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Dec 2, 2004

High oil prices punishing B.E.L., says CEO

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For his part BEL chief Lynn Young says that with oil prices heading in only one direction, the alternative energy can’t come soon enough.

Lynn Young, President/CEO, BEL

?We are getting about fifty percent of our power from Mexico right now and we get about twenty/twenty-five percent from the Mollejon Plant, the rest comes from the gas turbine and the diesel. By the time that comes online the load would have grown from about sixty megawatts to maybe seventy/seventy-one megawatts. So it will help us meet the extra load that we are getting. As well, Chalillo will be on line by then and should reduce our exposure to the dependency on Mexico and also reduce the usage from the diesel engines that we are running right now.?

Stewart Krohn

?Lynn, looking ahead to 2008, what do you predict the mix of B.E.L.?s generation will look like??

Lynn Young

?Hydro will probably be somewhere around forty percent. The BELCOGEN will probably be around twenty percent, twenty/twenty-five percent and Mexico will be most of the balance with the gas turbine and diesels being used just for peaking and backup purposes.?

And how will the introduction of power from sugar cane waste affect prices for the Belizean consumer?

Lynn Young

?This generation is actually a little bit cheaper than our average cost before now. When our prices were around twenty dollars a barrel or so, this would have been a little bit more expensive. So the trouble is, you know, we are living in a volatile environment; we are living in a changing environment. And I think one of the biggest benefits of this is that it?s a predictable and stable rate just like the hydro. Six years ago, the power we were getting from Mollejon was more expensive than the power we were generating with these engines. Now the diesel engine power is by far more expensive than what we are getting from Mollejon. So, having price ability, cost ability, is an important part of what we?re doing and we try to get a mix as how to get the price down eventually right??

Stewart Krohn

?Several months ago you applied to the Public Utility?s Commission for a rate increase. They told you on no uncertain terms that was not to be entertained right now. But at some point you are going to be looking to raise those rates. Explain why.?

Lynn Young

?Well, I have to be frank; the P.U.C. didn?t say that we won?t get a rate increase. They are saying that they can?t entertain it now. They will look at it when go for the next tariff review, which is March of next year. We would submit a tariff review and go through the kind of process that W.A.S.A. went through. I think we have to have an increase because what has happened–I don?t know if you are familiar with the way we set up the rates–but there is a portion for the cost of power that the P.U.C. sets a level and say this is your cost of power, anything above that you will just have to pay it. You don?t treat it as an expense in your income statement. But you are going to pay it and you are going to treat it as if it?s owed to you from customers so that if next year our prices go down, it is recovered that way. For the past five years we have been putting aside these extra expenses, keeping it on the balance sheet as what we called the Rates Stabilization Account. But our prices just keep going up and up and up. When we did that, we were expecting our prices would be about thirty dollars a barrel. So when it hit fifty dollars a barrel, I went back to the P.U.C. and said listen guys, this isn?t working. The system we put in place presumed that our prices would fluctuate; it?s not fluctuating. It?s just going up and up and up. So we have about fourteen million dollars now in that account that we?ve paid out for extra cost of power for all etc., that were supposed to have been recovered when our prices start going down. When Chalillo comes online, Chalillo was two years delayed and when BElCOGEN comes online that was delayed also. So you see we have been caught offside–if you wish–and we have to do something about it. So we will request the P.U.C. to request us to get temporary increase to clear out that fourteen million dollars that?s in the R.S.A. It think that we can do it like over a year and what we want to propose is just–it?s a temporary adjustment that should fade away once we?ve clean out that fourteen million dollars. Now will the P.U.C. approve it? We will just have to wait and see.?

Viewers please note: This Internet newscast is a verbatim transcript of our evening television newscast. Where speakers use Kriol, we attempt to faithfully reproduce the quotes using a standard spelling system.

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