Big bucks

Professional fees paid by the Barbados Light and Power Company (BLPC) skyrocketed from less than $50 000 in 2015 to almost $500 000 last year.

The revelation came from BLPC Managing Director Roger Blackman as he was cross-examined on Wednesday by intervenor Ricky Went when the utility company’s rate increase hearing before the Fair Trading Commission (FTC) entered day six.

However, when asked to explain the massive increase, Blackman told the Commission the company’s Director of Finance Ricaido Jennings would be better placed to provide that answer.

Went had been seeking to reconcile the performance of the company’s investment income against the payout of professional fees.

“Why was that investment fund all along $2.3 million in 2015 and jumped to $8 million?

“What I am seeing is we are paying more for the professional fees but we are getting less value on the investment income,” he suggested to Blackman.

The witness responded by pointing out that professional fees were not only paid to the investment manager.

Earlier, Blackman gave a breakdown of the investment income. He disclosed that in 2016, the income fund stood at $8 million, $2.6 million in 2017, $1.2 million in 2018, $1.3 million in 2019, $1.3 million in 2020 and $1.2 million last year.

Went again pointed out to the managing director that the fund had jumped to $8 million in 2016 before the withdrawal of $100 million which was paid to BLPC’s new shareholder and parent company Emera Caribbean.

The intervenor contended that even if professionals could help the company earn more, he was concerned about the sum that was taken out.

“So, we have missed the opportunity then to actually bring the generation [plant] in as the Act allows [for insurance cover] and still find ourselves with this money loss, and ask the rate payers to pay $8 million, 50 per cent in the test year. Is that correct?” he queried.

But Blackman rebuffed the assertion by Went.

“That’s not correct. That’s a false premise,” he argued. “We haven’t missed the opportunity for generation. You would have to set aside for generation if you wanted to self-insure generation, and that was not being set aside. It is as simple as that,” the company boss told the FTC.

Went said he would leave this matter to Jennings who he suggested would help him get to the bottom of the matter.

He added that he could not understand paying more professional fees to make less income “at a time when the income was going to be coming through nicely in investment”.

Blackman followed up, stating: “We will provide that information to help you understand.”

When Jennings took the witness stand to give evidence jointly with the BLPC’s expert on depreciation, Peter Huck, he was asked by BLPC’s legal counsel Ramon Alleyne to provide the basis for the depreciation rates used by the power company for a rate review, specifically for the 2020 test year.

“The depreciation used in the application was based on the audited financial statements for December 31, 2020,” Jennings said.

“Those statements were prepared using international financial reporting standards. They included the depreciation rates approved by the Fair Trading Commission for general plant and for transmission and distribution,” the financial director added.

The commission also heard from the witness that the additional information requested by the FTC regarding the depreciation rates that were not approved has since been supplied.

During today’s proceedings, intervenors and attorney for BLPC argued over whether the utility company was seeking to apply for new rates in a manner that was not acceptable.

In a related development, the parties involved in the hearing were ordered to “cease and desist” from their “disrespectful” conduct before the commissioners hearing the case.

Minutes before the FTC was scheduled to adjourn the proceedings, the tribunal issued a strongly-worded statement which was read by commissioner Ruan Martinez expressing “grave” concern over the conduct of intervenors and attorneys for the company.

“The panel is gravely concerned with the manner in which the proceedings are currently being conducted by all parties involved,” commissioner Martinez stated. She declared that the tribunal had taken offence at “the lack of respect” for the panel, its rulings, and continued arguing with the panel. She said the manner in which the panel is addressed, was a cause for concern.

“We would therefore like to request that from this point forward, all such behaviour shall cease and desist,” the FTC told the hearing.

The position taken by the commission came on the heels of a series of verbal exchanges, some heated, which occurred between both sides and between parties and the panel.

Most of the exchanges involved intervenor, attorney-at-law Tricia Watson, her colleague Ricky Went and lead counsel for the BLPC Ramon Alleyne, King’s Counsel.

The nature of the exchanges largely surrounded issues of procedure and the production of documents or information requested from the BL&P by the Watson-David Simpson team.

The reminders by Watson to commission chairman Dr Donley Carrington of the laws governing aspects of the proceedings and interventions by Alleyne who objected to some requests or expressed concern about how the chairman’s rulings were treated, featured in some of the most robust exchanges during the session.

The hearing resumes at the Accra Beach Hotel and Spa on Thursday at 9 a.m. when Jennings and Huck will be subjected to further interrogation.

emmanueljoseph@barbadostoday.bb