BL&P blames blocked cost-saving ideas for rate increase application

Light & Power has defended its decision to seek an 11.9 per cent rate increase, saying it held out for as long as it could before applying for the price hike.

Director of Customer Solutions Kim Griffith-Tang How said that several other options were considered over the years but those measures were either not approved or are still before the regulator for review.

Griffith-Tang How revealed that in response to the Clean Energy Transition Rider (CETR) application submitted in June 2020, the Ministry of Energy had intervened and suggested a rate increase application should be submitted.

The company submitted the CETR application to the Fair Trading Commission (FTC) last year with the aim of recovering millions of dollars in investment associated with its five-year Clean Energy Transition Programme (CETP) that was started at the end of 2019.

During a media briefing on Friday to explain the rationale behind the rate increase application, Griffith-Tang How told reporters: “To date, we have not received a decision back from the FTC on that mechanism.”

She explained that such a mechanism “if done well, can actually help a utility to hold off going for a rate review sometimes because what it does is anticipate that a utility may need to make a significant investment”.

“The Ministry of Energy actually intervened to ask that that mechanism not be approved for us unless we submitted ourselves for a general rate review, which is what we are doing now,” she said.

“So we have not been successful and more than a year has passed where we could get back a decision on that Clean Energy Transition mechanism . . . so here we are. We are going to work through the process and we expect the Ministry of Energy will also participate and we pray and hope that the Clean Energy Transition Rider decision comes back from the regulator soon.”

She also indicated that the BLPC attempted to put in a fuel hedging programme on three different occasions that could result in a “stabilization” of prices to customers that would help them better plan and budget, but those applications were not approved.

“With the last time being last year when we saw significant falls in the price of fuels, to date we have not received a decision back from the Commission on that matter. Since then the fuel prices have gone back up,” she said.

Another initiative that would “alleviate” the impact of fuel prices on customers, she said, was the planned Customer Energy Savings Finance Programme.

That programme would take place through the company’s planned Integrated Utility Service model (IUS) or on-bill financing programme, that would see householders and business operators seeking to implement major renewable energy and energy efficiency initiatives doing so through a loan facility from the utility company.

“We advanced that application to our regulator more than a year ago, and again, we haven’t received approval from the regulator to proceed,” she said, adding that the company has always been aware of the effects any rise in electricity costs could have on other services.

Pointing out that the utility company has not been spared the impact of the COVID-19 pandemic, Griffith-Tang How said it “began to see the signs that we need a rate adjustment” since 2019, but continued to delay that request.

“So we have been facing a dire need for rate adjustment for some time now, but we have had several discussions with key stakeholders, particularly with the government, and we have been ever conscious of the unfolding situation on the ground in Barbados,” she said.

“Unfortunately at this stage we can’t hold off any longer, and we find it necessary to seek the adjustment. We have done a number of things to try not to file but we find ourselves here now.”

The rate increase being sought could see residents paying between five per cent and 20 per cent more on their bills, which would mean as much as over $4,000 more per month for some commercial customers depending on their electricity usage.

The company said that the increase would not result in more than $6 for customers using less than 150 kWh in electricity in a month.

Managing Director of BLPC Roger Blackman told reporters there have been numerous discussions on the matter with Government over the past 18 months.

He said: “The reasons for a general rate review filing at this time are two-fold. One, is to ensure that the company can continue to safely and reliably meet the current and future energy needs of our customers, and secondly, to seek approval to implement a more cost reflective rate structure that would be more suited to facilitate the changes expected in the reformed electricity market and Barbados’ transition towards 100 per cent renewable energy generation.

“The challenges of the current COVID global pandemic have unquestionably underscored the need for reliable and safe electricity supply to serve the island’s essential services including water, health care and telecoms as well as our residential and commercial customers. The provision of electricity must be maintained reliably and safely for these essential services and for Barbadians across the country.”

He said since the last adjustment to base rates in 2010 the company has made “rigorous efforts” to control costs in supplying electricity.

Blackman said should the rate increase be denied, the company would review the decision to determine its next steps. (MM)