#BTEditorial – Wrong time for a rate increase

Any onlooker at what is happening in the Barbados economy, regionally and globally, would reasonably argue that this is a period of consolidation.

There is little to no wiggle room for indulgences and extravagances. In most companies and households, the strategy is to hold on to the gains already established, prioritize expenditures, and consolidate cash reserves to respond to any unexpected “events”.

The COVID-19 pandemic overshadows every economic, social, and political activity in our country. There is no escaping its tentacles.

There is simply too much uncertainty in the market. Predictions on how the pandemic was expected to unfold have been faulty at best. There is an acknowledgement, however, that almost every plan for a possible economic comeback through the expansion in the tourism sector is now in limbo because of the Delta wave now inflicting severe sickness and death on too many people in Barbados and across the region.

To add to the Barbadians’ rising misery index, must certainly be the news from our local medical experts and epidemiologists that exploding confirmed cases of COVID-19, now consistently being reported at over 300 each day, could actually be three times higher.

This week, the International Monetary Fund (IMF) which has been praising our resilience in responding to the COVID-19 pandemic, is conceding that its predictions for growth in the Barbados economy have been seriously undermined in recent weeks.

IMF chief economist Gita Gopinath in the institution’s global forecast said: “The global recovery continues but momentum has weakened, hobbled by the pandemic. Fuelled by the highly transmissible Delta variant, the recorded global COVID-19 death toll has risen close to five million and health risks abound, holding back a full return to normalcy,” she said.

“Pandemic outbreaks in critical links of global supply chains have resulted in longer than expected supply disruptions, feeding inflation in many countries. Overall, risks to economic prospects have increased and policy trade-offs have become more complex.”

She added: “With fiscal space becoming more limited in many economies, health care spending should continue to be prioritised, while lifelines and transfers will need to become increasingly targeted, reinforced by retraining and support for reallocation. As health outcomes improve, policy emphasis should increasingly focus on long-term structural goals.”

In this context, we are forced to ask the question: What are the folks at Barbados Light & Power (BL&P) thinking that would influence the management of this company to introduce an application for a rate increase that could hike electricity bills by as much as 20 per cent.

Amid a Delta variant-spawned runaway infection rate, mounting deaths, increasing division over vaccinations, news from the Pan American Health Organisation (PAHO) that our infection rate has jumped five-fold in recent weeks, the BL&P throws this on a COVID-weary population.

We understand that the electricity supplier runs a capital-intensive utility that must renew its operating equipment for optimum performance. Barbadians can remember only too well the severe blackouts of 2019 that crippled businesses and made us question our status as a leading developing nation.

But we are flabbergasted, to say the least, by this application to the Fair Trading Commission (FTC) for a rate increase. We are already tottering by a pandemic that has severely hindered economic activity. There is high unemployment, and under-employment as many citizens are now working in situations where security of tenure is not afforded.

The mental anguish on vulnerable households, and anxiety among this country’s middle-class about their ability to maintain their status are leading too many of us to endure sleepless nights.

This is not hyperbole, but the Canadian-owned utility company’s management must be aware of something the rest of the country has no knowledge of because the timing of this application could not have been any worst.

The consensus among the public is that the proposal should be rejected at this time. What is encouraging, however, is the statement from acting chief executive officer of the FTC Marsha Atherley-Ikechi, that it will prioritise the BL&P’s request.

Responding to complaints from the utility that the regulator appears to be sitting on applications it has made for other activities, Atherley-Ikechi said the rate increase application will be given precedence over everything else including BL&P’s Clean Energy Transition Rider (CETR) application, and the Customer Energy Savings Finance Programme pilot project.