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Fair Trading Commission To Hand Down Barbados Light & Power Rate Hike Decision

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FAIR TRADING COMMISSION

DECISION – RATE REVIEW

THE BARBADOS LIGHT & POWER COMPANY
LIMITED

BARBADOS

No. 2 of 2009

IN THE MATTER of the Utilities Regulation Act CAP. 282 and the Fair Trading Commission Act CAP. 326B of the Laws of Barbados;

AND IN THE MATTER of the Utilities Regulation (Procedural) Rules 2003;

AND IN THE MATTER of the Application by the Barbados Light & Power Company Limited for a review of electricity rates pursuant to Section 16 of the Utilities Regulation Act CAP. 282 of the Laws of Barbados;

THE FAIR TRADING COMMISSION HEREBY GIVES NOTICE that:
The Commission will reconvene the Rate Review Hearing on Thursday, January 28, 2010 at 10:00 a.m. at the Lloyd Erskine Sandiford Conference Centre, Two Mile Hill, St. Michael to deliver its Decision in this matter.

Dated the 22nd day of January 2010.

Peggy Griffith
Chief Executive Officer
Fair Trading Commission
Telephone: 424-0260

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92 responses to “Fair Trading Commission To Hand Down Barbados Light & Power Rate Hike Decision”

  1. David Avatar
    David

    A good thing which may come out of the FTC decision if they agree to a rate hike is the urgency which may follow to develop a renewable energy program.

  2. BAFBFP Avatar
    BAFBFP

    Actually the drive now is towards “Distributive Energy” which flies in the face of this centralised approach to dilivering electricity

  3. JC Avatar
    JC

    What is distributive evergy? Just heard light bill gone up by March 1, 2010!!!!!!

    Wow!

    Thanks CH, BANGO and others for fighting for us thanks although the people we pay are not listening to us!

  4. David Avatar
    David

    The time has come for real change.

  5. JC Avatar
    JC

    How insensitive can one be?

    Do we pay the commission? It seems as if our voices are being ignored!!!!!!

  6. JC Avatar
    JC

    @ David

    Telling me ………..

    I just don’t understand ……

  7. JC Avatar
    JC

    We NEED TO GET SERIOUS ABOUT SOMETHING!!!

  8. Hants Avatar
    Hants

    @David,

    This is probably what Barbados needs to duplicate on a smaller scale.

    “The government of the Canadian province of Ontario yesterday signed off one of the world’s largest renewable energy projects, inking a $6.6bn deal that will result in 2,500MW of new wind and solar energy capacity being built.

    Under the agreement a consortium – led by Samsung and the Korea Electric Power Corporation – will manage the development of 2,000MW-worth of new wind farms and 500MW of solar capacity, while also building a manufacturing supply chain in the province.”

  9. Christopher Halsall Avatar
    Christopher Halsall

    Sigh…

    Sorry everyone. We tried our best…

    The only good news is that rather than the requested 10.48%, BL&P are only getting a 10.00% rate of return on rate base.

    Part of this 0.48% reduction is being applied to the lowest users — rather than the first block being the first 100 kwh, it is instead the first 150 kwh.

    This means instead of approximately 16,000 customers seeing the smallest increase ($3.45 / month), it will be approximately 30,000.

    The Intervenors are reviewing our options…

  10. Young Bajan Avatar
    Young Bajan

    Hants, those companies don’t do small in Barbados terms for the simple reason that they can’t rake in BILLIONS. It’s a good idea but Bim lacks the space necessary to even consider that. Bajan will have to install solar panels themselves, which is overly expensive as is in North America, so imagine when Government stick on some tax and surcharges. That type of project would need serious collective agreement, and we got a FTC that can’t even support it’s citizens (mind you them included) with a deferral of price increases for maybe a year. REAL IGNORANCE going on in this place. Let oil go up and see what happens then.

  11. David Avatar
    David

    @Chris or ROK

    Please explain the appeal process.

  12. Christopher Halsall Avatar
    Christopher Halsall

    @David…

    First we have to find reasons to request a review of the decision.

    Please rest assured that “we’re not dead yet”.

  13. DR. POOPERTALLIAN Avatar
    DR. POOPERTALLIAN

    aawhhh !
    water up by 3 and 4 times —————–light up —foreign exchange parity to the dollar unemployment david Thompson—–somewhere in the mix-up –confusion reigns

  14. Christopher Halsall Avatar
    Christopher Halsall

    @All…

    I don’t want an answer from anyone on this (yet).

