BEL Calls PUC Statement

Last night the PUC dropped the hammer on BEL in a strongly worded press release.

The announcement was that the average electricity rate is going up due to the increased cost of power.

But the news was that the PUC accused BEL of purchasing power from the wrong source - and in the process - costing consumers two million dollars.

The statement created the impression that BEL was slacking on its submission and making power purchase decisions that ended dup costing consumers millions of dollars.

About two hours ago - BEL executives held a press conference to call those statements unfair and untrue:

Dawn Nunez - GM, Employee and Corp. Services
"Very disappointed, I could tell you that when we heard the news yesterday it created a lot of buzz in BEL, we were very disheartened about it and we need to defend the reputation of our employees in the face over the very unfair, untrue allegations that were made by the PUC yesterday."

In "Comments related to the Draft Decision", the PUC said, quote, "from September 1, 2021 to September 24, 2021, there were excessive instances where BEL elected to purchase power from BECOL when the cost of power from CFE in Mexico was significantly lower. The PUC also identified instances, in the last week of September 2021, where BEL elected to purchase power from CFE when the cost of purchasing power in the domestic market was significantly lower."

The notes continue, "The combined effect of the above was that the Cost of Power to consumers for the month of September 2021 would be $2,000,000 (two million dollars) more than it could have been had BEL dispatched using the lowest-cost mix of generation plants to meet demand." End quote.

BEL says it received that complaint from the PUC in October and responded with the facts, but never got an answer from the PUC:

Dawn Nunez
"We responded to the PUC comprehensively in writing, we provided them with all the information, we refuted the allegations. Furthermore, we asked the PUC to please respond to us and provide us with the evidence for your allegations against the company and such a request is quite reasonable because if you make an allegation against anyone, it's expected that you are going to bring evidence and supporting information to support your claim. The PUC did no respond to BEL's request for evidence and can also share with you that later on there was a discussion between the CEO of BEL and the chairman of the PUC. In that discussion, the CEO inquired why there was no response from the PUC and the chairman's response to was to the effect that BEL has documented it's position and that is the end of that matter. So having said that, we were very surprised to see the allegation being made in the communication by the PUC yesterday."

Leon Westby - Mgr. Strategy and Business Innovation
"The PUC has the authority and they have been adamant that they will not allow cost to pass on to customers if they deemed that those cost were not justifiably incurred. If you look at their decision, the PUC accepts the cost of power that was submitted by BEL for the month of September 2021 as is, which means then they had accepted BEL's reputation of that allegation, that we mismanaged cost of power in that month, that's the only explanation. So it begs the question, what are their motivations?"

Dawn Nunez
"Had we dispatched power in the manner that the PUC is suggesting that we should have, we actually yes, we would have indeed saved customers 1.5 million dollars in cost in relation to cost of power but on the other hand, we would have incurred about 2.3 million dollars in spill charges."

Jules Vasquez
"But you're still talking there about a hypothetical and it always concerns me that BCOL is a 1/3 shareholder in the ownership of BEL, so I'm always concerned when decisions are made to purchase power from BCOL at times that are not optimal because there is in my opinion, a manifest less than arm's length relationship between the power supplier and the power purchaser and the consumers are in between."

Dawn Nunez
"I can say very confidently that the way we dispatch power control center and specifically talking about our staff there who is responsible for the minute by minute, hour by hour decision, it's govern by the principal of ensuring that the cost is as low as possible and there is reliability to the customer."

Obviously the PUC was not convinced. In other areas of the public documents, the PUC says, quote, "The Commission intends to ensure that future dispatch decisions are reasonable and prudent and to disallow any request for a rate increase, where, in its view, BEL's dispatch decisions were not consistent with good utility practices."

We asked the BEL execs about the tone of the statements:

Jules Vasquez
"Is it that you feel that the PUC has some type of agenda to humiliate BEL in front of it's consumers? What could it's agenda be to speak publicly like this?"

Dawn Nunez
"It's very regrettable, we don't want to speculate, invest any time and energy in trying to figure out where all of this is coming from. What I can say though, its regretful, it's not good for our customers, it's not for the country because we have very important things we need to be looking after."

Jules Vasquez
"As the regulatory liaison, how do you respond to this very strident criticism which says that your submission was late, your submission was inadequate and that you must expose all your cost for review, that it takes exception to the way BEL continues to flout the law and intentionally ignores reasonable request for information such as supporting invoices for cost of power, dispatch, productions, modelling including assumptions and formulae, that is very direct accusation that only are you all lacking in your timeliness and in the completeness of your submission but that you are flouting the law continuously. What's your response to that sir?"

Leon Westby
"I'll say this, that it was disheartening and it would discouraging but as Dawn explained, our leadership is preoccupied with our strategy that's focused on building out the system to better serve our customers."

