BLPC criticises FTC; intervenors take commission’s side
By Emmanuel Joseph
The Barbados Light and Power Company Limited (BLPC) has blasted the island’s utility regulator, accusing it of exceeding its jurisdiction and failing to follow established regulatory principles.
But intervenors, including newly-appointed Acting Public Counsel Douglas Frederick, struck back with equal firmness, recommending that the Fair Trading Commission (FTC) stick to its ruling.
The BLPC’s position is contained in a strongly worded 20-page submission presented by the company’s lead counsel Ramon Alleyne, KC, on Monday on the first day of a three-day public hearing before the FTC for a review and variation of the commission’s February 15, 2023 ruling regarding an electricity rate increase.
The company is challenging certain orders that formed a major portion of that ruling that the regulator has put on hold pending the outcome of the current hearing.
The FTC had thrown out the 8.79 per cent rate of return that the BLPC used to calculate its requested 11.9 per cent increase in base rates and said the power company would have to adjust its calculations and assumptions using a rate of return of 7.47 per cent.
Among the submissions to the FTC that were rejected in the BLPC application was the request to recover, in the new base rates, some of the money from the cost of a five-megawatt energy storage device. The company was also directed to establish a regulatory liability account and place in it the $99.5 million that its trustees previously removed from the Self-Insurance Fund (SIF) which is used to self-insure against damage and consequential loss.
On Monday, Alleyne, who was the first to present on behalf of the company, took the FTC to task on several aspects of its judgment.
“The commission acted in excess of its jurisdiction, and, therefore, ultra vires, by directing the applicant to take certain actions regarding the SIF when it had no jurisdiction to do so, and had previously acknowledged that it has no jurisdiction under its enabling legislation to oversee the SIF or to direct the applicant to take actions regarding it,” he contended.
“The applicant contends that a requirement to create a regulatory liability account in relation to the SIF, as indicated in the decision, is not ‘reasonably necessary,’ or ‘incidental’ to the rate-making powers of the commission,” the senior counsel added.
Much of Alleyne’s submission, which focused on the controversial SIF, also condemned the FTC for its ruling on the company’s decision to withdraw $99.5 million from that facility.
“The applicant had a reasonable and/or legitimate expectation that the $99.5 million withdrawal from the SIF, of which $15 million was paid to the Government of Barbados, would not be treated capriciously by the commission, based on the commission’s prior representation that the applicant did not require its approval.
“The commission violated the important regulatory principle of regulatory certainty and consistency by making a ruling on the SIF in its decision which was contrary to a written direction given to the applicant on a previous occasion on the same matter, and which apparent reversal prejudices the applicant,” Alleyne asserted.
The BLPC’s lead attorney also rejected the FTC’s order that customers be refunded millions of dollars contributed to the collapsed SIF, declaring that ratepayers never overpaid any monies.
He added: “The commission’s decision, if left unvaried, would not only result in the applicant’s inability to recover the full cost of an asset that customers are benefiting from, but failure to allow the applicant to recover the full cost would effectively result in the taking of the applicant’s property without the opportunity for fair and just recovery, thus in violation of the section of the URA [Utility Regulations Act] and established regulatory principles.”
But Frederick, whose office is also assisting the Business Development Division of Government and the Barbados Association of Retired Persons (BARP), pulled no punches in urging the regulator to stand its ground, insisting that it was well within its jurisdiction to make the orders against the power company.
In fact, the Public Counsel, who represents the “most vulnerable” Barbadians across the island, submitted that the BLPC’s case “was at war with itself”.
He questioned how the company could agree that the commission can examine the electric storage device (ESD), which helps the utility provider to stabilise the power grid, but not the SIF.
“They are saying that is an asset. The consumers, of course, have an interest in that because this is an asset that can stabilise the grid. We are interested in that because it means that we will have an undisrupted service. How can we look at that as they are suggesting and can’t look at the SIF? It is at war with itself. Their case is at war with itself.
“And when you find that the applicant’s case is at war with itself, what do you do as an adjudicating body? It means that they have not gotten themselves together. It means that they have not proven their case. It means that they have contradicted themselves in material particular,” the former magistrate contended.
He argued that the BLPC had not provided any error of law, jurisdiction, fact, change in circumstances, new facts or important matter of principle that would justify any review or variation of the FTC’s February order.
“They are claiming that unless you reverse points of your decision, that they will suffer irreparable financial harm which cannot be remedied by damages. I am of the view that they have not proven their case to move you past that threshold. They have to prove their case on the balance of probabilities, and here they have to convince you that they have a justifiable point that is an issue. They have not done that,” the Public Counsel submitted.
Frederick was adamant that the BLPC’s disposal of the SIF was under the FTC’s purview.
Utility attorney Tricia Watson, half of an intervenor team that also includes chartered accountant David Simpson, said the BLPC had merely repeated its arguments from the previous hearing and failed to advance its case for a review of the commission’s decision.
“The applicant has not raised any issue of substance that could justify the commission reversing or varying any element of its decision. The applicant also has not and cannot demonstrate how the reversal of the February 2023 decision would be in the public interest. They use those words, but their arguments are specious,” she submitted.
Veteran utility rate hearing professional Kenneth Went addressed the commission’s ruling that electric consumers should be reimbursed for their contributions to the SIF, saying that it was “justifiable”.
He said that amount should be either $160.78 million if the contributions to the SIF were regarded as shareholders’ funds, or $141.7 million if they were considered injections made from consumer rates, which his team contends they were.
The president of the Barbados Sustainable Energy Cooperative Society Limited, Lieutenant Colonel Trevor Browne, and Douglas Skeete, who represented BARP, also supported the FTC’s ruling.
The Ministry of Energy did not attend and the Barbados Renewable Energy Association (BREA) made no submissions.
The proceedings were adjourned until Tuesday morning when BLPC’s lead counsel will respond to the intervenors’ submissions.
emmanueljoseph@barbadostoday.bb
