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Jul 17, 2020

Dissecting the PUC/BEL/Santander Quagmire

The Public Utilities Commission is enforcing an order which makes it compulsory for Belize Electricity Limited to sign on to a power purchase agreement with Santander Sugar for the supply of energy to the national grid. The order follows several months of back and forth between the regulator and the licensee over the terms and conditions of that agreement. Tonight we take a closer look at the standoff between P.U.C. and B.E.L.  News Five’s Isani Cayetano has that report.


Isani Cayetano, Reporting

The Public Utilities Commission is locking horns with Belize Electricity Limited over a contract to be signed with Santander Sugar Energy Ltd for the supply of electricity to the national grid.  The power purchase agreement, or PPA, as it is known, is a formal arrangement between both companies based on terms which would be negotiated and agreed upon by either party under the PUC’s oversight.


Dawn Sampson-Nunez, GM, Employee & Corporate Services, BEL

Dawn Sampson-Nunez

“In this case, the PUC as the regulator really should have an impartial position and that is important because if you envision a situation down the road where there might be a dispute between BEL and Santander regarding this power purchase agreement then really that dispute would need to be escalated to the Public Utilities Commission.  So if you have a situation where the PUC was the one to actually negotiate the agreement but then at a later time they are then to be a mediator, it really puts the commission in a… 04:01 Out:…position of compromise.”


While that logic may be straightforward, PUC Chairman John Avery maintains that, as the regulator, the commission should be the body to determine the stipulations of the contract with Santander.


John Avery

John Avery, Chairman, Public Utilities Commission

“Last year November, Santander made a proposal to the PUC to amend the agreement.  They were taking steps to increase their production and to extend their grinding, their production season, both of sugar and for electricity.  The original proposal they made was to basically produce for three months.  However, because of the financial position that they’re in, they’re motivated to try to use their assets more efficiently and so they’re seeking to produce more sugar.”


…and more sugar simply means that there would more bagasse being produced and subsequently more electricity would also be generated and sold to the national grid.


John Avery

“This increase production would of course contribute to the overall government policy, the overall policy of trying to be self-sustained, self-sufficient in electricity generation.  This is local production.  We felt that if Santander is willing to produce more, then that would also produce more business for the local community, would keep workers employed for a longer period of the year and then, like I said earlier too, Santander owes local banks a good amount of money, so if they can sell more sugar and sell more electricity then they would be in a better position to pay off those bank loans.  And then, finally, Santander is a foreign exchange earner for Belize and we’re paying these rates in Belize dollars.  So given right now the situation that the country is facing with foreign exchange, we felt that we need to urgently jump on this and encourage Santander to produce more electricity locally.”


As far as the power purchase agreement, BEL is of the firmly held position that it should be able to negotiate the terms of the PPA with Santander, without PUC as an intermediary.


Dawn Sampson-Nunez

“We’re saying, let BEL negotiate directly with Santander the terms and conditions of the agreement.  We’re also saying that had we been given that opportunity to negotiate directly with Santander, we really would have had the same objectives as the PUC and those are objectives simply to ensure that it’s in the best interest of all stakeholders, our customers and the company.”


According to Avery, discussions with BEL on the matter have been ongoing since January, to no end.


John Avery

“At one point BEL was basically saying to us that we don’t have any authority to do any of this and so in effect they wouldn’t sign this agreement.  We had a meeting with BEL and we explained to them that the PUC is the only entity in Belize that the law gives power to set rates, because BEL was saying no, we shouldn’t be setting any rates here.  They should negotiate the rates with Santander.  We pointed out to them that you’re a generation licensee, in effect you’re a competitor to Santander.  How can you be negotiating rates with Santander and expect the commission, then, to approve such rates.”

As a result of the lengthy discussions, PUC has announced that it will be enforcing an order which will essentially mandate BEL to comply with the specific conditions of its license.


John Avery

“We’re also announcing our intention to make an order under Section 23 of the Electricity Act to ensure that BEL complies with condition seventeen of its license.  Basically Section 23 says that if the PUC is satisfied that where a licensee has contravened the condition of its license and the PUC is satisfied that it will or continue to do so then the PUC can make an order to ensure compliance with that condition of it license.”


Isani Cayetano reporting for News Five.

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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