Intervenor says FTC’s rate review procedure out-dated, grossly inefficient

One of the most vocal intervenors in the last electricity rate hearing is suggesting that the Barbados Light and Power Company’s (BLPC) controversial removal of the nearly $100 million from its Self-Insurance Fund should be referred to the Director of Public Prosecutions (DPP) for action.

At the same time, the retired army officer and chairman of the Coalition of Concerned Cooperatives, Lieutenant Colonel Trevor Browne believes the entire rate-setting process under the Fair Trading Commission (FTC) needs to be overhauled.

“A complete review of the utility rate-setting process is urgently warranted. A new Utility Regulation Board should be empanelled, and the FTC should revert to its real role of defending customers’ interests and rights, instead of being BLPC’s chief advocate,” Browne suggested.

His comments were made on Thursday while responding to Wednesday’s decision of the Fair Trading Commission (FTC) on the power company’s application for an 11.9 per cent increase in its base rates for domestic service customers that is linked to a revenue requirement of 89.79 per cent.

When he handed down the decision during a press conference at the FTC’s Green Hill, St Michael headquarters, chairman of the rate hearing panel Dr Donley Carrington directed the BLPC to, among other things, establish a regulatory liability account and place in it, the $99.5 million that its trustees previously removed from the fund which is used to self-insure against damage and consequential loss.

“In the event of a catastrophic event that is eligible to be covered by the Self-Insurance Fund, the BLPC is directed to first deploy the monies recorded in the regulatory liability account. BLPC is further directed to refund to customers, the Self-Insurance Fund amounts withdrawn that are not redeposited into the Self-Insurance Fund over a 30-year amortisation period, as a reduction to insurance expense that shall be shown [as a] separately identifiable account for regulatory reporting purposes,” Dr Carrington stated.

But Lt Col Browne, who is also president of the Barbados Sustainable Energy Cooperative Society Limited, chastised the commission for giving the energy company 30 years to repay the funds which were withdrawn and paid as dividends to the new owner Emera Caribbean.

“Even when irrefutable evidence of BLPC’s ‘illegal’ transfer of the Self-Insurance funds were presented to the commission, [its] decision, while detailing and admitting the ‘illegal’ action by the company, proposes to redress the situation by giving the BLPC 30 years to repay the money. This is a matter that probably should be referred to the DPP,” he argued.

The FTC also gave the company three weeks to make some adjustments to its original request for 89.79 per cent on its rate of return. The utility regulator said it will use the energy company’s revised computations to determine the final base rates which in any case, would be lower.

However, intervenor Browne saw this as another attempt by the FTC to turn to the company for ‘guidance’ in establishing new rates to be charged to Barbadian electricity customers.

“While effectively confirming most of the initial requests set out by the utility, the commission now sees it necessary to invite them to configure the final rates. If this in itself does not confirm the ineffectiveness and invalidity of the current electricity rate setting process, nothing can,” Browne contended.

He has therefore called for an overhaul of the utility rate-setting process and a review of the FTC’s present role in determining rates.

He said even though the sitting members of the commission meant well, the rate review process managed by the FTC was out-dated, ill-conceived and grossly inefficient.

“It is clear that these fundamental concerns cannot be addressed by the FTC themselves, and need to attract the attention of higher powers such as our Parliament and Courts. Until then, Barbadians can expect to continue to subsidise Emera’s Canadian operations with our excessive energy bills,” Lt Col Browne said.

He said the decision of the commission was no surprise to him nor to anyone who had been closely following the situation.

He described the procedures and processes that led to Wednesday’s FTC decision as 16 months of meaningless back-and-forth which resulted in the commission again turning to the BLPC for ‘guidance’ in determining new electricity rates.

“In the circumstances, it is inconceivable that the commission could now feel comfortable in relying on BLPC’s guidance and advice in setting of rates for Barbadian customers, and yet the whole process is currently operated on this basis,” Browne stressed.

The FTC said the new base rates will be announced in a month, once the company submits a compliance report containing all the required adjustments to its rate proposal within the prescribed three-week deadline.

emmanueljoseph@barbadostoday.bb