Bunker C and BL&P Revisited

Stephen Worme, Barbados Light & Pwer Co Ltd

Stephen Worme, Barbados Light & Power Co Ltd

Some have always admired the candour of Stephen Worme of Barbados Light and Power (BL&P). He was recently asked by a BU family member what was the average price they (BL&P) had paid per ton for Bunker C in the 2003 compared to 2013. This is a follow up to an earlier blog – http://wp.me/p41kz-74Z

2003 – $435 per ton.
2013 – $1,439 per ton.

Were these prices regulated by Government or have been subsidised in any way at any time? We cannot confirm at this time?

66 thoughts on “Bunker C and BL&P Revisited


  1. Why had the government of Barbados allowed a utility, which forms part of national security, to be owned by Canadians?
    But then again this is a government that is using the so-called new design of money to print through the back door.
    Why didn’t they introduce coins for the paper money mostly in circulation ie $2 and $5?
    How much did they print in the latest run? Are they going to take ‘damaged’ bills out of circulation equal to the amount printed, or is this a de facto increase in M1 money supply?
    Is the central bank governor trying to be a magician with taxpayers’ money?


    • The problem like many in Barbados is that there is not a comfort level with being transparent by our leaders.


  2. @ Hal,
    The government didn’t merely allow the sale of shares, it had a hand thru the NIS . The talk back then was for the proceeds to be utilised for funding of 4 seasons. And that sale was approved the same month of the St John’s by-election when people were mostly concerned about the queen and if her opponent suit was ill fitting and was he really a true Bajan having born in another country but to Bajan parents who were working there( as the big scoop on this blog). See why we get the shaft and a big one at dat.
    Very interesting point on the money .. didn’t think of that.. good one


  3. “The problem like many in Barbados is that there is not a comfort level with being transparent by our leaders.”

    Problem in Barbados is that you don’t vote for leaders, you vote for party.

    I is always say Mia could win any seat in Barbados because we know who she is and what she stands for not many politicians in Barbados put their beliefs out like that be cause they don’t really have to, all the have to do is say D/B. So in the end the public don’t have anything to measure them by.


  4. When hundreds of Koreans arrived at Spring Garden to construct the new engines down there Worme at BL&P told us electricity rates will do down when the new low diesel engines were installed. What happened was the opposite rates went up.

    Whether oil prices high or low BL&P rates never go down. Worme and the BL&P management do not instill confidence or optimism . News from BL&P is always dismal. I dont listen to their crap anymore. You see a BL&P exec on tv switch channels because you know price of electricity gone up.

    The goverment has a clear five year mandate its high time we move big scale on renewable energy and drilling for oil offshore. Bite the bullet do whatever must be done. We’ve talked enough time for bold action. What are we waiting for? BL&P is moribund we will get nowhere depending on that utility


    • Why the government doesn’t fast track weaning the Barbados Water Authority and the Grantley Adams Airport which is responsible for a significant fossil energy usage? If the government has a problem with the BL&P why sell out to EMERA or put a case onbehalf of the people to the FTC.


  5. Hal………………..again because successive governments in Barbados refuse to be transparent about what they do with taxpayers dollars and the countries interests, most people are not aware of the history of the light and power company……………the company was built and installed by the Canadians initially, they in turn sold it to an American interest who owned it for quite some time, the American resold it back to the Canadians EMERA again recently……………..the questions that we need to ask the government is why the government sold the remaining shares that the taxpayers owned in light and power to EMERA without consulting the taxpayers, same as they did with the BNB remaining shares, now they are still broke.


  6. David…………………some research needs to be done to make absolutely sure that the water authority is still taxpayer owned, the airport, well let’s see how that one rides.


  7. @ David
    Again this post and the mouthings of respondents presumes that there is an authority somewhere in Barbados to determine any of these matters. That narrative falsely assumes that the global corporate state is in fact what we once thought of as ‘a national state’. We happen to know Stephen Worne and agree that he is a good boy and should not be judged primarily by the racist acts of his father. But to lionize him as some paragon of virtue and ignore the dominate fact that Stephen is merely a water boy for his global corporatists masters, represents a disservice to readers, thinking people. What kind of ‘underground’ will blindly and at every moment find reason to serve the real corporate global governing structures, unseen as they are? What willful sightlessness!


  8. @ Hal Austin | May 15, 2013 at 8:10 AM |
    “Are they going to take ‘damaged’ bills out of circulation equal to the amount printed, or is this a de facto increase in M1 money supply?
    Is the central bank governor trying to be a magician with taxpayers’ money?”

    So Hal even from a distance you can see the game of Russian roulette being played with the country’s financial future?
    Why do you think this government approved in Parliament yesterday a massive increase in the borrowing limit for Treasury bills and other short-term paper? The game is to flood the local circulation system with the new mickey mouse money through this government’s huge expenditure pipeline and to pay very old bills in arrears with revenues it never earned through taxation. The intention of which is to effectively achieve a further internal devaluation of the Bajan dollar.

    This new money, about to enter the system, has no backing based oneconomic production and export.
    Why put more useless money into circulation when demand for local goods and services is on the decline?
    The inevitably frightening thing about this local version of financial roulette is that there is a loaded golden bullet in the form of an external devaluation conveniently placed in the chamber that can be discharged any time after this round of financial madness being practised by this incompetent administration pretending to be the croupier of a saviour of the country’s economic downfall.
    Here we have an arrogant idiot of a MoF boasting of his “superior” financial skills in managing the foreign reserves while the engines that generate the flow of the forex fuel into the economic tank are on their knees and in need of a serious jump start.
    Now how has the arrogant fool managed to keep the plane in the air if not by overseeing the sale of the country’s family silver gilded in its major utility power plant and the remaining interest in the erstwhile National Bank?

