2020 was possibly the most difficult financial year for Belize's Economy and its working population, devastated by the Covid 19 pandemic. But, although Belizeans are struggling to adjust to pay cuts and jobs lost, your electricity company managed to make record profits last year, 47.2 million dollars to be exact.

Unlike both the private and public sectors, Belize Electricity Limited is reporting that the pandemic had a major positive impact on its operations - even as the the company has massive arrears by customers who are struggling to pay. Also, their sales are down by 20%. But, a significant fall in the company's cost of power from Mexico, allowed the company's cost of operations to go way down, leading earnings to spike dramatically.

It's all detailed in the company's 2020 Annual Report - which was released on Thursday at its Annual General Meeting, and today, we had an extended sit-down conversation with the chairman of BEL's Board of Directors. Here's what he told our Daniel Ortiz about what's behind the surprising outcome of last's year's financial performance:

E. Andrew Marshalleck - Chairman, BEL Board of Director
"Part of the performance is a result of the pandemic. While overall sales of electricity fell significantly, and while arrears of electricity bills have also climbed significantly, the cost of power incurred by BEL to secure the electricity supply to its customers also fell dramatically. That fell dramatically because BEL was able to source, over the course of the year, significant amounts of power from CFE, from Mexico, at extremely reduced prices. As COVID set in globally, and demand for power contracted in Mexico, the price of power from the CFE fell dramatically, and Bel was able to capitalize on that by sourcing more power from CFE, and keeping its costs even further below the decreased revenues, and increased arrears that we saw during the COVID year."

Reporter
"How long can this sort of benefit last, given that at some point, Mexico's consumption rate will increase back to its normal numbers? What happens then?"

E. Andrew Marshalleck
"Well, it's already increasing back to its normal numbers. It's on a climb, and we anticipate that it will settle at a hire - the lower rates from CFE won't continue as demand in Mexico is restored back to normal levels. So, we expect it to go back up. So, the cost of power will go back up."

"Dividends were declared and paid for the previous year, using the benefits of those slows. The Government of Belize, the Social Security Board, and Fortis have all received their dividend payments. So, the profit has been - so far as the public sector is concerned - has been recycled in through Central Government, and through the Social Security Board."

So, while BEL managed to turn those major profits, its customers had to survive the COVID-induced economic crisis. 10s of thousands of Belizeans lost their jobs and had to sit at home for months in hopes that commercial activity would return to their sector so that their companies could rehire them.

Today, we asked the BEL Board Chairman if the company is concerned that its customer base will start to push for relief on their light bills, given those major profits for 2020:

Reporter
"The more adversarial customers and the more adversarial critics of the company may frame the 47-million-dollar profit in the light that these record profits were made off the backs of the pandemic laden public. How would you discourage them from taking such a negative view?"

E. Andrew Marshalleck - Chairman, BEL Board of Director
"Well, the revenues were collected from customers. So, from one perspective, you can say that. But, you need to recognize that BEL does not fix the rates. The rates are fixed long in advance of the period they're charged. And they're based on projections. The authorities did not project what happened with the prices in Mexico. There have been instances where those prices have gone extremely high, and they've also put BEL in financial difficulty. Luckily, in COVID, they came low, so, it allowed BEL to do more than was anticipated during that period?"

Reporter
"How have you all addressed what seemed to be an increase in customer disquiet, where they were trying to suggest - at certain points, even malign BEL - that you all are over-charging. How have you all managed that situation?"

E. Andrew Marshalleck
"Well, I'm aware that there was a small group of customers, but in terms of the whole, you're talking about a very small proportion. For the most part, our customers have been very satisfied with BEL's performance as the consumer survey results show. So, there is always a small percentage of people who make these allegations. The simple fact of it is when you look into a lot of these, there are explanations for it. And, it never is the case that the company is over-charging or stealing. There might be some instances of error in reading a meter, recording a number, or something like that. But, in the main, the billing system works as intended."

Balancing The Regulatory Account

But, the company is hoping that its customers will place last year's boom in profits in the proper context. Today, the BEL Chairman reminded the public that there is a running regulatory account balance. This is a detailed assessment of the relationship between BEL as the service provider, and the Belizean consumers, which changes from year to year.

