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Jan 16, 2012

B.E.L. reacts to P.U.C. approved electricity rates

The Public Utilities Commission and the government have both announced a six point one-four percent decrease in electricity rates to come online on February first. Earlier today, Belize Electricity Limited (B.E.L.) gave its initial reaction and it doesn’t sound that they are rejoicing. According to B.E.L.’s release, it needs to “understand the P.U.C.’s underlying assumptions and provide more information necessary to ensure all assumptions reflect the Company’s operational reality.” It’s not an outright rejection of the decision, but it sounds like the utility company is not fully onboard with the sizeable decrease and says it will be requesting a meeting with the P.U.C.  Meanwhile, the P.U.C. held a press conference today to discuss the rationale behind different aspects of the decision. P.U.C. chairman John Avery, says that one major decision included what to do about frivolous spending that spiked the company’s operating expenditure under the previous management.

John Avery, Chairman/Director General, Public Utilities Commission

John Avery

“In the last two years, B.E.L. incurred, according to its annual report, expenditure well in excess of these figures that we have approved for them. For example in 2010, they reported something like twenty-nine million dollars in operational expenditure. We determined that a lot of those expenditures were, in our opinion, imprudent. A lot of it—some almost four million dollars were legal fees, taking what we thought were frivolous matters to the Supreme Court, asking the Supreme Court to make determinations and that sort of thing and to issue orders against the P.U.C. which we felt the law clearly stated that the P.U.C. had the power to do the things that they were trying to prevent it from doing. Not only that; they brought lawyers from around the world at some huge expenses to accomplish these things. With the matters, this rate review had another extraordinary twist to it in the sense that these were imprudent expenditures, in our opinion, however they were incurred under a different management. Now that you have a new ownership under different management, it was hard to consider whether or not—because these will definitely in effect be a penalty on the current management. So we had to consider whether we would penalize the current management—effectively penalize because it’s not really a penalty against them—for the actions of the previous management. But then again, if we didn’t do that, then we would end up then penalizing the consumers. We thought that the consumers have no other recourse, so we could not penalize them. However, the new owners of B.E.L., they have some recourse in the sense that compensation is still to be determined for the takeover of B.E.L. and so these imprudent spending and these different things are matters that the current ownership and management have another way that they may address these things and get some relief from them.”

According to Avery, B.E.L.’s operational expenditure remained under twenty million dollars up until 2008, but once the legal battles started, it shot up to twenty-five million in 2009 and twenty-nine million dollars in 2010.

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