    I am sorry to say this Hal but this country is in serious trouble leading to economic “pen and ink tom tit” if corrective measures are not taken within the coming weeks.
    The egotistical MoF fiddles away thumping his chest and bragging about his ‘superior’ management skills while the country burns financially. Does the man really feel that things would improve unless he takes drastic corrective action and immediately?


  9. Most Bajans including workers at the light and power company do not know that this entity never belonged to Bim entirely, governments refusal to let taxpayers know what their real interests are and what they can expect when entities are foreign owned creates a delusion………Worme and his father both have always been employees, if not for the Canadians, for the Americans…………this refusal on the part of DLP/BLP to enlighten their own people, is a travesty. Selling the remaining shares in the company owned by the taxpayers smacks of stupidity.


  10. Excellent post, miller!

    You should have seen the whale for a man, the MOF on TV last night boasting of the excellent management of the Barbados economy by this DLP government. Instead of taking corrective measures, all he is doing is borrowing so that according to him…..the ship of state does not hit the rocks… I got news for you Mr Stinkliar, it is there already.

    Kyffin Simpson helped them out last month, he borrows this month, what is he going to do next month? Presumably, if he is resorting to other forms of borrowing, the NIS must be near depletion? I agree with you and Hal, the issue of new money at this time is just a ruse to print more money. And they deny that we are not up shit street??? Meanwhile I am still looking for my tax refund, despite repeated calls to the IRS.


  11. Worme is an excellent employee. He is doing the job he is being paid to do.

    Emera is a Canadian company in business to make profit.


  12. @ Hants | May 15, 2013 at 1:11 PM |
    “Worme is an excellent employee. He is doing the job he is being paid to do.
    Emera is a Canadian company in business to make profit.”

    Pity he was not made CEO or GM or President of the BL&P! Why must the CEO of BL&P be always an electrical engineer even if shockingly black?

    The majority of shares previously owned by Bajan holders were sold to Emera and you have no objection to Emera making a profit. Fair enough!
    But how come then, Hants, you expressed real animosity when the shares of the BNB were sold to the T&T owned Republic Bank under a previous BLP administration?

    What’s the difference? One rule for the Canadians and another for the Trickidadians?


  13. @ miller

    The problems are obvious, but why do they get away with holding high office while totally ignorant.
    I am sure Sinckler is a bright lad, but he is out of his depth. He should have served his apprenticeship as a junior finance minister, sadly nature intervened and catapulted him beyond his capabilities.
    In the meantime the nation suffers.
    An MA in internal trade and working for an NGO does not equip him to be a modern finance minister.
    By the way, do we still have a prime minister., os is he away?


  14. @ Hal ,Well Well and Prodigal Son. I will begin by telling you a little story something like what we “youngsters” used to read in our Toyal Reader, with a moral as the intent. Some time after I returned to Barbados (you were not yet born Well Well) around 1965 or thereabouts, no it might have been closer to 1967 A new company was formed called Barbados Dairies Ltd. Shares in this company were offered to the public at the price of one dollar (Bds) each. I was poor, and nearly poverty stricken at the time (still close to that still) but knowing the potential value of owning shares in a company; and since many companies in Barbados were (still are) privately owned and did not sell shares to the public, I bouthe (invested) one hundred shares. As time passed and the company profited, the value of the shares increased. When the value reached a certain point the shares were split (insgead of one hundred shares I now owned two hundred shares, without having to invest more money. Time passed, the company made more provit and the shares were split again. I now owned four hundred shares. In addition I got annual dividends based on the number of hsares I held. The company increased in value until my one dollar shares (initial investment) became worth eight dollars (listed on the stock market). I was able to use the value of my shaes as collateral to obtain a loan, to the value of the share value. My shares were eventually sold to satisfy payment of the loan. When they were sold the value per share was around eight dollars. The moral of the story is that 1. Investment in shares of a company, are to be treated like any other commodity; sugar, tomatoes, breadfruit, golden apples, etc; they are to be bought and sold. some people keep their shares and their ownership close to the vest. Shares, or the purchase of shares should be seen as a way of saving for a rainy day, and as soon as the rain is set up and you need a shelter, the shares should be gotten rid of to satisfy the need, and if possible new shares should be purchased. That is the essence of the Stock Market. Shares in BL&P have never been majority owned by government. Like any good investor, shares were purchased by government (NIS) and when the price was right they were sold. Barbados is a signatory to the treaties on Free Trade, thus any company that has shares listed for sale is compelled by trade agreements to sell these shares to anyone who offers to buy them if they accept the offer. Emera offered to purchase all the shares in BL&P that were up for offer and BL&P were thus compelled to sell them. The price was right and the Government was correct in selling them and realizing a profit (just like I did). BL&P is not a national commodity. It may be important but the company is free to do with its hares what it wants.Anyone can go to the stock market page, look at the shares offered by companies, contact a broker if he is attracted to the price offered and purchase whatever amount he wants. Apart from Government, many people made money selling their shares to EMERA, realizing a profit.
    @Miller. Your biases are showing again. Why is it that you think Stephen Worme is an excellent employee while the Chief engineer is”shockinglyly Black”. Why didn’t you also add that she is “also Shockingly female. You should be proud of this fact, proud enough to tell every one and not be “shocked” by that. We have very talented and bright BLACK men and women in this country, although people like you grudgingly want to accept this.


