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Not so fast, BL&P! Intervenors want change to rate application

Article by: Shawn Cumberbatch – taken from the Nation News paper Tuesday September 13th, 2022

THE BATTLE OVER the Barbados Light & Power Company Ltd’s (BL& P) application for an electricity tariff increase is heating up ahead of next week Wednesday’s planned start of the substantive rate hearing.

Joint intervenors attorney Tricia Watson and chartered accountant David Simpson said they filed a motion last Friday requesting that the Fair Trading Commission (FTC) order BL& P to amend its rate application based on the FTC’s March 25 ruling on the utility company’s depreciation application.

“Our latest motion is intended to persuade the FTC to prevent the BL& P from proceeding with its rate application which, as a consequence of the FTC’s recent depreciation decision, is now known to be based on incorrect rates and calculations,” Watson asserted yesterday.

“In this case [BL& P] would be allowed to recover the cost of its investment in generation assets through depreciation. Depreciation calculations are key to value of the assets that are included in the rate base.

“Annual depreciation expense is a key component in the revenue requirement calculation. Despite these concerns being raised by multiple intervenors over the past six months, the BL& P is still using incorrect rate information that is at odds with the FTC’s recent depreciation decision,” she claimed.

Call for FTC to discontinue interim rate review

BL& P declined comment on matters related to the rate hearing, saying they were “fully focused on being prepared for next week”.

Indications are that the FTC is pressing on with adjudicating the company’s substantive rate increase application which was submitted on October 4 last year.

While no decision on BL& P’s request for an interim rate hike has been made public, following a July 1 hearing on the matter, the FTC sent correspondence to the company and intervenors last Friday, the same date as Watson and Simpson’s latest motion.

In the September 9, 2022 letter addressed to BL& P managing director Roger Blackman, and copied to intervenors, FTC general legal counsel and commission secretary Kevin Webster said: “Further to Procedural Directions No. 6, the commission confirms that the hearing of the application is set down for 12 consecutive business days, commencing on Wednesday, September 21, 2022, and concluding on Thursday, October 6, 2022, at the Accra Beach Hotel and Spa. The hearing room will be the Khairoon.”

They also want the FTC to “discontinue the interim rate review and confirm that they have not conducted or made any decisions in respect of interim rates because . . . the FTC cannot make decisions on the basis of the incorrect depreciation information [and] the interim rate relief proceeding is not lawful under Barbados law because the FTC does not have the legal authority to grant an interim rate, or any rate, without a public hearing and without considering the full facts of the case in conjunction with intervenors”.

Another intervenor, Ricky Went, said key issues needing resolution included BL& P’s deprecitation rates, its restructuring, and some tax income matters.

His expectation was that the FTC would deny BL& P’s request for an interim rate increase.

“BL& P is not in financial distress, rate payers already have it hard. High fuel prices have not helped as the fuel clause adjustment falls on rate payers. BL& P is still making a profit and still paid dividends in 2021. BL& P can wait until after the full hearing, hence I expect interim rates to be denied,” Went said.

BL& P managing director said recently that “at this juncture we are facing a financial situation that does require urgent rate relief, and there are actually several projects that we have had to defer”.

“Our coming for a rate increase . . . really is a last resort and critical for us to continue having adequate resources to meet the level of service, both in terms of resilience and reliability, that’s required by our customers,” he added.

While not calling for a delay of the rate hearing, which was previously scheduled for August 25, Watson and Simpson said they wanted the FTC to order BL& P “to adjust their application to show amendments that reflect the true depreciation rates and calculations for all assets [and] for the BL& P to amend the application as instructed and consequently show amendments to the revenue requirement and to the requested rates”.

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