So, we are prepared to make sure that the customer still has electricity continuously. That is not a problem."
"Are we saying that the 6.14% rate reduction is currently unsustainable?"
"Well, at this moment, with the fuel prices at this level, if you do the analysis now, obviously, it's unsustainable. But, you cannot do it at one moment in time. The PUC has to be looking at it in periods of 4 or 5 years. That's why they call it full tariff review. Like I said before, and forgive me for insisting, because we did our submission to the PUC on December 10, the PUC takes 15 days to deliberate and do their own technical stuff with us supporting them with whatever information they want. During that period of time, we cannot by law say anything to the public that would influence - or that would look like we're influencing the PUC in a decision. So, suggesting a rate, or suggesting an increase or a bottom line, I would not be able to do it. After the PUC put out its first decision, which will be around December 27 or 28, then I could answer you on all those questions, without a problem. We're trying to encourage and promote the public for energy conservation. Whatever way the rates go or don't go, we don't want the public to pay any more than they need to."
So, at this time, there is no rate increase being suggested, it's the PUC's responsibility to come up with a decision on what steps the company will take in the next rate review period.