  15. Mr. Worme need to tell us why we have not benefitted from the new system as spring gardens. We were promised a reduction in electricity cost and that company has recouped the cost of installing the generator many times over.

    The FC needs to look at that fuel adjustment cost, that is impacting seriously on the cost of doing business on the island.


  16. @millertheanunnaki,

    Emera bought BL&P because it is a profit centre and a monopoly. Easy money from captive consumers.

    Canadians are no different from anyone else when it comes to greedy capitalism.Ask Moneybrain.

    More importantly Government must support Solar companies by mandating that all government buildings have a green energy program instituted.


  17. A more pertinent question;why is BL&P occupying such valuable seafront real estate for a power plant that should have been in St Lucy.And why did the Govt of the day use valuable seafront real estate in Holetown to build a Police Station and complex.
    As I recall,OSA was literally begging bajans to buy up the Govt shares in BNB.
    Not so with the NIS shares in BL&P.Btw,in the 50’s politicians objected to the name BL&P,saying it was probably owned by the BLP.
    Garsun boy Sinkler will always be a buffoon.Width but no depth and led by Dumb Boy.Pornville has sounded the trumpet!!


  18. With the comments about the MOF being in over his head, I decided to have a look at his bio at:
    http://www.gisbarbados.gov.bb/index.php?categoryid=41

    Man, this guy has been around, but I do not see him in a position where he had to cover a payroll. Maybe that explains why he has so many civil servants waiting for their pay cheques.

    I see one of his research papers is titled “Death, Taxes of Structural Adjustment: Analysing the Economic Reform Effort in Barbados 1991-93”

    Suggest he may want to do an update to “Death, Taxes of Structural Adjustment: The Economic Reform Effort in Barbados 2013-2015”


  19. @ Alvin Cummins | May 15, 2013 at 5:20 PM |

    Your argument in regard to the sale of shares in the power generation monopoly or other strategic assets like the former BNB makes for interesting reading. But for the sake of balance how come such ‘intellectual’ analysis was not extended to the sale of other assets under the BLP administration? What is the difference here, Alvin?

    By using such analogy to your personal financial difficulties in justifying the sale of well-performing assets by the NIS you let yourself down to be the target for critical attack.
    Are you saying that both the government and the NIS are experiencing serious financial difficulties to the extent that they are both forced to sell the best assets in their investment portfolios?

    IF the NIS is doing well cash flow wise why would it want to liquidate its investments in long-term’ guilt edge’ securities like the monopoly power plant? What was done with the proceeds from the sale? Was the cash reinvested and in what? Short-term bank deposits?
    Or was it ‘commandeered’ by the MoF to make both the foreign reserves look “respectable” and to finance unproductive and inefficient statutory corporations like the TB?

    With respect to your personal reference to the colour of the chief engineer at the BL&P I cannot help you for I know not the person’s racial background and only her gender by way of your reference.
    I was referring to the position of the Chief Executive Officer or General Manager which has always been held by an engineer; the current one being the first black (according to Bajan racial profiling) person to hold that position. Was he the “better” person for the job compared to Stephen?

    The miller does not give a rat’s rectum about a person’s colour as long as that person (male or female) is qualified and competent to do the job.
    Because a person is “BLACK” is no justification whatsoever for supporting them. Just look at the quality shit we have in charge of the country and tell us if this is something to be proud about? Why must we accept and promote liars and corrupt incompetent officials to be in charge of the people’s business? Just because they are black like you? You tell us, Alvin!


  20. Good one Miller that one Alvin like to play he is some authority on everything and talking nuff nonsense.


  21. Miller………………from my personal experience with the light and power plant, they really do need a qualified electrical engineer as CEO. there are any amount of problems you encounter with such an operation.

    Alvin…………….my concern is really that when you sell the shares in every possible entity belonging to the taxpayers on the island, the only thing left to sell are the people………..that will be another road. Yes, they needed money then, how i look at it, light and power will be around making money for centuries to come as long as the island is floating, they could have borrowed money from somewhere else, as it is, the shares are gone and so is the money, they still have to look elsewhere for funds to keep the island going.


  22. To think that the present Minister of Finance holds the same portfolio as Errol Barrow; Tom Adams and Owen Arthur MAKES ME WANT TO PUKE !!!!!


  23. BARBADIANONOVERSEASVISIT | May 15, 2013 at 6:15 PM |
    Mr. Worme need to tell us why we have not benefitted from the new system as spring gardens. We were promised a reduction in electricity cost and that company has recouped the cost of installing the generator many times over.
    ************************************************************************
    Those engines made and installed by the Koreans are designed to run on the least expensive low grade bunker fuel , unfortunately before the engines were commissioned, the manufacturing of this cheap fuel ceased.


  24. @ Well Well | May 15, 2013 at 8:15 PM |

    I would agree with you if the acronym “CEO” stands for Chief Engineering Officer. The CEO, one must agree, must have an appreciation of the technical side of the business but his or her main focus should be on managing not fixing the plant. The Chief Engineer is there for that and he or she certainly must be well trained and proficient in that field of electrical engineering.
    Do you think if BL&P starts to underperform dividend wise or is unable to get the rate of return it demands Emera would send an engineer down to Bim unless he is also an accountant or holds an MBA?

