Mismatched figures

The Barbados Light and Power Company (BLPC) told the utility regulators on Tuesday that the Fair Trading Commission’s (FTC) records which show an excess of $32 million in accumulated depreciation rates charged to customers are incorrect and need to be fixed.

Director of Finance Ricaido Jennings told this to the panel hearing the BLPC’s application for a basic rate increase for electricity.

While Jennings, who was being questioned by the chairman of the proceedings Dr Donley Carrington, agreed that the records should be reconciled, he disagreed about where the adjustments ought to be made.

“I am suggesting that the application is based on accumulative depreciation of $853 million and I believe that the $853 million is the appropriate number to use in the application because it represents what’s in the IFRS [International Financial Reporting Standards] statements,” the finance director declared. “I believe that once we conclude this application, we should update the regulatory reports to align with the IFRS statements because I believe the IFRS statements bear a true and fair view of what the actual accumulated depreciation is,” Jennings explained.

However, the tribunal chair continued to question whether the witness thought it necessary to adjust the difference in the figures on the records of the commission to align with those on the company’s books seeing that an excess of $32 million is reflected on the books of the regulator.

“I believe adjustments should be done to the annual regulatory reports. I don’t think it is needed for the application,” the BLPC witness argued. Dr Carrington pointed out that the value of the depreciation rates which the FTC approved for the last hearing in 2010 was $885.8 million while the figure on the BLPC records is $853.7 million.

After some back-and-forth on where the adjustment in data should be made, Jennings told the commissioner exactly how he felt about his suggestion that the change ought to be done to the application.

“As you move forward in your current application where you have submitted rates that would be similar to the IFRS, would you see a need for realignment in your records to ensure the IFRS conforms to your regulatory books as at the date of the application?” the tribunal head enquired.

“No, I would disagree with that. I would say that the regulatory records should reflect the IFRS numbers,” Jennings contended.

The tribunal also heard from the asset management team comprising the director of operations Yohan Greaves and director of asset management Rohan Seale. Under cross-examination by intervenor Stephen Worme, a former senior employee of the BLPC, Seale addressed some of the technological challenges that the BLPC would  experience on its grid and how these could impact Barbadians who are coming on as the country pushes forward with renewable energy. He said that with high penetration of the system, the company has to properly manage the renewable energy which could rise as high as 40 per cent.

“It can cause some challenges for our system operators to manage the network, it can cause voltage issues, so we do have to manage very carefully the other assets we have online to make sure that those units can respond to maintain the requisite system…We do have challenges from that high penetration levels and we are managing currently,” Seale testified. The director of asset management also said what is required, since the company is “very” close to 70 or 80 megawatts that would allow the BLPC to operate without mitigation, “We are practically at that limit. We do need to add additional devices to stabilise the network.”

He said the company has identified the required devices as additional battery storage and equipment that would allow the system to operate safely. The witness was also asked by Worme, who represents the Barbados Renewable Energy Association (BREA), if he was aware that many of the renewable energy systems in operation are experiencing failures and temporarily shutting down their photovoltaic systems.

“We are aware that that is a possibility. That’s also one of the reasons why, as part of our process for standardisation, we would have issued a code that was approved by the FTC in 2017. And what that code seeks to indicate is that the various inverters that manage the devices there should be specified and conform to the operation ranges as outlined in the code,” the senior manager told the hearing. “If it is that some of those inverters do not meet that particular standard it is possible they might face some of those issues. But we do encourage installers to be sure that we are able to meet or conform to avoid the challenges you have identified,” the company official stated.

Worme then asked the witness how soon mitigation solutions could be put in place to tackle these problems, especially with more installations to come onto the network.

“We are already in the process of procuring up to 45 megawatts of battery storage. We would have received responses to that RFP [Request for Proposals] issued to the market. So we are in the process of looking at that particular procurement. The full procurement is subject to the vagaries of supply chain and some of the post-COVID impacts. We are working with suppliers to make sure that we can have those mitigation measures implemented on the grid as soon as humanly possible,” Seale disclose

Pressed to identify a reasonable timeline, the director of asset management told the hearing it could be within a year.

The hearing, which was again conducted both online and in person, resumes on Wednesday at 9 am at the Accra Beach Hotel and Spa for day 11 of the proceedings. emmanueljoseph@barbadostoday.bb