Three intervenors representing consumer interests and the green energy industry in the rate battle with the Barbados Light & Power Company have warned Barbadians to brace for a substantial increase in electricity bills, with at least one suggesting a jump as high as 26.2 per cent.
The warning comes after the Fair Trading Commission (FTC) on Tuesday ruled on a request from Light & Power to pre-approve three of the power company’s five proposals to invest in battery storage and recover the cost from customers through the Clean Energy Transition Rider (CETR). It partially approved a fourth plan and rejected the other. The regulator gave the green light 15 megawatts of the requested 90MW Battery Energy Storage Systems (BESS).
Veteran utility analyst Ricky Went warned that as a result, the average customer bill will experience an increase between 20.7 per cent and 26.2 per cent.
“It is expected that the proposed assets will not be all commissioned at the same time, and as the assets are proven used and useful, the rider is recalculated and revised upwards. As a result, the impact of the investments on the customers is moderated to some degree,” he said, quoting the commission’s ruling.
The analyst said the impact on the customer bill ought to be further considered in light of two key international statistics: The cost of electricity in Barbados compared to other electricity rates paid by consumers and businesses are among the highest in the world, and carbon dioxide emissions by Barbadians are amongst the lowest in the world.
Opposition senator and lawyer Tricia Watson also placed consumers on alert for a possible legal loophole to allow rate increases beyond those from Tuesday’s FTC decision.
“The people of Barbados should not stop paying attention,” she urged.
Watson argued that if the utility’s Canadian owners Emera find it unacceptable, they may try to get rates approved under the December 2023 amendment to the Utilities Regulation Act that allows the energy minister to bypass FTC regulation.
She claimed that most households will bear all of the cost burdens, which will be “tremendous”, and will reap none of the benefits which will make some elite players “very wealthy at the expense of ordinary consumers”.
And the utility lawyer told consumers not to be fooled into thinking that the regulator had saved them from a rate increase.
“Whatever was approved by the FTC this time around will still result in electricity rate increases for Barbadians. That is on top of the 2022 interim rate increase, and possibly on top of another $10 million per year rate increase that Light and Power asked for in January this year and that the FTC is reviewing right now,” she said.
Stephen Worme, vice president of the Barbados Renewable Energy Association (BREA), said while the FTC got “some things right”, he believed limiting battery storage was not in Barbados’ best interests as it is “a critical element needed to restart the renewable energy transition which has been stalled for some time”.
He said the 90 MW of storage requested by Light & Power over three years was “less than 20 per cent of the overall storage that will be required for the full [renewable energy] transition”.
While acknowledging the cost impact, Worme said this would be offset over time by reductions in the fuel adjustment clause, the monthly charge on an electric bill that reflects the utility’s fuel cost.
The BREA spokesman said the FTC’s decision to limit battery storage purchase to 15 MW “is going to significantly limit the transition to 100 per cent renewable energy generation and it is going to take us much longer to reduce our dependence on oil”.
Light & Power had also declared its disappointment at only being approved one-sixth of the total battery storage capacity it requested, saying this would create challenges in immediately expanding grid capacity to meet the island’s renewable energy needs.
Utility intervenors also criticised other aspects of the FTC’s ruling. Went argued that Light & Power should not be granted its request for $131.2 million in revenue as part of the pre-approval of investments and cost recovery through the CETR.
“The revenue requirement of $46.5 million requested by the company, must be adjusted downwards significantly after the findings identified by the FTC and intervenors,” the accountant said. “Yet, BL&PC wants an approval of $131 266 265 to be granted mostly on the premise that its request is necessary to comply with the Barbados National Energy Policy of 2019.”
The intervenors maintained the FTC should have been tougher on Light & Power, insisting the regulator must get “the full picture” to ensure the utility can recover its investment while being mindful of the impact on ratepayers.
Senator Watson urged vigilance, warning that “at the rate that we are going, only a few privileged people will benefit from the energy sector transition in Barbados” while most households bear the cost burden.
She said she and her team were “completely” dissatisfied with how the FTC conducted the utility company’s application. Watson claimed that the regulator continued to “ignore and disrespect pro-consumer intervenors” by withholding relevant financial information, putting “Barbadian residents and rate-payers at risk of an unjust result that would have a negative financial impact”
Worme, a retired Light & Power senior executive, agreed the FTC was right to require Light & Power to investigate repurposing existing generators as an alternative to new synchronous condensers.
The FTC did not state its reasons for limiting Light & Power’s battery storage request. But the decision falls in line with the Mottley administration’s announced intention to spread battery investment to independent players in a yet-to-be-established energy storage market.
Barbados aims to transition to 100 per cent renewable energy generation by 2030 under its National Energy Policy.
emmanueljoseph@barbadostoday.bb