    If we were to accept your guidelines of fitting people to the job which is perfectly sound and reasonable do you think we should be saddled- at this time of our country’s development and economic challenges- with an idiotic boastful buffoon passing for the MoF? The man boastfully admitted that he can’t even add two numbers together and once thought a ‘fiscal deficit’ was the knick name of George Payne until Jepter Ince pointed out the difference between a “Fiscal Deficit” and a “Physical Deficit”. LOL!!!


  25. Miller……………you killing me……….i don’t know if the CEO also has a business degree, I thought that would also be a requirement for any business entity. I am sure the head office would look into those things instead of leaving entirely to the locals.


  26. BA Stard>Those engines made and installed by the Koreans are designed to run on the least expensive low grade bunker fuel , unfortunately before the engines were commissioned, the manufacturing of this cheap fuel ceased.
    —————————-
    What the f&%k I hearing BA Stard you telling us BL&P were clueless about the cessation of the manufacture of the cheap fuel and still went ahead with construction and lies. BL&P is an even more mickey mouse operation than was thought. The Koreans came eat their cats, rodents and porcupines and left two fancy looking installations for us to pay for electricity through our arse. A Commission of Inquiry should be launched on this new revelation and a host of BL&P fat cats fired.

    By the way Alair Shepherd like he get away scot free for skinning he spawgy arse at the female judge.


  27. @ B. A . Stard on May 15, 2013 at 9:23 PM
    Bunker C is still very much available.
    A quick Google shows average oil prices per barrel went from $22 to $87 from 2003 to now. That is more than the variance you quote.


  28. I raised the question as regards the spring garden plant because recently i was speaking about the disappointment of the spring gaden plant and the increase in electricy cost and it was explained to me that the light and power company took us for a ride and the govt did not intervene. It was furher explained that the fuel adjustment clause needs to be revisited. I explained that i think that the fc was inviting a consultancy to look at that. I await the outcome and would see how long it will take to this consultancy to prouduce a report.


  29. Barbadian………………the consultancy will take as long as is necessary once the large fees keep flowing, when it runs dry you will have your half-*** report, whether it will be allowed for public viewing is a whole nother animal……………


  30. i will speak to person who had hinted to me as to how we have been taken for a ride as the person is a barbadian with extensive knowledge in the area of fossel fuel and solar energy.


  31. I have been thinking about powered electricity for a while and have even gone as far as enquired what i needed to start the process and at the same time benefit form the maximun tax concessions allowed in any one years.3500 after an investment of 10 000 in the first year . I discussed this with a barbadian-american who questioned the wisdom of going that way and suggested the various sub-sectors could come together and form a company to invest in the solar energy sector and then sell the energy to blp for distribution to the consumers. In that way, the cost of production will be known and the govt will then control what profit bl&p could make as the initial outlay of capital will not be the company’s own.

    According to the person, BL&P would not be able to hold the company to ransom.


  32. Bunker C or fuel oil # 6 is a byproduct of crude oil. Its is a highly viscous tarry residual that comes just before asphalt in the refining process. It is solid at room temperature has to be either heated or mixed with other heavy fuel oils ((HFO) before it can be used in the power plant. BL&P mixes Bunker C with Gas Oil, a lighter fuel that it gets locally from Asphalt Processors. Hence they refer to it as Bunker C/ HFO.

    BL&P uses it for its two steam turbines and its six low speed diesel plant because it is the cheapest (and dirtiest) fuel available. These two types of plant are used primarily as base load because of their higher efficiency and lower fuel costs. The most efficient are the low speed diesel plant particularly the recent one (D14 and D15) installed by the Koreans. They achieve efficiencies of 43-45%. They need only about 0.19 liters of fuel to generate 1kwh of electricity and any first year engineer student knowing those heat rates and the price at which BL&P buys Bunker C ($1500/ ton) would determine that the cost to produce one kwh of electricity using the low speed diesel plant is about Bds $0.30. Using a similar exercise for the steam plant one would determine that the cost of generation would be about Bds$0.47 per Kwh primarily because of the lower efficiencies (30%).

    The exercise for gas turbines is a bit tricky because there are used for peak load and as such they can run at full load or sometimes as low as 40% of their maximum continuous rating in which case their efficiency falls off tremendously. These plants use either diesel or jet fuel and that again makes them more expensive to run. But there are necessary for grid stability and for balancing supply with demand at peak periods. There are responsible for 20% of the production of electricity as compared with 66 % for low speed diesel and 14% for Steam the other base load plants.

    Overall the gas turbines produce electricity at an average of $0.85 per kwh but this can vary from $0.65 to $1.05 depending on the circumstances and the type of fuel. When one computes the weighted average of these components given their respective importance to the production of electricity you can see why we have arrived at Fuel Clause Adjustments in the ballpark of $0.45 /Kwh.

    Hope the above helps clear up an misunderstanding pertaining to the mysteries of electrical power generation in this country.