    But please think about it…

    How many of you (or those you know) spend more for telephony (read: landlines, Internet and Cellphones) services than you (or they) do for electricity?

    Please note that we are still awaiting a Decision from the FTC on the “Revised” Reference Interconnection Offer (RIO).

    The single-day Hearing on the RIO was held many months earlier than the 13 day Hearing on electrical rates, and yet we are still awaiting a Decision on the former.

    Hmmm…

  15. BAFBFP Avatar
    BAFBFP

    Distributive Power was the topic of the last Big memorial lecture at the Frank Collymore Hall. It entails every household generating its own energy from earth, wind, Fire (yea yea), sun etc. and feeding the excess into a national grid. It is the power equivalent to distributive (ed) computing in the computing world where peer to peer or even client server has replaced the centralised computing environment.

    The GoB was invited to be the first test domicile in the Caribbean… all that was required was for the Minister that was present, my good friend David Estwick to send the principals ONE email stating intent to move forward…!

    Does anyone know how much money was contributed to both political parties by the Barbados Light and Power Holdings?

  16. Christopher Halsall Avatar
    Christopher Halsall

    @BAFBFP…

    I hope we can refrain from fighting over this…

    But would you not agree that BL&P have a “natural monopoly” on [electrical] power *distribution*.

    Or, perhaps put another way, is not electrical power Transmission and Distribution a “natural monopoly”?

    Note that this is different than [electrical] power *generation*, of which I agree that BL&P have no natural monopoly. Thus the wish for “grid-tying” / “feed-in-tariffs”.

    With regards to the political dimension, I cannot speak. I don’t do politics.

  17. Christopher Halsall Avatar
    Christopher Halsall

    @BAFBFP: “The GoB was invited to be the first test domicile in the Caribbean… all that was required was for the Minister that was present, my good friend David Estwick to send the principals ONE email stating intent to move forward…!

    Language can be so *very* important in the message communicated. By definition…

    1. “The GoB was invited to be the first test domicile in the Caribbean…

    1.Q.1. Invited by whom?

    2. “…to send the principals ONE email stating intent to move forward

    2.Q.1. Please define “the principals”.

  18. BAFBFP Avatar
    BAFBFP

    Jeremy Rifkin, an advisor to international governments on climate change, energy security and cutting edge technologies, delivered the 34th Winston Scott Memorial Lecture at the Frank Collymore Hall on Monday, November 23, 2009 that started at 8:00 p.m. You should have been there Padre…! Peter Williams was…

  19. Christopher Halsall Avatar
    Christopher Halsall

    @BAFBFP…

    People talk all the time…

    It is easy to talk…

    You talk…

    I talk…

    Others talk…

    What is resultantly being done?

  20. David Avatar
    David

    Is it reasonable to expect the government and opposition to comment publicly on the FTC ruling?

    After all we did hear President Obama criticise the recent Supreme Court justices decision on election campaign financing.

  21. BAFBFP Avatar
    BAFBFP

    Christopher Halsall // January 28, 2010 at 5:56 PM

    I agree

  22. BAFBFP Avatar
    BAFBFP

    Christopher Halsall // January 28, 2010 at 6:47 PM

    I agree..!

  23. BAFBFP Avatar
    BAFBFP

    David // January 28, 2010 at 6:51 PM

    I agree

  24. Christopher Halsall Avatar
    Christopher Halsall

    @BAFBFP et al…

    My apologies…

    I’m in a bad mood….

  25. Christopher Halsall Avatar
    Christopher Halsall

    @All…

    Has anyone else noticed, while watching our learned CBC Evening News…

    …that the Earth rotates in the wrong direction whenever it is presented rotating?

    Trustworthy?

  26. ROK Avatar
    ROK

    I think I made a little mistake in my calculations today. The marginal group is 66,000 and as Chris indicated earlier, the 150 kwh block covers 30,000 person in that marginal group. I said 60,000 and 20,000. My mistake.

    It actually covers half of the marginal group.

  27. ROK Avatar
    ROK

    Incidentally. The decision and order is available on the FTC website. Or click on the link to download a copy: http://www.ftc.gov.bb/library/blip_app/2010-01-22_commission_decision_No2_of_09_rate_review_barbados_light_and_power_company_limited.pdf

  28. David Avatar
    David

    Most Barbadians had the feeling that the rate request would have been approved, that is our sense. What does that say?

    BU will not post a blog tonight, we are in morning at the FTC decision.

