FTC prepares to grant power company, intervenors an audience in BLPC challenge

Consumers’ wait to hear how much more they will pay for electricity has been dragged out further as the Barbados Light and Power Company (BLPC) fights a Fair Trading Commission (FTC) order it said could cause it “irreparable financial harm”.

The power company says the FTC’s ruling last month for it to revise downward the figure it used to calculate its requested 11.9 per cent rate hike could also compromise its ability to provide a safe, adequate, efficient and reasonable service to its customers.

It has therefore asked the FTC to review and vary its decision and to grant a stay until that review is completed. The regulator has confirmed to Barbados TODAY that it is considering the request for the stay, even as it prepares for a hearing, on the review request, in which intervenors will have a say.

On February 15, the FTC gave the BLPC three weeks within which to go back to the drawing board and make adjustments to the rate of return it used as a basis for seeking a hike in basic electricity rates.

It had denied the BLPC’s rate of return on a rate base of 8.79 per cent, instead approving a rate of return of 7.47 per cent to be used. The utility regulator also denied the financial capital structure of equity 65 per cent and debt 35 per cent that the BLPC used to determine its rate of return but granted a financial capital structure of equity 55 per cent and debt 45 per cent.

The power company was ordered to submit a compliance report containing all the required recalculations and readjustments that the FTC would use to determine the final base rate to be paid by Barbadians.

But in a 62-page motion dated March 7, 2023, BLPC said if it is required to implement the FTC decision, “it will suffer irreparable financial harm which cannot be remedied by any subsequent award of damages, even if the same were available”.

“If the applicant is forced to implement the decision before review, its rate base will be reduced below acceptable levels, negatively impacting its ability to operate with the reasonable financial facility,” the power company stated.

It added that it would end up operating with severe financial challenges for the 2023 financial year and at projected marginal profitability for the foreseeable future until the matter is resolved.

“If the applicant is forced, before the hearing of a Motion to Review, to implement the Commission’s decision and direction that the applicant record 50 per cent of its 2019 income tax gain as a regulatory liability and amortise the liability over a 15-year period, this will contribute to an undue reduction in the applicant’s approved rate base,” the motion further argued.

The BLPC claimed that its return on equity would also dip below acceptable levels. That, it said, would result in a compromise of its ability to maintain its plant and equipment, and make necessary alterations and improvements to provide a safe, adequate, efficient and reasonable service to the public as required by the Utility Regulations Act.

BLPC also argued that the FTC’s decision – generally, and particularly in 11 various paragraphs – suggested that the utility company was untruthful, lacked transparency, provided incorrect or deliberately opaque information, included unsubstantiated costs in its application, and made errors in its calculations.

According to the motion, the decision also claims that the BLPC sought to mislead the FTC, failed to implement orders or directions made by the utility regulator in its 2010 Rate Review Decision, and engaged in self-dealing or misappropriation of assets.

The FTC’s Chief Executive Officer Dr Marsha Atherley-Ikechi told Barbados TODAY on Friday that BLPC’s request for a suspension of its ruling was under consideration.

“We met to consider the motion. Invariably, a regulator would accept and stop to consider what is being requested. That would be like a mini-hearing. But these matters have to be discussed and considered not only by the commission, but we have to give the intervenors the opportunity to comment on them as well,” she said.

The Commission’s General Counsel and Secretary Kevin Webster added that the FTC on Thursday issued procedural directions to all of the parties.

“So, as of right now, Light and Power as well as the intervenors all know the process that we are going to be taking,” he said.

He said the intervenors have until March 31 to make their submissions on the stay, while BLPC must hand in their response within two weeks after that.

Webster explained that while the FTC is making its determination on the stay, timelines will be set for submissions related to the motion for review, “so the matter progresses and there would be no undue delay”.

“So the two processes will be happening concurrently,” he said.

Intervenor Retired Lieutenant Colonel Trevor Browne told Barbados TODAY he would be making submissions for the motion to review, fellow intervenor Stephen Worme of the Barbados Renewable Energy Association said he would also take part in the process, and Rickey Went declared his intention to “keep fighting for the less fortunate”.

The intervenor team of Tricia Watson and David Simpson could not be reached for comment.

The position of the Division of Energy, which was also an intervenor in the rate hearings that concluded in October last year, is not clear.
emmanueljoseph@barbadostoday.bb