  33. @Miller.
    If you are only concerned with the person’s ability to run the organization why did you refer to his colour and put it in juxtaposition with Mr. Worme “an excellent employee?”
    Remember you are the person who introduced colour in the discussion. My intention was to draw your attention to the fact that the Chief Engineer was not only black, but a woman, so that the introduction of one type of bias or the other is misplaced. As to my decision to sell my shares, i am sure you will agree what when you can make an eight hundred percent return on an original investment it is strategic to sell them. This I did at the appropriate time. Similarly if Government can realoze such a large return on the original investment and at the same time obtain foreign exchange which was (and is) needed that is a necessary budiness decision. Only a fool would not admit that the Government needed money at that time; for whatever reason, and one invests at the appropriate time. I am sure that prudent use was made of the proceeds of the sale-after all there is an investment arm of the NIS Board who seem to be doing qite well with the investments the make with the NIS funds. Whether they bought Treasury Bills or Government Bonds, or invested it in private enterprise I am sure the omney was INVESTED which implies returns on the money, so “let not your heart be troubled” be of good cheer.”
    By the way, if I remember correctly some time around September or October on the BL7P (just before it was bought by EMERA,} did any of you (the present contributors to this blog) attend the hearings as intervenors or observers? You should have been able to get all the information you neeeded, and asked all the questions you are now raising and gotten answers.
    And I am sure that if the occasion warrants it EMERA will sell its shares in the electric company it they can realize a profit on the sale of these shares. Hard nosed businessmen do not depend on sentiment. Strategic marketing of shares held is the essence of wise and sound investment. Berkshire -Hathaway, a company that started with a small group of workers at the carpet manufacturing plant did not get to be as big as it is by holding on to shares in companies it bought just because they were getting good dividends every year. Warren Buffet made strategic decisions to buy and sell shares in companies showing the possibility of increasing in profitability and expansion over time. shares are to be bought and sold from time to time, at the correct time. However there are certain strategic assets that are held by government that require judicious decision making.And for your information I have applied “intellectual analysis” to other similar exercises when both DLP and BLP have been in office. I told you already I am not afraid of either party and if an issue requires ventilating and criticizing I will do so without fear or favour.. .


  34. The Boxer,

    very informative thank you. Just one question from someone that knows nothing of the process. If there is a peak period demand, why is it that BL&P does not offer an off peak rate for all or some users? I am thinking of little things like swimming pool pumps, that in some cases could be run at night at lower rates on timers.


  35. By the way do you know that GEICO was one of the strategic investments made by Berkshire hathaway? Warren Buffet noticed that Goverfnment Employees in Washington were involved in the fewest motor vehicle accidents and made the decision to start the insurance company insuring vehicles owned by Government employees that’s why it is called Government Employees Insurance Company (GEICO), so next time you see the little green lizard think of Berkshire Hathaway.


  36. Alvin……………..I used to watch that geico lizard commercial for years. I don’t why the government employees in Bim don’t get proactive, letting all these fly by night dishonest insurance companies enrich themselves off the monthly salaries of the locals.


  37. Bpxer

    the question to be answered, are barbadians being charges a fair rate in light of the assurance that we were given that we were supposed to get cheaper electricity cost when the sping gardeb plant was commissioned, my source does not think so. Please no theoretical response as I would asked that your response be analysed against what is believed.


  38. @Adrian Loveridge
    The recent Pilot Program that concluded on December 31,2013 and which examined the impact of interconnecting renewables to the grid had, among other things, a Time of Use Rider (TOU) that was designed to reflect the differences in the cost-to-serve or marginal cost of generation during peak and non-peak hours. Peak hours being determined by BL&P as 10 a.m tao 9 p.m week days.
    The program was intended for only large power customers of which nine (9) participated. They included Barbados Water Auathority, R.L.Seale, Barbados Mills and West Indian Rum Refinery among others.
    TOU pricing is a common feature in power utility management world wide since it rebalances the load from peak period where it is very expensive to serve to non-peak hours where demand and costs are lower.

    This component of the Pilot program was not very successful and as far as I gather only Water Authority saw some benefits because of the nature of their load and the fact that their pumps work continuously. They could have realized greater savings if they employ the strategies of R.L.Seale and a few others who used their in house generation to satisfy their load at peak period and used the Grid to benefit from the lower off-peak rates.
    Others refused to participate because either they could not see the economic benefit of it (the differential between the rates were too small) or that their normal business operations would have been too impacted.

    TOU pricing is an important part of integrating renewable energy into the grid and should be available to all customer both large and small. BL&P, however, have express concerns that this would cause significant diminution of there revenues if done on a large scale even though they will enjoy the obvious benefit of not having to invest in expensive power plant in order to meet their peak production needs.


  39. @BARBADIANONOVERSEASVISIT

    I can’t express an opinion on what is a ‘fair rate’. All I can say is that without the two Diesel Plants, D14 and D15, the combined heat rates of the remaining Diesel, Steam and Gas turbine would be much higher and the Fuel Clause Adjustment (FCA) much higher all things being equal.
    Having said that there are other factors that drive up the FCA and these include equipment availability, dispatching strategies, rising fuel costs etc. Some of these are due to BL&P’s management, others are due to the suitability and age of the equipment and public policy.
    If by ‘fair rate’ you are referring to aspects of the rate design then that was litigated by the FTC and others in the last rate hearing (2008) in which BL& P were given the opportunity to earn a certain required level of revenue to recover reasonable operational expenses and at the same time earn a specific return on their employed assets (otherwise known as the rate base).


  40. @Boxer

    when does the fc determine that bl&P has recovered its investment and when does it dteremin that an adjustment needs to be make to reflect the reality, or this never happens?


  41. @well

    gas price rises and fall based on the price paid for fuel on the international market.


