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Rate hike delay – FTC’s decision on BL&P increase to take a little longer

Article by: Shawn Cumberbatch – taken from the Nation News Paper. January 17th, 2023

BARBADIAN HOUSEHOLDS and businesses, which have been paying an interim electricity rate hike since September, will have to wait longer to find out if their bills will be higher permanently.

Fair Trading Commission (FTC) chief executive officer Dr Marsha Atherley-Ikechi said yesterday work was ongoing to reach a decision on the matter, but it was unlikely to be concluded by the end of this month as previously hoped.

This comes three months after the conclusion of the FTC oral hearing into the Barbados Light & Power Company Limited’s (BL& P) application for an increased tariff, and with intervenors still concerned about the utility company’s dividend policy, its self-insurance fund (SIF) and depreciation of the generation plant.

“We are working on getting a decision to the public of Barbados as soon as possible. We were initially working with the end of the month, [but] that does not appear to be possible, given a meeting that we had only late last week,” Atherley-Ikechi said.

“But I don’t want to put a date on it . . . . We are working to be able to deliver it in the shortest possible time. A number of things impact when we deliver a decision; it is not only the Commission’s staff [involved].”

Last November 17, the FTC said in a public notice on the rate review: “With the conclusion of the . . . oral hearing on Friday, October 14, the Commission fixed a deadline of Friday, October 28, 2022, for the parties to file final written submissions. The filing deadline was thereafter extended by the Commission to Tuesday, November 8, 2022.

“The electricity hearing panel, with the assistance of [FTC] staff, is reviewing all the arguments and evidence presented during the process, including over 1 300 pages of the application, over 1 000 pages of submissions, [and] over 1 900 pages of transcripts. On completion of the full assessment, the Commission will render its decision,” the regulator said then.

Yesterday, when contacted about the pending FTC decision, BL& P representatives said they would not be issuing a statement on the matter at this time.

Concerns

However, as the public awaits the ruling that could see BL& P guaranteed a $46.5 million increase in its revenue, intervenor Ricky Went said there were still concerns “about some key issues even after the public hearing concluded in October 2022”.

“Intervenors are worried that whether or not an increase is granted, BL& P will pay dividends and then seek rate hikes in order to maintain the public network, if the FTC does not insist on a clear dividend policy in its impending ruling,” he said.

Regarding the SIF, Went stated: “Intervenors feel strongly that the SIF, which was built from rates charged to customers to address catastrophes, should be used to insure BL& P’s plant and equipment as the scheme allows.

“We are firmly of the view that BL& P should be made to recapitalise the SIF by approximately $100 million, which could then be used to cover generation units in addition to transmission and distribution plant. Any excess should be returned to the rate payers and not paid as dividends.”

Went said intervenors believed that after the FTC “disallowed the depreciation rate for generating plant in March 2022, then the previously established rate should apply and BL& P should be required to file a new application to vary the life of its generation plant”.

In September, the FTC granted BL& P an interim rate increase equivalent to half of what the company applied for in relation to all customer classes except its employees, who have been paying the full rate until the substantive decision is issued.

BL& P said in October that the interim rates would be in effect until there was a decision of the full application and that the increase would allow the company to maintain the electricity network, and continue to provide a safe and reliable service.

The FTC said that if the full review found the interim rates to be excessive, BL& P “shall refund all customers the difference between these rates and the final approved rates, with an interest rate equivalent to the return on equity to be approved in the substantive rate review hearing”.

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