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May 5, 2014

Electricity rates to be lowered

John Avery

The Public Utilities Commission has approved a nominal reduction in electricity rates, following an Annual Review Proceeding submission by Belize Electricity Limited earlier this year.  While the mean electricity rate presently stands at zero point four-four-six-five cents per kilowatt hour, it will be lowered by zero point four-three-zero-zero cents per kilowatt hour.  The proposed reduction bears in mind a decrease in the cost of power forecast for the current and future annual tariff periods.  Although B.E.L. predicted a total of a little over ninety-three million, three hundred thousand dollars in regulated asset value, the PUC reduced that figure by approximately seventeen million dollars.  That difference is the result of an overall reduction in proposed direct investments.  In reviewing the proposal, the PUC adjusted the cost of power as submitted by B.E.L. and applied a general annual corrections formula retroactive to the period of July first, 2012 to June thirtieth, 2013.

 

John Avery, Chairman, Public Utilities Commission

“All of these decisions we’ve done since the FTP started in 2012, we’ve spread out the corrections over the remainder of the FTP. In many instances, because they were so huge, if you were to put them in one year, it would either have B.E.L. reporting this fifty or sixty million in profit or thirty or forty million in losses which doesn’t makes sense. So it is best to put keep the company on an even keel than keep things without wild swings from here to here noh. So that is why we normally do the corrections over the remainder of the full tariff period.”

 

Reporter

“So are you indicating to us that down the road there can be further..”

 

John Avery

“…Corrections in favor of consumers. We are still operating right now, for this period, on projections for cost of power—for the couple months of this year that we have received reports—the actual cost is still lower. So what we have in there for cost of power, we would probably still be lower than that by the time the year is finished; however, we can’t go and make final corrections on a period that isn’t completed as yet. So that will be addressed when we review rates again. Whatever excess or shortfall that may occur within this current six months we are in, it is only after it is completed that we can make the corrections.”

 

Reporter

“Sir from a consumer’s perspective, who operates from a position of relative ignorance much like myself and for whom this entire opex and all these things are completely hanging in your cloud, how would you explain man, B.E.L. ask for an average of forty-three cents…”

 

John Avery

“…and we come up with forty-three point four-seven. We have a rate setting methodology that we apply and we try to apply it consistently. I can’t tell you as I said earlier, I can’t tell you the exact reason why B.E.L. came up with forty-three cents, but I mean every time, it is just like in December, B.E.L. recommended a three cent reduction. After we did our calculations and put it in our thing, we came up with forty-four point six five; so we were one cents lower than them. This time, they recommended forty-three cents, we apply our methodology consistently as we do every time and we came up with forty-three point four-seven. Now, as I said, if you look at what we did, we basically reduced everything they projected, yet we still came up with a higher figure than them. I can’t say how they came up with forty-three; all I can tell you is that the forty-three point four-seven is based on our methodology that we try to apply consistently.”

 

The seventeen million dollar difference in the cost of the regulated asset value will be borne by consumers. 

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