by Emmanuel Joseph
The Barbados Light and Power Company (BLPC) is suing the Fair Trading Commission (FTC) for rejecting its request for an 11.9 per cent rate hike and an 8.79 per cent return on its rate base.
In a statement issued late Friday, the utility accused the regulator of making significant errors in law and policy which it said were affecting its ability to serve its customers.
The unprecedented legal challenge came after the chair of the regulator’s rate hearing panel Dr Donley Carrington announced that Barbadians would learn before Christmas about the revised electricity rates, stressing that it would not be the 11.9 per cent increase requested by the company.
Intervenor Ricky Went expressed confidence that Light & Power would lose in court, while fellow intervenor, retired Lieutenant Colonel Trevor Browne, declined comment, stating only that it was a matter for the commission and the electric company.
BLPC said the legal appeal was necessary to defend “fair and reasonable legal standards” governing the industry, and accused the FTC of making “significant legal, jurisdictional, and procedural errors” in its decision.
“We feel that we are left with no other option than to continue efforts to resolve serious errors of law related to the rate application,” the electricity company said.
“Such mistakes have major consequences on our ability to adequately serve our customers.”
After two years of involvement in the FTC’s rate review process, the national power company, owned by the Canadian energy conglomerate Emera since 2010, expressed disappointment that a reasonable outcome could not be achieved. It charged that the FTC retroactively changed settled decisions, contradicted government policy on energy storage and made arbitrary adjustments.
Among those “settled decisions”, BLPC said, was the treatment of the firm’s Self- Insurance Fund and accumulated depreciation and taxes in a manner that is “punitive” to the utility several years after such settled decisions were made, the company charged.
“Notably, these specific issues were formally raised with, and supportive responses received from, the relevant regulatory bodies (including the FTC itself) [and] were relied upon by Light & Power,” the statement added.
BLPC also accused the FTC of “confiscation of prudent investments already made by Light & Power in good faith and already in service currently providing benefits to customers, and arbitrary and inconsistent adjustments to the test year”.
Assuring customers and stakeholders of its commitment to providing the best possible service, the company said it looked forward to a resolution in the High Court.
“Light & Power has full respect for the legal and regulatory process and will comply in every way necessary to bring this matter to a full and fair close that respects the best interests of customers, the company and the evolving energy needs of the country,” it said.
However, asserting that the FTC’s decision is sound and backed by data, intervenor Went accused the utility of making unilateral changes to depreciation rates in 2012.
He told Barbados TODAY: “We presented a 101-page affidavit that shows clearly the FTC is correct. In some instances, the FTC was most generous. For example, BLPC removed $99.5 million from the SIF [Self Insurance Fund] and paid dividends in one year. FTC gave BLPC 30 years to replenish the SIF. No interest was applied.”
In changing the depreciation rates in 2012, the company suggested that resulted in an increase of $7 million in depreciation expense for plant generation.
The intervenors’ analysis shows an impact of $9.351 million, Went countered, because the company “didn’t make any adjustment for the drop in demand during the pandemic”.
Went added: “There are several other big impacts which are highlighted in the FTC’s decision. We feel confident the court will rule in favour of FTC.”
Following the regulator’s February ruling in which BLPC was ordered to return to the drawing board to recalculate its rate data and resubmit its findings to the FTC, the utility company filed a motion for the commission to review that decision and change its orders.
The company was given a stay of execution on those orders.
But in handing down its ruling last month, Dr Carrington said the company has to comply with those February orders and respond accordingly.