One of the groups objecting to the Barbados Light & Power (BL&P) request for a rate increase has put the Fair Trading Commission (FTC) on notice that it will be protesting its treatment of intervenors’ concerns.
That was disclosed on Friday by the spokesman for the Coalition of Cooperatives, Lieutenant Colonel Trevor Browne in response to a recent decision by the FTC to allow BL&P to exclude certain confidential information from the public during the upcoming rate review hearing.
Lt Col Browne said the coalition, which represents the Barbados Sustainable Energy Cooperative Society Limited, the Barbados Cooperative and Credit Union League, and the Cooperative Business Association, has had no responses from the utility regulator regarding a list of proposals and concerns submitted over the past several months.
“Should our concerns continue to be ignored by the Fair Trading Commission, then the coalition will take our detailed concerns to our membership and to the general public for further guidance and directions,” he told Barbados TODAY.
Lt Col Browne said the coalition has been experiencing issues with the commission since being granted intervenor status in the rate hearing process that started in October 2021.
“During the interim period, in various communications with the commission, we have received no answers to numerous questions which we have raised about the process being followed, about clear requirements of the Utilities Regulations Act (URA), nor in response to some fundamental issues we raised about BL&P’s rate methodology,” he contended.
The spokesperson, who is also president of the Barbados Sustainable Energy Cooperative Society Limited, pointed out that from the very start, the coalition submitted to the FTC its request that the basic principles being used to determine electricity rates in Barbados needed to be reviewed and that they intended to make proposals in that regard.
The intervenor argued that the Act requires the commission to set the maximum rates to be charged, monitor the rates charged to ensure compliance, monitor the standards of service supplied to ensure compliance, set a guideline of five years maximum for the regular review of such guidelines, and carry out periodic reviews of the rates and principles for setting rates and standards of service.
“There has been no review of BL&P rates in about 20 years, and the principles being applied to determine these rates have been in place even longer. Meanwhile, most aspects of the electric utility business in Barbados have changed in the interim. The URA provides very clear guidelines on the frequency with which reviews should be undertaken, giving a clear maximum period of five years between such reviews,” the coalition spokesman asserted.
“We have had no response from the FTC on any of our proposals, questions, or even to our concerns which we have raised about how the process is being conducted. Instead, we have been bombarded with legal documents and arbitrary initiatives from BL&P which appear to be largely disruptive to the process and designed to sidetrack the key issues that we raised,” Lt Col Browne told Barbados TODAY.
He added that the electricity company had submitted a request for large volumes of data in support of its case to be treated as confidential.
“When challenged, this request for confidentiality was subsequently explained that the information was not really confidential after all. However, after an exchange with the commission, BL&P decided to reinstate their position that the matter was confidential again after all.
“Not only did the FTC organise a hearing to determine this matter, but they insisted that all participants sign a document which binds signatories not to discuss any information raised at that hearing. Obviously, this could potentially compromise the coalition’s ability to properly update our members, and we declined to sign any such document and, presumably, as a result, we were not invited to participate,” the coalition spokesman disclosed.
Lt Col Browne added: “BL&P also submitted a request for ‘interim rates’ to be granted by the commission, pending the final rates to be determined. We pointed out to the commission that this is not provided for in the regulations and that the request was, in fact, illegal. We have received no response to this, and while we were sent a link to attend a so-called ‘hearing’, presumably as observers, the coalition declined to participate in what we suggest is an illegal process.”
“We are concerned that the various side issues being pursued by the BL&P and the FTC are mere distractions that seek to avoid some questions raised by the coalition with respect to some fundamental key issues such as cost of capital, and debt/equity management, among others,” he stated. He said that for example, in a single year, it appeared that unilateral decisions were taken by BL&P directors on these matters related to the cost of capital to use funds from parent company Emera at a 27.5 per cent dividend rate, rather than access loan funds from the banking sector at under three per cent interest.
“Directors also applied a debt/equity ratio of 26 per cent debt to 74 per cent equity, resulting in an additional cost to Barbadian electricity consumers of an estimated $50 million. It is to be noted that Emera itself is not allowed to exceed 40 per cent equity in their debt/equity mix at their own home utility company, Nova Scotia Power,” he said.
Lt Col Browne said that the Coalition of Cooperatives fully understands and supports the concept that the power company must be allowed to operate at a reasonable profit, and that rate reviews will be required from time to time in this very dynamic environment.
“However,” he added, “we reiterate that the ground rules which determine what is a ‘reasonable rate of return’ must be coherent, transparent, and fair to all parties concerned, including our constituent membership, who will be the ones paying those final rates awarded – even those ‘higher’ rates supposedly billed to businesses but which we all know will be passed on to end-users who are unable to pass the increases on further”.
When contacted on Friday night, Chief Executive Officer of the FTC Marsha Atherley-Ikechi said she was not in a position to comment at this time.
emmanueljoseph@barbadostoday.bb
