BL&P accused of failure to follow through on plant improvements after last rate hike

A group of individuals and organisations are gearing up for battle to ensure that consumers are not disadvantaged as the Barbados Light & Power Company (BL&P) seeks an increase in electricity rates.

Eight intervenors, including two government divisions, two associations, two coalitions and two individuals, have been approved by the Fair Trading Commission (FTC) to participate in the rate review hearings, as the power company seeks new rates that would allow it to raise $440.2 million in revenue.

One of the intervenors, prominent attorney-at-law Tricia Watson, said while objectors accept the increasing global oil prices will cause light bills to increase, they will be seeking to ensure the rates being requested by BL&P are fair.

“While we understand that global oil prices will affect consumers’ bills adversely, we will not take our eyes off the ball which is to fight for a reasonable increase in this current rate request,” said Watson who is an intervenor alongside Managing Director of Prestige Accounting Inc. David Simpson.

Another intervenor, Ricky Went, stated that while consumers having to bear increases in fuel prices is par for the course, “we have to fight even harder to make sure that consumers are fairly treated”.

The Barbados Association of Retired Persons (BARP), which will be represented by Douglas Skeete as well as the Public Counsel at the hearings, will also be taking a stand against the BL&P, its president Marilyn Rice-Bowen declared at a press conference on Wednesday.

“When BARP comes out, our voice will be against the rate increase. I know that people will speak about the current situation in Ukraine and Russia and all of that, but we are going to hold our position,” she said, against the background of the rising cost of oil on the international market since the start of the Russia-Ukraine war in February.

The other intervenors approved by the FTC are the Barbados Renewable Energy Association (BREA); the Government’s Energy Division; the Small Business and Entrepreneurship Division of the Ministry of Energy, Small Business, and Entrepreneurship; the Cooperative Coalition of the Barbados Sustainable Energy Cooperative Society Limited; and Dr Roland Clarke.

The BL&P rate review hearings, for which a start date has not yet been announced by the FTC, will be coming on the heels of the utility provider increasing the Fuel Clause Adjustment (FCA) component of electricity bills for the month of April to approximately 45 cents per kilowatt-hour, which is 22 per cent more than in March.

The rate hike which the BL&P is seeking represents an increase in revenue of $46.5 million a year.

Intervenors have indicated they intend to question the fairness of such an increase, given that the BL&P has not acted prudently since receiving a rate hike from the FTC in 2009.

Back then, the BL&P applied for a rate increase, in part, on the basis that it intended to retire and replace an inefficient steam plant as part of its capital expansion programme. It projected it would save around $30 million per year in fuel by being able to install new equipment which would use not only less fuel but less costly fuel.

The FTC had approved the rate increase with the understanding that it would help fund the new plant.

However, sources in the energy sector contended that BL&P never replaced the plant and its continued use of old, inefficient steam generators between 2012 and 2021 had cost customers and the country.

“The failure to make those investments cost Barbadian rate-payers an estimated $270 million in unrealised fuel cost savings over nine years, based on BL&P’s own projections of $30 million per year at a cost of US$60 per barrel [of oil],” the sources declared. “In turn, the country would have lost millions in foreign reserves to purchase oil.”

With the FCA being 50 per cent of customers’ bill, Went noted that in 2013, the FTC stated that “as a priority, the BL&P should replace the steam turbine generators with a more efficient generating plant in order to reduce fuel costs”.

Following its investigation into a two-day blackout in November 2019, the FTC concluded that the utility company “had insufficient operating reserves to sustain adequate energy supply to customers on a consistent basis”.

That finding, along with the significant unrealised savings, will be in the intervenors’ arsenal in the upcoming rate hearings.

They believe that had BL&P retired the steam plant and installed more efficient generating units with the appropriate capacity, there would not have been substantial losses to the economy and homeowners directly, as a result of the blackout.

emmanueljoseph@barbadostoday.bb, anestahenry@barbadostoday.bb, PR