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Date: Thursday, January 05, 2006
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P.U.C. says second B.E.L. rate increase is a must
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 The Public Utilities Commission held a press briefing at the its Mahogany Street office this afternoon to explain the method behind the madness of a second price hike in six months for Belize Electricity Limited. While the P.U.C. pushed the usual arguments of fuel costs and more expensive Mexican power, chair Gilbert Canton asserted that while those factors might decrease in the coming months, the millions of dollars that have been accruing in the rate stabilisation account continue to take up the price. As we reported earlier this week, the new rates took effect on January first and average thirteen percent. But with the oil industry anything but stable, the P.U.C. admits it is trying to do a balancing act between consumer, provider, and reality.
Dr. Gilbert Canton, Chair, Public Utilities Commission
”What we try to do is to look and analyse as carefully and closely and diligently as possible what the power costs are gonna be in the upcoming year. The tools that we use for that are basically the power purchase agreements that we hold with the different sources of supply, which would be CFE, BECOL. And then we also look at the operational cost, which are fixed and variable costs of B.E.L. for the gas turbine and their diesels. And we have to do things like go on to different sources and look and see what are the projections for future oil prices because a lot of these contracts are indexed to oil prices. It is a forecast, it is not something that is naturally gonna be what is gonna happen, but it is the best forecast that we can do with all the available information and analytical tools that we have to develop.”
Janelle Chanona
“When it comes to rate changes though, as a regulator do you think it’s tougher because this is a monopoly and there are very integral players in this industry? Do you find yourself held over a barrel on whether they should get price increases or not?”
Dr. Gilbert Canton
”I think the situation where, in reference to the monopoly question, I think there is a lot of discussion as to whether a competitive environment in electricity in Belize is something that is a viable or feasible thing to occur given the size of the market, given the amount of infrastructure that needs to be put out there and stuff like that. What we are trying to do basically is move it in what we call a restructured or reform process and we start off first by looking at the generation and the amount from the generation and distribution and we’ve been fairly successful at that so far I think because we have at least we have C.F.E., BECOL, we have BELCOGEN coming on line, Hydro Mayo is gonna come online at the middle of the year, we are concluding a request for proposals from B.E.L. right now for hopefully there will be another plant coming onboard, a base load plant in Belize. So there are all these different things that we are trying to get in place. Once we get enough plants and the market develops, then we can probably potentially move to the second phase which would be competition in generation. We could say, well who has the best price to offer at any particular time.”
Janelle Chanona
“When is the earliest consumers can expect the cost of power to them, their light bills to go down?”
Dr. Gilbert Canton
”I think well right now we are projecting, I think we’re doing a very close projection. You know, we could have played the game and said, okay let’s anticipate and hope that the prices of oil and the cost of power will come down. We said, no, let’s try to take it to the best forecast that we can. We don’t want to be accused of saying that we forecasted too low and we’re causing more of a problem than actually addressing a problem. So what we are saying is if the cost of power, oil prices start going down, more rain comes in where we could have more hydro power, those kinds of things start to happen, and the price starts dropping, then we will take the difference in that money, in that cost of power, and apply it quickly to the rate stabilisation account to try to accelerate the amortisation 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 stabilisation account to pay off that rate stabilisation account can be applied to a reduction in rates.”
Janelle Chanona
“And that can happen when?”
Dr. Gilbert Canton
”It’s projected, we don’t know. What we have projected right now is that the rate stabilisation account will be paid off in 2009. And if everything works out well, then that will be the time that the monies that is being used to pay that off can be applied to a rate reduction. But again, if the cost of power comes down quicker then we anticipate, then there’s an opportunity for a rate adjustment or a rate reduction to be coming even early if that occurs. But remember that there’s the other side, it could go higher too.”
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