    • The conversation keeps coming back to BL&P and how a strategic national priory to diversify its energy base is affected by what they want.


  42. @ TheBoxer | May 16, 2013 at 2:01 PM |
    “When one computes the weighted average of these components given their respective importance to the production of electricity you can see why we have arrived at Fuel Clause Adjustments in the ballpark of $0.45 /Kwh.”

    It seems from your informed analyses you are quite knowledge of the principles and mechanics applied in the calculation of the cost of electricity charged to consumers.
    From what can be gathered the variable FCA is really an exercise in estimation (direct product costing) based on past performance and projected cost of the differing types of fuels used in the production process.
    Nothing wrong with that.

    But what should be of concern to the FTC is whether the BL&P is any way materially benefiting financially from the revenues collected from customers as the Fuel Clause Adjustments.
    What measures does the FTC take to ensure that none of the FCA ends up in the BL&P’s P&L bottom line?

    Consumers were told that the FCA is strictly a ‘pass-through’ charge based on the cost of fuel imposed by the fuel suppliers whether it is the BNTCL or one of the other players like SOL or EXXON. In other words the BL&P passes on, with no intermediary mark-up, the cost of imported fuel charged by third party suppliers.

    Is the FCA collected from customers and is a payment of similar value paid over on a monthly or whenever basis to the fuel suppliers with the BL&P acting merely as the collecting agency as in the case of VAT?

    How does the BL&P settle its various fuels invoices and how are these reconciled with the FCA charged to customers? There must be both timing and costing differences between the estimated (weighted average) FCA and the actual cost of the fuels as invoiced by the suppliers. Who receives or bears the differences between FCA charged to customers and actual invoices settled with the oil companies?

    To put it bluntly Boxer, we want to know if there is any financial ‘hanky-panky’ or ‘frigging-in-the- rigging with regard to what is collected from consumers in the form the FCA (not the energy charge) and what is paid to the various fuel suppliers as per their invoices for actual fuels delivered for use in the generation process.
    Can anyone confirm that there is no mingling of revenues generated from the FCA with those charged in respect of the BL&P’s energy charge inclusive of its guaranteed rate of return?


  43. @ Alvin Cummins | May 16, 2013 at 2:46 PM
    “I am sure that prudent use was made of the proceeds of the sale-after all there is an investment arm of the NIS Board who seem to be doing qite well with the investments the make with the NIS funds.”

    Prudent use was made of the proceeds alright. Right down Maxwell pond via the Statutory boards.

    If the Investment arm of the NIS is doing “quite well” why is the Four Seasons project now being viewed like a pariah by the MoF?

    What is the hold up or is the NIS scared of taking risk in investing in the country’s major forex earning sector? If the NIS is not prepared to invest in that project can we conclude that the site will soon be returned to what it previously was? A sanctuary for our genetic cousins but this time in concrete and rusting steel instead of trees.
    The Amerindians that were buried on that site must be grieving in their graves for their stolen land.

    “However there are certain strategic assets that are held by government that require judicious decision making. And for your information I have applied “intellectual analysis” to other similar exercises when both DLP and BLP have been in office. I told you already I am not afraid of either party and if an issue requires ventilating and criticizing I will do so without fear or favour..”

    Can you refer to at least one “strategic asset” that the BLP administration during its previous 14 years in office sold off or had to liquidate for cash flow purposes without giving local investors the chance to buy before selling to foreign interests?
    So would you be prepared to state here categorically that the malicious false statements uttered by ac, CCC,Fractured TTP and the other DLP yardfowls that the BLP sold out Barbados to foreign interests especially T&T is a whole roll of lying bull and should be dismissed as such?

    Be a man and fess up, Alvin!


  44. http://www.ftc.gov.bb/index.php?option=com_content&task=view&id=255&Itemid=26

    FUEL CLAUSE ADJUSTMENT FINDINGS REPORT

    The Fair Trading Commission has completed its review of the Fuel Clause Adjustment (FCA) administered by the Barbados Light & Power Co. Ltd. (BL&P).

    The review found that:

    There is no evidence of any significant cumulative under or over recovery by the BL&P, when comparing the revenues collected from customers on a monthly basis through the FCA, to the actual fuel costs which were incurred by the BL&P.
    The efficient dispatch of generation plant is impacted because the BL&P, due to age and reliability concerns, runs the steam turbines continuously to satisfy base load instead of the more efficient low speed diesel engines. However, with the exception of the steam turbines, the BL&P dispatches its generating plant in order of increasing marginal cost of generation.

    The Commission is of the view that as a priority, the BL&P should replace the steam turbine generators with more efficient generating plant. This will be dealt with in the context of the Integrated Resource Plan which has been submitted to the Commission for approval.

    The Commission is desirous of improving its ability to verify and audit the FCA calculation and is proposing that the FCA should be based on the actual energy sales and the actual fuel costs incurred by the BL&P in the previous month. The Commission will therefore issue a Motion to Review the FCA to allow for it to be calculated based on historic instead of projected data. This will significantly enhance the transparency of the process.