Why Did PUC Push Rate Increase?

But above all the bickering and back and forth, is the rate increase for the next 6 months. BEL says they didn't ask for an increase in your electricity rates. Yet, the PUC has made a decision, contained in their final draft of their 2021 Annual Review Proceeding, to adjust the mean electricity rates from 39.99 cents per kilowatt-hour to 41.58 cents per kilowatt-hour.

The general public and the company will get an opportunity to voice their opinions on that decision. But shortly before the start of our newscast, we got an opportunity to speak with Ernesto Gomez, the Director of Tariff Compliance and Standards at the Public Utilities Commission. He's the PUC's main official who puts together the rate reviews, and he justified the proposed increase in your electricity rates as a consumer protection mechanism.

That's because a few months ago, Belizean consumers owed BEL some 35.4 million dollars. It's called the running regulatory account balance, and it's a detailed analysis where consumers got too much of an ease for past years of electricity provision, at BEL's expense. They paid more for the electricity supply you benefitted from, and yet you basically got it at a discounted price, due to the regulatory process.

So, since BEL's cost of power spiked in recent months, the PUC thinks that it is prudent for Belizeans to pay that back now, rather than add it to the debt of the regulatory balance.

Here's how Gomez explained the rationale to us:

Ernesto Gomez - Director, Tariff Compliance and Standards, PUC
"Normally on a submission for these rate review in December, BEL would make a specific request. In this case their submission was a little bit different, it was worded different, it was basically as an information of the variance of cost of power and the information that was officially done, was only up to the end of the year which is the 31st of December, 2021. It's on the attached tables that then you can see their projections from January to June added another 5 million dollars to the pact and as a result when you add up all their information from their letter of submission and the attachment, it turned out be a little over 9 million dollars. So, we saw it strange that there is no direct request for a rate increase but at the same, they are telling you that there is projections that the customers will owe BEL this amount of money. Adjusting it later because of the regulatory process, the next opportunity for adjustment is basically on the rate review period 2023-24 and at that time, you don't know what the variants of cost of power will be, if it will balloon bigger and it will become a bigger hit for the customer. So in that decision by the commission, with our recalculation and everything, we consider that it is prudent right now to adjust the 4.5 million dollars by 1 and a half cents now rather procrastinate it and leave it for the future. That is a commission's decision on the best interest of customers."

For its part BEL says that regulatory account balance is a number that is in constant flux, and the balance is right now at 21 million dollars, which is part of the reason they did not request a rate increase.

We turn now to the dispute over the cost of power.

You've already heard BEL's explanation about why they chose to use Hydropower, instead of buying energy from CFE in Mexico. We asked PUC's Ernesto Gomez to explain their counterpoint on that matter:

Ernesto Gomez
"The general contract with BCOL basically say if there is spills that BEL must pay and that is passed down to the consumer and it standard that in July/August the rains come and it fills the dam and BEL is very cautious that it doesn't reach spill levels so that it doesn't incur those types of extra charges. So that is a standard concept, the situation is that since 2014-15 the patterns have been changing due to climate change. The climate is not really following history it's changing, so what's happening there is August they did get a lot of rain and they actually build up about 8 meters of water in the dam. When they saw that it is obvious to think that there is a lot of rain coming so they better use the dam but it didn't rain anymore and the regional forecast for the Caribbean was basically that Belize is suppose to be on a drought watch and they didn't forecast any rain until February. The rain is not coming in those levels that would normally fill the dam but of course we rely on history you would do what they did, run down the dam and by the 23rd of September they reached levels of water that they cannot continue using the dam and they lose that resource. Now while they were draining the dam, they were foregoing some very cheap prices from Mexico. BEL is right in saying under normal circumstances if you use only history that's the way it should have gone but if you apply a little of climatology into it, you will realize that decisions could have been made different. A little consultation with climatology would have told them different and they could have shifted that decision and help the consumers in general."

We also asked Gomez to discuss that complaint that BEL did not disclose all the necessary documents on its costs of power. The suggestion was that BEL, quote, "continues to flout the law". End quote. Here's how Gomez explained why those alleged omissions are an issue:

Ernesto Gomez
"The idea is that we keep repeating to BEL and all the licensees that the PUC bylaw give the power of the PUC to ask for any and all information they want as much as they might judge that it is not necessary, so really by us officially asking for information and you not supplying it, you are breaking the law and this comes after multiple times of request in writing and still seeing that necessity to get it. I wouldn't call it micro managing but micro regulating because if you are very transparent and you open to the information we request to you, then we really don't need to amend regulations but if you are holding back information that we require then it reaches a point that we have to use the legal authorities to be able to get that information and hence the amending of the regulation is to be able to give us that facility."

As you heard, there is a discussion to amend the regulation to ensure that there is no ambiguity in what information needs to be disclosed.

Channel 7