See New Rates

by Adele Ramos

BELIZE CITY

The party is over for 14,100 customers of the Belize Electricity Limited (BEL) who had benefited from a reclassification of the social rate category in April 2003, which has been discontinued after BEL claimed that the Government subsidy for the program has dried up. As of July 1, 2005, those 14,100 customers will be dropped from the social rate category, which pays the lowest electricity rate. Their electricity bills could increase up to a whooping 57%.

This is because the reclassification comes along with broad-based increases in electricity rates, averaging 12%, which the Public Utilities Commission (PUC) has approved for all BEL customers, retroactively, to July 1, 2005.

The PUC recently decided to approve BEL’s request to reclassify social rate customers from those using a maximum of 125 kilowatt-hour (kwh) to those using a maximum of 50 kwh. It has also approved an across-the-board increase in the average electricity rate of 12%, which would increase the average rate from 34.9 cents per kwh to 39 cents per kilowatt hour.

A customer at the upper end of the social rate category, using 125 kilowatt hours a month, for example, would have paid a bill of $29.25 a month before July 1. After July 1, that customer would pay a bill of $46—an increase of $16.75 or 57%. This includes an increase in monthly service charge of $2 and an increase in per kilowatt charges of 12 to 17 cents.

Monthly service charges for all customers, except industrial customers, have also been increased. Most social rate and residential rate customers will see their monthly service charges increase by $1, while commercial customers will bear an increase of $5 a month.

In addition to the tariff and service charge increases, the PUC has also approved increases in a number of charges. For example, residential customers disconnected for non-payment would have to pay double, as the charge for this type of reconnection has been increased from $5 to $10. Commercial customers will pay five times more, $25 as opposed to $5.  Also as of July 1, it will cost $40 to transfer your electricity, up from the current rate of $33.

The most significantly impacted in the new tariff adjustments would be the over 14,000 people who have been classified as social rate customers since 2003. In his election-year speech of January 2003, No Turning Back, Prime Minister, Hon. Said Musa, announced that starting April 1, 2003, the cost of electricity would fall by 31% for mall and medium consumers. BEL did implement the program on April 1 that year.

PM Musa has also said that his Government intended to “round out its rate reduction program by providing relief to small and medium residential customers.” Musa further said that the PUC and BEL would increase the upper limit for qualification for the social rate category from 50 to 125 kilowatt hours per month.

That relief to those customers was only temporary, though. According to the PUC, the subsidy was only given to BEL for a specific period of time and since the funds have been “fully utilize,” the subsidy has to end.

“The PUC approved the request after considering that the 50kWh/month maximum is in line with social rate classifications in other countries and that the maximum is in line with social rate classifications in other countries and that the level of cross subsidies from other classes of customers required to maintain kWh/month maximum is undesirable,” said the PUC’s press release of Friday, July 15, 2005.

Overall, all customers should see increases in their electricity bills (See Table 5 below). Based on sample bill we have peruse, a residential customer who paid $51.29 for 163 kilowatt hours for June would pay $60.44 under the new tariff scheme.

The PUC announced on Friday, July 15, that it had made a final decision on an application made by BEL in March for an increase in electricity rates. The approval would increase the average electricity rate from the current level of 34.9 cents per kilowatt-hour to 39 cents per kilowatt-hour—an increase of 12%.

According to the PUC, “The Final Decision also provides for the full recovery of the BZ$20 million from the rate stabilization accounts over the full tariff period (FTP) July 1, 2005 – June 30, 2009, and includes a provision to prevent such a significant build-up in the future.”

Both the PUC and BEL have previously said that mean electricity rates have been kept stable by deferring any additional costs—incurred due to rising fuel prices, hurricane costs, and other factors that have increased the cost of producing electricity—into cost of power and hurricane rate stabilization accounts.

Under the law, BEL is permitted to collect the amount accrued from customers with interest.  Initially, the PUC had approved an increase of 8.6%; however, BEL pleaded its case. The PUC brought in an independent consultant to review the case, and the consultant recommended a rate that was closer to BEL’s initial rate increase request, and higher than the PUC’s initial approval.

In March, BEL had applied for a 14.6% increase in the average rate, from 34.9 cents per kilowatt-hour to 40 cents per kWh.

After reviewing BEL’s application, the PUC approved an increase of 8.6%, which would have driven the mean electricity rate up to 37.9 cents per kWh. BEL made further submissions to the PUC, arguing its case, and the PUC then hired an independent consultant to review the case, as is required under law in the event of an objection to its first or initial decision.

That consultant, Dennis Colenutt of NERA Economic Consulting in the UK, recommended a 12.6% increase, or a mean rate of 39.3 cents per kWh.

The new rates are as follows:

TARIFF BASKET--New Rates
In Belize dollars.  1dollar=.5 U.S. dollar

TABLE 5 (PUC Report)