    Copies of the Findings Report may be obtained from the office of the Fair Trading Commission, Good Hope, Green Hill, St. Michael between the hours of 9:00 a.m. and 4:00 p.m. Mondays through Fridays. The Findings Report can also be obtained from the following link:

    2013 Fuel Clause Findings Report

    Dated this 19th day of April, 2013

    Peggy Griffith

    Chief Executive Officer


  45. @Millertheannunnaki

    I appreciate your concerns because I too harbored those thoughts also about the FCA but after doing the calculations and reading the Consultation Report I was comforted that BL&P have been above reproach in that regard.
    What I am not comforted about is their approach to the Integration of renewables generation into their generation mix and this is where I think they are making a huge mistake. I think they should face the fact that distributed generation is a reality that is occurring with or without their willingness to participate.

    Photo Voltaic generation is here to stay and they need embrace it now and change their outdated business model or suffer the consequences later when they end up with stranded assets expecting the remaining rate paying customers to bail them out with further burdensome rates.The sad consequence of this approach is that these remaining grid customers will the ones who either rent homes, or who face restrictive covenants and are either unable or can’t afford to put panels on their roofs. A huge fairness issue looms now over who pays for the cost of renewable expansion in this country and no one seems to be aware of it.

    No one relishes the idea of a doomsday scenario played out before our eyes with BL&P facing declining revenues and stranded generation assets. And so as to protect BL& P from its destructive self, policy makers should step in now and deregulate the supply of electricity, separating it from its delivery. BL&P would be still responsible for the transmission and distribution which remain regulated. But generation, open to competition, will produce immediate and substantial benefits to consumers. Any generator of electricity, large or small, could negotiate contracts with BL&P for the supply of electricity. BL&P would still continue to schedule, dispatch and control the supply of electricity to meet the demand for electricity.

    The reason I am optimistic such a plan would work is simple. In Barbados 65% of the cost of electricity is in generation versus 25% elsewhere in the developed world. If we could reduce that by even 20%, I think we would be better off. It happen with the Airlines and the Telecommunications Industry. Will it happen here? Probably not. The reason being is that companies like BL&P attract risk-averse investors who put their money in utilities because they want or need dividends to be paid no matter what happens. Directors of these companies will not let a CEO make changes that can bring about uncertainty.

    Other challenges confront renewable expansion. These relate to planning, investment, technology, infrastructure and grid management. Taken as a whole, something tells me if we are banking on renewable energy as an economic game changer then it isn’t happening anytime soon.

    there is still time rather than wait until they end up with a lot


  46. If they making the profit they are now Bunker is $1439
    WHAT hte HELL were they earning in2003 when Bunker was £435??:)


  47. Miller said:
    “Consumers were told that the FCA is strictly a ‘pass-through’ charge based on the cost of fuel imposed by the fuel suppliers whether it is the BNTCL or one of the other players like SOL or EXXON”.

    Miller, the charge is still passing through. I don’t know which century they plan to start using the sun, which is still free, for renewable energy purposes, they may wake up one morning and realize that it is no longer there.


  48. Alvin is an optimist, he believes the government did the right thing by selling the investment in light and power and, he hopes, they invested the money wisely………….alas, they never did say what they did with taxpayers money from the sale of the shares, maybe we can ask them.


  49. @ TheBoxer | May 17, 2013 at 2:20 AM |
    “Photo Voltaic generation is here to stay and they need embrace it now and change their outdated business model or suffer the consequences later when they end up with stranded assets expecting the remaining rate paying customers to bail them out with further burdensome rates. The sad consequence of this approach is that these remaining grid customers will the ones who either rent homes, or who face restrictive covenants and are either unable or can’t afford to put panels on their roofs. A huge fairness issue looms now over who pays for the cost of renewable expansion in this country and no one seems to be aware of it.”

    Thanks Boxer for your analytically objective insight into the local power utility pricing system and its associated pending serious challenges.
    You are a real living comfort just like your name sake in that famous book of anthropomorphized animals. We are most impressed with your empathic sensitivities to the profit objectives of the power supplier vis-à-vis those of the defenseless customers faced with growing financial difficulties and unable to meet the unending increases in their power utility bills.
    We are also really impressed with your erudite understanding of the economics of monopoly utility pricing and regulation. Your ability to clarify and present the workings of this technical issue in an understandable style to help educate the layman or ordinary person is most remarkable and certainly appreciated. Adrian Loveridge will agree with that commendation.

    However, I am still not entirely convinced that the BL&P does not benefit financially from the FCA charged to customers. Only a comprehensive review by a real ‘independent’ audit would allay fears of any price gouging on the part of the BL&P to meet any short falls in the rate of return the fixed energy charge is unable to achieve because of reduction in kilowatt demand arising from a depressed economy. Hence the BL&P’s lack of enthusiasm for greater emphasis on renewables substitution which would affect generation capacity.
    That concern about the BL&P’s potential to exploit ‘overlapping ’revenue sources to maintain its cash requirements to meet shareholders’ expectation is indeed reflected by your observations made in your submission and reproduced as a quote above. Similar observations and concerns have been expressed in the past on this blog (David of BU can confirm).

    Who is going “guide and regulate” this monopoly in the direction it must take in order to ensure a smooth transition to the future business model required to meet the developmental economic needs of the country while satisfying reasonable expectations of private shareholders and providers of capital?

    There has been too much of a cosy relationship between utility entities and other service providers and the official agencies mandated to regulate their behaviour and pricing mechanisms. One only has to look to the financial services industry for abject negligence and made worse by the management of the defrauding companies’ ability to influence and control the level of regulation through political patronage and cronyism with Cabinet ministers. CLICO and the role of the now defunct Office of the Supervisor of Insurance spring readily to mind and unfortunately being carried on by its incompetent successor the FSC or whatever it is so titled.

