BELPO Challenges Electricity Rate Hike

January 30, 2006

SEE Letter in MS Word format

Belize Institute of Environmental Law and Policy
P.O. Box 54, San Ignacio, Cayo District - Belize, Central America
Tel. (501) 804-2032 – Fax: 824-2685

FAXED: 227-1149

30 January 2006

Dr. Gilbert Canton,
Chairman, Public Utilities Commission
63 Regent Street
P.O. Box 300, Belize City, Belize
RE: Revocation of Electricity Rate Increase Decision

Dear Dr. Canton:

Thank you for your quick response to my letter of 12 January 2006. It would have been more constructive had you taken the time to give the request a more thorough appraisal rather than a defensive one.

You state that your decision technically gave the public enough time to comment, though no one did. Our objection was not in your failure to follow the letter of the law, but the failure to follow the spirit of the law, which is to encourage public participation.

To be clear, the complaint is that these decisions were made in haste. Middle-income Belizeans now must pay at least 50% more for electricity this year or shut off their lights. The rates are now also a major hindrance for Belize’s businesses, especially the productive sector, and discourage economic growth. Yet you have decided that these are not “material or substantial” objections.

You also suggest that it is your duty to quickly give BEL the New Year’s bonus it requested and to prevent Belizeans from seeing the “private” business documents of BEL, a public utility provider.

In coming to this decision, you emphasize the discretionary powers of the PUC to reconsider (or in this case, not to) its decisions. While the PUC and Electricity Acts clearly give the PUC a great deal of discretion, they are equally clear that this discretion is not unlimited. For example, the PUC must ensure that rates are reasonable. The PUC Act says: “It shall be the duty of the Public Utilities Commission to ensure that the services rendered by a public utility … are satisfactory and that the charges imposed in respect of those services are reasonable.” PUC Act, Part V, section 22(1).

The decisions to grant BEL rate hike after rate hike with no meaningful public input is an abuse of the discretion entrusted in the PUC. How can the PUC “ensure” that the services rendered are “satisfactory” and that the rates are “reasonable” without consulting the public?

The fundamental principle of the PUC Act is that public utility rates “shall be fair and reasonable.” Part III, section 11(1). The PUC has the duty to ensure the fairness and reasonableness of the rates, and is given strong powers to carry out this duty. In response to a complaint about rates the PUC is required to hold a hearing, conduct an investigation (section 15(2)), and set fair rates to protect the Belizean public. PUC ACT, part III, section 15(1). The law is on our side: “In any proceedings under [PUC Act] section 15 above, the burden of proof to show that the rate complained of is fair and reasonable shall be on the public utility provider.” (section 16). With this in mind, I reiterate my complaint about BEL’s rates, and urge you to conduct a public hearing and investigation to reconsider these rates.

I also reiterate the request for the cost of power estimates you used in calculating the new rates. You asked for a clarification of this request. Your 31 December 2005 decision provides a “forecast” for the cost of power for 2006 of $.255 per kilowatt hour (kWh) and

then explains that this is composed of forecast costs of electricity from gas, diesel, CFE, BECOL, and HydroMaya. In the report on your website, you name the sources of power and then give an aggregate estimate -- but you never break it down. However, Steve Usher, Vice President of Operations, has broken it down. He is quoted in the San Pedro Sun of 25 January 2006, as saying the energy supplied by the Chalillo and Mollejon plants costs about $.17 per kWh; electricity purchased from Mexico averages $.44 per kWh; and

energy from diesel generators averages about $.42 per kWh. It is evident the figures have been compiled. Furthermore, in Adele Ramos’ article (Amandala 8 Jan. 2006

‘Killing with the Kilowatts”) she reports that you have stated that a 12% profit is factored into the current rates.

I request the (1) individual cost estimates for electricity generated by gas, diesel, CFE (both the contractual and spot market figures), BECOL (Chalillo and Mollejon), and HydroMaya; (2) the dispatch profiles you estimated for each; and (3) the power purchase agreements that provide the basis for this information. There's no question that there are power purchase agreements for each of BEL's sources (otherwise, how does BEL know how much it is paying).

To claim that these agreements with a monopoly public utility contain privileged business information is simply no answer. These documents are public documents and must be released to the public, as was demonstrated by the public release of the Third Master Agreement with BECOL (which shows such agreements are for the public view). Without this information, we can only conclude that there is no rational basis for your decision.

Belizeans pay Fortis/BEL the highest rates for electricity in all of Central America. The most recent rate hike is due to Fortis/BECOL’s misguided and expensive Chalillo dam, to extortionary diesel rates, and to extortionary profits. Each year, Canada’s Fortis reports more and more profits squeezed from Belizeans. Speaking on behalf of many concerned Belizean citizens, organizations, and businesses, I ask you to take up your duty to listen to our complaints in a public hearing, and to protect us against this price gouging. PUC published two full-pages ads in the papers this week. These ads could have been used to announce a public meeting on the rate hikes!




Candy Gonzalez, Vice President

Belize Institute of Environmental Law and Policy

P.O. Box 54, San Ignacio, Cayo District,

Belize, Central America

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