Chairman Marshalleck told us that because of past years, where electricity rates were lowered in times when the cost of power was very high, the net balance is still very much slanted in the company's favor. He explained why:

E. Andrew Marshalleck - Chairman, BEL Board of Director
"As you know, the price of electricity are regulated and are fixed by the regulator. So, that's something that the regulator keeps in mind when they are fixing rates that Belizean consumers have to pay for electricity. As you're aware, rates have fallen twice already in this year, not by very much, and the reason for that is because the - there's a regulatory account balance that's kept, where, when the rates are set too low, consumers end up owing BEL to cover the cost of power. The balance accumulates in the regulatory account. That account had a fairly high balance because rates in previous years are always - the tendency is to fix them as low as possible. And they tend to be too low to cover the cost of power. So, this relief that we got last year, allowed for some of that balance to be covered, bring it more in balance, given the history of that account. So, this relief that we're experiencing in the reduced cost has allowed that account to be brought more into balance, but there's still a significant balance in favor of BEL on that account."

Will Record Profits Spell Any Good News For Customers?

But, for those customers who are still struggling with their pay cuts due to COVID, any ease from utility bills would be a welcome benefit.

So, we asked the BEL Board Chairman about where you should set your expectations for any reduction in rates. Here's that part of the conversation:

E. Andrew Marshalleck - Chairman, BEL Board of Director
"You try to project what electricity sales will be in the upcoming year and what the cost of providing that electricity will be in that year and you fix rates by reference to those projections. That's what happens. If the rate that you fix is too low, then it means that BEL had to find monies from elsewhere to cover the cost of providing that energy. If it's fixed to high, then it means that there is a balance by BEL owed to consumers. So you always adjusting, because the predictions will never be perfect. You always carrying a balance into the future. So what it is that over the past many years rates have traditionally been fixed low, so it's always the case BEL has to find resources to cover those costs and this regulatory balance has climbed over the years."

Reporter
"When can a customer realistically see a reduce in their rates which will not hurt BEL?"

E. Andrew Marshalleck - Chairman, BEL Board of Director
"There is an entire methodology that's design to achieve that objective. It's a high sophisticated calculation exercise undertaking by the PUC. They do it every 5 years a full tariff review and then they also review every year an annual review and that's their job, that's their function and rate setting methodology and the formulas the calculations that are done to fix the basket of rates it's something that they have studied and tried to achieve that fair result that you talk about. So the application of the rate setting methodology itself seeks to achieve that balance, because that balance is actually mandated by law. You have to recognize why it is that balance is important, because you don't want to put consumers to unnecessary expense, but you also recognize that the cost of the energy must also be met. BEL is buying power and distributing it to the customers and charging and collecting for it. It's not that energy is free. Energy comes at a cost."

BEL Has 40+ Million in Arrears Since COVID

So, while a reduction in your light bill may not be something available in the foreseeable future, the company says that it has tried to be understanding of the financial pain facing its customers.

That's why, in 2020, they stopped disconnecting customers who had arrears and couldn't pay due to losses in wages. That consideration has caused their total arrears to grow from approximately 25 million to somewhere between 40 and 50 million dollars.

We asked the Chairman about that:

E. Andrew Marshalleck - Chairman, BEL Board of Director
"What we've done is not a single customer was disconnected for non-payment of bills throughout that year, not one. And that's why the arrears have climbed by close to 20 million dollars. They're significant amounts owed for electricity that has not been paid. Luckily, because of the reduced costs, we were able to off-set and bear that, because if it were the case that the cost of power was more closely matched to the revenues, the failure to pay those bills would have jeopardized the ability of the company to provide power to everybody. Luckily, because of the reduced cost experience, we were able to accommodate, for the entire year, those arrears. So, what we've done, apart from making significant donations toward COVID relief directly, is to not disconnect any customer for the year. And, we've since embarked on a program of contacting people and trying to make reasonable arrangements to accommodate the accounts being brought back current. And, that's the approach we've taken. We've taken a soft approach to the collections, but that's not to say that the funds are to be written off. They still need to be collected. You need to remember that if it is that these amounts are not collected, and they become a cost to the company, eventually, that cost gets revisited to the entire consumer base by way of an adjustment to the rate. So, what the lower cost of power has done for is given us some space to allow more latitude in those arrangements can be made, and how payment arrangements can be accommodated. And that's the approach we've taken to it."

Reporter
"So, it's a situation of a slow bleed or a wound that's continuously bleeding, that must be closed at some point."

E. Andrew Marshalleck
"Yes, and we're making efforts to close it, but we're dealing with it on an individual basis, rather than just setting arbitrary cut-off dates, or anything like that. We're talking and engaging with the customers, and trying to make arrangements the circumstances they face."

Channel 7