  29. Crusoe Avatar
    Crusoe

    There are a few pertinent factors here.

    Firstly, any major engineering business, indeed any business must have monies for re-development and renewals.

    Nevertheless, a monopoly has certain advantages there that the average business does not, obviously.

    In addition, are the shareholders forever guaranteed a dividend, despite economic times and the need for re-investment?

    Do the shreholders not bear a brunt of re-investment in the business that will ultimately give them more dividends?

    Or are the consumers to provide all such monies?

    Secondly, one has to be careful at this time.

    Significant increased costs to businesses e.g. hotels etc, will have implications at a time when there is no light at the end of the tunnel, indeed maybe things are slowing further, internationally.

    We cannot afford to put additional pressure on either the businesses that generate revenues nor the average Barbadian at this time.

    Thus, as a policy decision, this could be a costly mistake, from a macroeconomic viewpoint.

    In addition, this will imply additional costs for inflation on food and goods i.e. costs of refrigeration and lighting etc have immediately risen.

    Not timely at all.

  30. Crusoe Avatar
    Crusoe

    Dr.Poop,

    Shut up do. The previous Government seriously overleveraged this economy.

    And do not harp on about me raising the actions of the previous Government.

    Their actions are directly related to our current situation.

    An over-leveraged economy seriously handicaps subsequent fiscal flexibility, as we are now experiencing.

    So, cut the political ……

    Reality is that we have five to eight years of a tough economy, that is it.

    If the international economy slides again, it could be more.

    Hopefully within eight years we shall have borne out some of the over-leveraging and be moving to recovery.

    How do we get past this?

    Get back to cultural life and enjoyment, simple ways of life, with strong community roots.

    There is no silver bullet.

  31. David Avatar
    David

    @Crusoe

    What is the mandate of the FTC?

    Do social considerations factor greatly?

  32. Young Bajan Avatar
    Young Bajan

    Crusoe that would have made a lot more sense if Government had not done the seemingly backward task of raising taxes during a recession. Mind you, one was to raise money to fix roads and within a year come and say the have applied for a loan in excess of the $44 million that the same tax was to raise for roads. The party followers really need to stop trying to blind side people all the time with rhetoric and live in the real world. Even up north (USA) they seem to be coming into the light, but i am not holding breathe until i see something comprehensively change. Caribbean politics has to change and can’t continue along the old adages.

  33. Crusoe Avatar
    Crusoe

    David,

    From the FTC website ‘Our Mission:
    To be a transparent and accountable agency providing professional services to those whom we serve, thereby safeguarding the interest of consumers, promoting and encouraging fair competition and ensuring efficient regulated utility services.

    Consumer Protection
    The division serves as one of the guardians of consumers’ rights. Officers of the division provide public education awareness, investigate consumer’s complaints and seek amicable resolutions where possible. The division also monitors any promotional material released by businesses.

    Fair Competition
    Under the Fair Competition Act the division seeks to promote and maintain competition by investigating and prohibiting anti-competitive practices and by informing businesses and consumers about the importance of effective competition.

    Utility Regulation
    The Utility Regulation Division regulates two utility companies – Cable & Wireless (Barbados) Ltd. and The Barbados Light & Power Company Ltd. The division oversees rates and service standards and investigates queries and complaints’.

    So, there is no definitive mandate to take social considerations per se into account other than related to fair standards and service / competition.

    However, I was commenting more on the policy move bythe company and its implications on the public.

    That said, there must also be an element of moral suasion brought to bear in tough times, both socially and economically.

    Otherwise, how can we truly say that we are a chesive society?

    Is the company a part of this society in times of tribulation, or is it outside looking in?

    No one will disagree that development costs are substantial.

    But, these are tough times for all.

    Where does the moral responsibility lie, at this time?

  34. Hants Avatar
    Hants

    Now that ROK and Halsall have done their best to save Bajans from BL&P,
    Bajans can now save themselves by using less electricity.

    When you are not watching TV turn it off.
    Walk out of a room turn off the light.
    Not listening to the stereo turn it off.

    Use lower wattage bulbs except when you need good lighting for reading.

    Next time you buy a fridge buy a smaller one. Your friends might ask “wha you buy da little foolish fridge fuh? but they don’t help you pay the bills.

    I live in Canada and I am forced to do all of the above so wanna cuh do like me too.
    We even get a little break because the electricity is cheaper on weekends so all the Laundry and dishwashing is done on weekends.