    If the BL&P is not financially benefitting from the FCA (since- according to your analysis-it is paid over to the actual fuel suppliers) who then is taking the profits generated from huge differential between the FCA charged to consumers and the landed cost of the imported fuels? If as at present the BL&P is faced, (according to Stephen Worme’s latest figures) with Bunker C cost of $1,450.00 per ton which is passed on via the FCA then what is the imported landed cost of the same ton?


  50. @Millertheanunnaki
    I am not sure about the process of getting from where we are now to where we need to go, however, I share your concerns about the cozy nature of local business relationships.

    It is my view that this process must not only be fair and transparent, but must appear so to the general public. All investors large and small should be given the opportunity to participate, even though we expect that given the size of the undertaking the usual suspects will come forward and dominate. But we are all Barbadians and this is still Barbados. What we should ensure is that the process be guided by an outside consulting firm, since this is something that while new to Barbados but certainly not new to the rest of the world.
    As far as the ‘huge differential between the FCA charged to consumers and the landed cost of imported fuel’ all I can say there is a differential and leave it at that. Additionally, you may or may not know that the FTC is litigating that matter before the courts now and BNOCL are not the Plaintiffs. One way or the other we will know soon if this is a hidden tax or not, but do not look at BL&P because you are not going to find the answer to your question there.


  51. @ Miller
    “Can you refer to at least one “strategic asset” that the BLP administration during its previous 14 years in office sold off or had to liquidate for cash flow purposes without giving local investors the chance to buy before selling to foreign interests?”
    ************
    Bushie was taking a well deserved break from BU …..but whenever this argument comes up it rubs the bushman like a plimpler…..

    What give what locals what chance to buy what asset what….??

    …so who did the assets belong to in the first place…?

    You mean the politrickians elected to manage our business gave US a chance to buy OUR assets from OURSELVES… in lieu of which THEY had the rights to sell these assets to OTHERS and not even explain where the Money went?

    …such an offer is simply adding insult to injury…
    Shiite man!!! It is like removing the Vaseline before making us bend over….
    PLEASE stop talking about that….!


  52. St George’s Dragon | May 15, 2013 at 11:52 PM |
    @ B. A . Stard on May 15, 2013 at 9:23 PM
    Bunker C is still very much available.
    A quick Google shows average oil prices per barrel went from $22 to $87 from 2003 to now. That is more than the variance you quote.
    …………………………………………………………………..
    I refer to it as Bunker C, as i cannot recall its correct designation.


  53. @Miller.
    “Can you name at least one strategic asset…..foreigh interests.
    Before I attempt to answer that question you will have to define exactly what you mean by “strategic asset”.


  54. @B A Stard

    r u telling me that we have been taken for a ride. why did the production of bunker c fuel cease as soon as the engines were ready to be commissioned and who would have advised BL&P to go that way, that was a strategic decision, wont market conditions have predicted whether there was a market for such fuel, or were we and other countries hijacked.

    just asking questions as I don’t understand the difference between bunker c, jet fuel or kerosene.


  55. @ Alvin Cummins | May 17, 2013 at 6:13 PM |
    “Before I attempt to answer that question you will have to define exactly what you mean by “strategic asset”.”

    Dear Alvin,
    The term “strategic asset” is used in the same sense and context that you Alvin, yourself, employed in your own submission of [Alvin Cummins | May 16, 2013 at 2:46 PM] and repeated as follows for ease of reference:
    “However there are certain strategic assets that are held by government that require judicious decision making. And for your information I have applied “intellectual analysis” to other similar exercises when both DLP and BLP have been in office. I told you already I am not afraid of either party and if an issue requires ventilating and criticizing I will do so without fear or favour.”

    But before asking you to elucidate on your meaning of “judicious decision-making” here is what I think is a ‘reasonable’ definition of a ‘Strategic Asset’ in the context we speak.

    ‘A business entity- whether operating for commercial purposes or as a public good- that is owned and controlled primarily by the State (Government) or by private investors mainly citizens and is deemed politically to be significantly instrumental in achieving the country’s socio-economic developmental goals’.
    The asset can be in the area of international transport like air or sea ports, public health care, public utilities, or even in financial services like banking and insurance to provide financing and risk capital where private players appear to be too risk averse too back or support any new areas of economic development e.g. renewable energy or agribusiness.

    Now Alvin, please don’t try to look up my definition in any text book or by way of an Internet Googling serendipity excursion. As an author yourself you well know that mishmash creativity can be a wonderful exercise for the mind.
    Now let us hear you pontificate on these “strategic assets” that the BLP is accused of selling while Bushie conveniently avoids addressing the question posed in the first place.
    Tell us Alvin ,do you think your DLP administration is going to put on the auction block GAIA and the Seaport to satisfy its thirst for foreign exchange and to continue feed the cash addiction of the other politically abused statutory entities like the TB, NHC, BADMC, CBC, BIDC and Invest Barbados?

    Who or what is going to meet the unbudgeted expenditure needs of the St. John’s Polyclinic along with the other occupants of the soon-to–be-called “David J H Thompson Memorial Centre”?

    Sounds like déjà vu 1992 all over again but this time cement, flour and animal feed are not on the “For Sale” liquidation list.
    BNOC and its subsidiaries might just form the right attractive portfolio mix to the Simpson “Christian” Empire along with the TB.


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