January 22, 2006
PUC broke the law - Senator Ambrose Tillett
by Adele Ramos-Daly
“PUC colluded with BEL to gouge customers …it gave BEL a blank check.”
Opposition Senator, Ambrose Tillett, has written to the Public Utilities Commission (PUC) challenging its decision to increase electricity rates and give the Belize Electricity Limited (BEL) an increase in revenues, purportedly to pay for electricity costs.
Senator Tillett contends that the rate increase was, in effect, illegal, since the PUC did not follow proper procedure set out in the law, in writing the new regulations under which the PUC granted the rate increase, which took effect on January 1.
As highlighted in this week’s edition of FOCUS, BEL and its sister company, the Belize Electric Company Limited (BECOL) are forecasted to supply about 50% of the country’s electricity in 2006. Together, they will get about 60% of what consumers will pay towards the cost of power. Much of this would pay for expensive diesel generation—expensive, according to BEL, because of high oil prices.
However, Senator Tillett accused the PUC of colluding with BEL to gouge consumers.
“The price-gouging of dieseling generation by BEL highlights a more fundamental failure of the PUC and a recurring theme of the undersigned – the failure of the Commission to carry out its function given under section 6(2) of the Electricity Act to promote competition in generation,” said the Senator. “The PUC continues to collude with the utility provider to make ratepayers pay costly wholesale power, so that BEL and its sister company BECOL can extract monopoly profits in the electricity generation sub-sector to the detriment of ratepayers.”
He contends that the PUC has given BEL a “blank check” to charge ratepayers for internally produced electricity from diesel-fired plants.
“The PUC must only accept reasonable costs from BEL’s diesel generation,” he added.
Apart from the issue of price gouging, Senator Tillett also challenged the recent passing of a Statutory Instrument (S.I.) by the PUC and Minister of Public Utilities, Hon. Ralph Fonseca. Interestingly, the same day the new S.I. was passed, BEL applied for its rate increase.
“The S.I. 145 of 2005 is ultra vires of the Electricity Act. Certainly the PUC must rescind the bylaw and all the decisions flowing from it,” he said. “Therefore, it means that the order of December 31, 2005, is also improper…”
The pre-existing S.I. only allowed for annual rate adjustments, as well as adjustments at the full tariff period every 4 years. The new S.I. allows BEL to apply for rate increase every time the cost of power projections turn out to be off by $3 million.
However, Senator Tillett contends that new regulations cannot be made without proper consultation with all stakeholders—which include ratepayers or those who use BEL’s electricity. He elaborates that the PUC is required to circulate final draft copies of the new regulations to “any interested person.”
Without giving a genuine opportunity for all stakeholders to have an input, the PUC has violated the law, he contends.
“In fact, the statute grants discretion to interested persons to demand a hearing on an issue of importance to them and the public,” the Senator wrote. “Clearly, the language and the spirit of the statute are for the PUC to carry out genuine consultations with those being affected by any bylaw, order or directive, and not to make secret deals with the utility provider and the minister.”
He also agrees with the argument put forth to the PUC by Candy Gonzalez, vice president of BELPO - the Belize Institute of Environmental Law and Policy, that the manner in which the PUC permitted the process to flow did not allow meaningful public participation.
The PUC said, for its part, that despite the publication of the relevant notice by BEL, no one wrote and no one called expressing any concerns during the required time period of 11 calendar days.
In a letter dated, Thursday, January 12, 2006, Gonzalez said that the process of public consultation was “a farce.” She said that Belizeans had a very short time—which she estimates to be 3 working days, given the fact that it was done during the Christmas season—to review BEL’s proposals for a rate increase, submitted on December 20, 2005.