    Conserve and save yuhself.

  35. Crusoe Avatar
    Crusoe

    Good advice hants.

    You know, how about looking at the glass half full and as you suggest, be glad we have electricity but use it wisely.

    If there were a severe international catastrophe, say a meteorite strike or a Middle East war, we would have either no electricity or much more expensive or rationed electricity.

    So, utilise from baseline i.e. think as if you had none and then decide what is important to use.

    That is zero based budget planning.

    Only spend IF it is essential.

    Hants, by the way, even reading lights come with various methods that now use less electricity, either flourescent or LED.

  36. Baje Engineer Avatar
    Baje Engineer

    I want to posit a suggestion that the intervenors were not fully equipped to deal with this matter. There were a number of issues which were not dealt with during the rate case. One of these was the number of gas turbines that this Company has in operation. Nearly 30% of its generating capacity is based on gas turbines. There is actually a report prepared for the Fair Trading Commission on this very issue. These gas turbines use the most expensive fuel available to the Company. The Company says that these units are used for peaking purposes but in reality they operate somewhere between base load operation and peaking load i.e. they run longer than typical peak load plants and less than base load plants. Obviously, if the customer pays for the fuel used by these units, the cost will be high. Therefore, I would like to humbly suggest therefore that the efforts of the intervenors were misdirected. The case should not be whether the Company required a rate increase but whether it is being responsible in minimising the cost to the customer by way of it application of the generating plant mix to meet the customer load demand. Indeed, the focus of the intervenors should have been further directed, in my opinion, to limiting the ability of the Company to pass on unrestrained fuel costs to the customer. As an example, if the Jamaican model is examined, the local utility is limited in the amount of fuel costs that can be passed on to their Customers, i.e. they have to absorb the costs if the exceed the agreed limit. The effect this has had is that the Jamaican power company is more responsible in the types of generating plants that it purchases and they will purchase plants using low cost fuels first. Therefore the customer benefits since the fuel charge is greatly reduced and the country benefits from the reduction in foreign exchange that would have been expended if higher cost fuels were purchased.
    There is more but that is just an example. I will pause for now.

  37. Avatar
    Anonymous

    so Baje Engineer

    I take it you were working in Antarctica and have only now returned to Barbados to learn of this rate application and FTC decision. If not and you were here all the time…why the r#@@h*l% did you not join with the intervenors and fully equip them with say your expertise? Easy to stay quiet when it mattered and now come anonymously and pompasett pon BU!!! If however you had offered your advice and it was rejected well then “crapaud smoke we pipe”!

  38. mash up & buy back Avatar
    mash up & buy back

    Baje Engineer

    Thank you for that useful information.Sadly it is all over for us as the FTC seemed to have already made up its mind to accept BLP’s argument even before BLP started speaking.

  39. Baje Engineer Avatar
    Baje Engineer

    I, under another alias, (as well as others) tried to tell them that they were not addressing the issues but they did not get it!

  40. Baje Engineer Avatar
    Baje Engineer

    @ Anoymous, If I joined with the intervenors, crapaud would really smoke my pipe! Pick sense from nonsense!

  41. David Avatar
    David

    @Baje Engineer

    Do you think enough to give us that would support grounds for an appeal?

  42. ROK Avatar
    ROK

    Appeal will only be on points of law… that somewhere along the line the FTC failed to consider the facts or apply the law.

  43. David Avatar
    David

    @ROK

    Are you saying if information is uncovered which exposes that all pertinent facts were not considered that there isn’t grounds to revisit this matter?

    Please don’t say no!

    Also do you agree with Baje Engineer that the Intervenors did not fact the gas turbine generation in the argument?

  44. ROK Avatar
    ROK

    @David

    The matter of the choice of turbines was raised. Note that Baje Engineer obviously has evidence which did not reach the Commission and which none of the Intervenors are privy to.

    The Commission declared that the company exercised prudence and professionalism in this matter, based on the evidence before it.

    If we discover evidence which is material to imprudence and wastage, then that is another complaint; but note that the company can easily say that it is their judgment. More expensive and more reliable are two different things and a matter of opinion. We may have to prove that the company lied, that would be material. We could then ask for a re-hearing.

    The fact that an appeal is a right, it is not necessarily the only route to go, or even the most immediate route as there is a process to be completed before an appeal could be heard. This is a mere technicality.

    However, if there are/were irregularities or a discovery of evidence, then there is a process to address the matter. When it comes down to the final appeal, it can only be on points of law or fact.

