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4 days after it sprung a 13% increase in electricity rates on consumers, the PUC today held a press briefing to explain its decision. Chairman Dr. Gilbert Canton, explained why light bills continue to go up even when BEL gets a third of its power from locally produced hydro electricity which is not affected by increasing prices in petroleum.
Jules Vasquez,
How do you answer the consumer who sees all these energy alternatives going up but yet sees the cost of power continuing to increase? It is counterintuitive that in a time when we have the largest hydro plant operating and with all these energy alternatives about to come on board, that in fact our light bills keep increasing and increasing. How do you justify or explain that?
Dr. Gilbert Canton, PUC Chairman
"Well because you have to look at all the different sources and the amount of energy coming from each different source. For example, if you look at the hydro, the hydro is the lowest cost of power that we have at this point in time but how much of that is actually the total cost of power, its only about 20%. So if you're growing and your hydro does not grow, and that becomes less and less, then the impact of that lesser cost becomes smaller and smaller. It's not enough to really mitigate the other influences, which would be the oil prices and the stuff on the larger portion of energy that is being sourced."
Jules Vasquez,
Sir as we've come to know the PUC, there is always time to object or to demand a public hearing. As I understand it, there should always be thirty in which you can make an objection but in fact this rate increase was sprung on consumers without anyone knowing at midnight or 12:10 on January first. Do we still have the ability to object as consumers and why was no one was informed before? One has the sense that BEL is owned by Fortis which is a foreign company and their interest is to, as much as possible, fleece consumers and get their rate of return on both their companies. However we have the feeling, or I have the feeling, that in fact the PUC which should be a consumer advocate is in fact a corporate advocate so in fact the PUC becomes a complicit partner in the fleecing of consumers. How would you respond to that criticism?
Dr. Gilbert Canton,
"Well its not like that at all Jules because what happen is that we monitor BEL's numbers, we get their financial information, their production information, all their information on a monthly basis. We review that, we analyze it, we keep on top of it, so we know exactly what those numbers are on a monthly basis."
According to S.I. 145 of 2005 signed on December 20th, 2005, the same day BEL applied for its rate review, "the commission shall not make such orders or decisions, or give or issue such directives without first giving notice to, and inviting comments from, any person who may be interested or affected by such orders, decisions or directives."
And indeed the PUC did give notice in the newspaper which hit the street on Friday December 23rd. The notice says that the PUC will issue its decision 15 days from the commencement of the review, which was December 20th. It says that interested parties were supposed to submit their comments by December 30th, 2005, just 8 days from the date of publication, and only four of those were working days, all suggesting that feedback wasn't quite the priority for the PUC. At any rate, those who are interested can still object. The law says: "Any person aggrieved by an Order, decision or directive of the commission may apply to the Commission for review of its order, decision or directive within thirty days of the making of such order, decision or directive."
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But without any challenge, the PUC says it is open to revising those rates downward and adjusting the formula if there is some dramatic improvement in the price of fuel that drives down the cost of power.
Dr. Gilbert Canton,
"What we're saying is that if the cost of power, oil prices start going down, more rains comes where we could have more hydropower--those kinds of things start to happen and the price starts dropping, then we will take the difference in that money and apply it strictly to the rate stabilization account to try to accelerate amortization of that, to get rid of that account. As soon as that account is finished, then all that money that is going to that rate stabilization account, to pay off that rate stabilization account, can be applied to a reduction in rates. It is projected, we don't know. What we are projecting right now is that the rate stabilization account will be paid off in 2009 and if everything works out well, then that will be the time that the monies that are being used to pay that off can be applied to a rate reduction. Again if the cost of power comes down quicker than we anticipate, then there's a opportunity for a rate adjustment or rate reduction to be coming even earlier if that occurs."
Of the present increase, 12% goes to settle the rate stabilization account over the next four years, and 88% goes to pay for an increase in the cost of power, which is projected based on what the PUC expects will be in a new power purchase agreement with Mexico's CFE which will not be finalized until August.
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