    Let me use an example for clarity (hopefully). An appeal means that the tribunal erred in some way in arriving at its decision. If there is new evidence it does not mean that the Commission erred since it can only consider what is before it. There can be no appeal based on this because the Commission did not err. This does not mean there is no cause of action.

    The Commission may be asked to review the new evidence; this is the procedure. The reason is that the court is not a utility regulator, accountant, engineer, etc. and prefer not to have to consider these matter since it is not competent in the professions outlined.

    Hence the reason for the tribunal. If new evidence comes to light, it is better for the Commission to determine the matter. Now if things cannot be resolved in this environment, this is where the court will kick in and there are two steps.

    1. Hearing before a high court judge on matters of law and procedure, etc. and if that does not work, then;
    2. Appeal.

  45. David Avatar
    David

    @ROK

    BU is not too bright so be patient. Integral to the deliberation is the fact that BL&P needs to increase revenue to invest in plant.

    If as the commenter is saying the BL&P is using the most expensive type of fuel to drive 30% of its capacity; how is that not germane in a way which calls for investigation in a granular way?

    The commenter further stated a report was submitted to the FTC on this matter. Do you have this report? Was it part of the discovery or are we understanding you to say it was glossed over?

  46. Christopher Halsall Avatar
    Christopher Halsall

    @Baje Engineer…

    With respect… I would humbly argue that the Intervenors did as good a job as we possibly could have done.

    There were eight separate Intervenors (at the end of the Hearing), many of whom were represented by more than a single individual. Economists, accountants, lawyers and engineers.

    Now, with regards to your particular issue… I would argue that because of the Fuel Clause Adjustment which results in the Company making *no* profit on any of the fuel consumed in Generation, that your particular issue would have been (correctly) deemed irrelevant to the Rate Hearing.

    But, just because all of the Intervenors didn’t consider your argument worth running with didn’t mean that *you* couldn’t have also sat beside us all as Intervenor number nine.

    Further, please consider that if your proposal was implemented, and the Company was given these “economic signals” (which I don’t think is actually required), the Company would receive less revenue because of this additional cost.

    Since, for clarity, this entire exercise was about what Rate of Return the Company is allowed to receive on Rate Base, at the end of the day it would have meant that the Company would have received more than they did actually get (10.00%).

    But, again, if you felt you could have done better, there was nothing stopping you from Intervening yourself.

    And, as an aside, I personally feel that the Fuel Adjustment Clause is terribly misunderstood by most Consumers. In my opinion, it is an excellent way of introducing transparency into the cost of Generation.

  47. David Avatar
    David

    Here we go again, the consumer screwed. The FTC hearing would have deemed a possible wastage inefficient use of an input irrelevant.

    Who pays for the fuel cost? Is it not the consumer?

  48. David Avatar
    David

    Barbados Today, Roy Morris’ new newspaper is reporting that Douglas Trotman is going to court.

    It seems some of the Intervenors don’t want to go to court.

  49. Christopher Halsall Avatar
    Christopher Halsall

    @BU.David…

    Sigh… Please try to think a bit beyond paranoia…

    1. The Company has *no* incentive to waste fuel.

    1.1. Or to “burn” (read: consume) expensive fuel over inexpensive.

    2. If “Baje Engineer” has some hard data of relevance) that he would like to bring forward, *everyone* would be very interested.

    3. However, it is *very* interesting that “Baje Engineer” is using an anonymous alas.

    3.1. Perhaps “Baje Engineer” has some inside information…

    3.1.1. If so, “Baje Engineer” have *your* e-mail address — I’m sure you’d be happy to pass on anything he can provide to you to the Comission and the Intervenors with complete anonymity.

    4. But, stepping back a bit…

    4.1. If BL&P *didn’t* use the Gas Turbines sometimes, some of us would be in the dark during peak periods (read: “load shedding”).

    4.2. If you’re comfortable with this, then you should sign up for the “Interruptible Service” which the FTC will hopefully approve soon.

    5. This is fundamentally *engineering*.

    5.1. Can we please get a little more serious about it all, rather than ranting and raving without knowing what the issues actually are?

  50. David Avatar
    David

    @Chris

    It seems you can speak with authority about what BL&P can do. Is anyone questioning BL&P’s capacity to shed load? The issue on the table relates to the cost of the fuel used to feed the gas turbines which represents 30% of generation.

    Baje Engineer hinted at why he has to use an alias, don’t you ever read between the lines?

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