Fair Trading Commission mired in the politics of the moment – waiting for electricity rate hike, waiting for relevant renewable policy, waiting

Minister of Energy and Business Development, Lisa Cummins

Barbadian will have to tarry a while longer for the decision from the Fair Trading Commission (FTC) on whether Barbados Light & Power (BL&P) request for a rate hike will be approved. Yesterday the FTC directed the BL&P to revise some assumptions downward used in calculations presented to support the rate hike application. Although it is premature for consumers to assume which way the win is blowing from the current stage of proceedings, it seems reasonable to assume the hike if approved will not be as significant as originally forecast.

The angst being generated at the prospect of a hike in electricity rates should move the government and Barbadians to appreciate the importance of implementing an effective national energy policy. After many years of talk by successive governments about transforming the Barbados space to one where renewable energy sources are prioritized, it seems we continue to labour to get over the hump in the quest for a relevant mix. It does not take a rocket scientist to anticipate the negative effect on inflation accepting that Barbados is a price taker. It seems the majority of Barbadians are oblivious to the fact a significant percent of what we consume is imported. We buy and sell and the rich merchants live fat off the profit margin.

See FTC decisionFTC Issues Decision & Order on BLPC’s rate review application

We continue to struggle with execution although this should come as no surprise if we consider how many less complicated projects are stuck or slowly moving through the pipeline. The Barbados ID project, modernization of the court system to relieve the case load, enacting transparency legislation, rationalization of state owned entities, addressing perennial concerns of the auditor general, recapitalizing the National Insurance Fund, reform of the education system targeting the 11+ exam, moving Barbados to a FAA Category 1 designation …

Back in the day the son of the late Professor Oliver Headley contributed to Barbados Underground and a comment he posted continues to resonate with the blogmaster. Take note his comment was posted in 2008 to the Barbados Solar Industry in flux blog.

Hi everyone. Keith Headley, son of Prof. Oliver Headley here. You know, if you have about 20,000 US you can convert your home to PV (Photovoltaics, electricity from the sun). Skystream, just today sent me an email – 12, 000 to 15,000 US for wind. There are some of us who have to use a lot of electricity. Run a workshop for example and you’ll know. Then there are the rest of us who have to make a choice. Barbados was and is perfect as a renewable energy Heaven. Sustainable anything, like tourism, is expensive. You have to make a decided investment in it, before you see any money.Yes money. PV today is almost as valuable as gold. Wind energy companies are setting record profits. We need to make up our minds what we want. If we do nothing that’s what we will get – nothing. I personally know over a hundred people who are seriously interested in renewable energy in Barbados. But are they as well organised as tourism? No. Are they as well funded? No.Barbados must choose. You do not have to lower your standard of living to live a sustainable life, but it does cost more money. The better your standard of living the more it costs to go green.How much are we willing to invest?

Keith Headley

We continue to do the same old things including waiting on a FTC that is hamstrung by politics to regulate a NOT fit for purpose energy sector. A decade from now we maybe having this same conversation. And we call ourselves an educated people.

9 thoughts on “Fair Trading Commission mired in the politics of the moment – waiting for electricity rate hike, waiting for relevant renewable policy, waiting

  1. Government needs to be bold and have ZERO duty/levies on all Solar & Alternative Energy products!!! Insist that BL&P absorb the energy created except for those with their own storage.

    In the long run, this will reduce our oil import bill and save house-owners lots of money. Too much red-tape currently exists and all we do is create committees, committees, committees.

    • @KS

      What does any terms and service agreement light and power has with Barbados that challenges your position?

    • Feed hike throws livestock sector into uncertainty
      By Colville Mounsey colvillemounsey@nationnews.com
      A cloud of uncertainty now hovers over the participation of some pork producers in the just extended Social Partners Food Prices Compact.
      This is as a result of the country’s lone feed manufacturer, Pinnacle Feeds Ltd, announcing that the price of feed will be increased by eight per cent come the middle of next month. This has forced the 200-member Barbados Pig Farmers Co-operative Society to revise its earlier calculations, upon which participation in the compact hinges.
      Chief executive officer of the Barbados Agricultural Society (BAS) James Paul said he is concerned the resulting price increase in local meat and poultry products could be used as an excuse to source cheaper items overseas.
      President of the co-op, Algernon Johnson, told the Weekend Nation his membership will be meeting next week to discuss the issue, as they would have signed on to the compact before this significant cost surge in their inputs.
      Under the new compact which was signed earlier this week by Government, the private sector and labour, pork producers agreed to a markup of ten per cent and sell at $7.25 per pound or $15.95 per kilogramme. Pork hocks, knuckles, pork mix stew, from the shoulder and legs at $7.75 or $17.05 per kg. These are the upper price limits which will be discounted in times of build-up.
      ‘Significant increase’
      “This is something that we have to look at very seriously. We have to look at it as an organisation to see how it is going to affect the industry because eight per cent is a significant increase. It comes at a time when we just agreed to take part in the compact because we are of the view that we need to give back something. However, this is something that has come and hit us a couple days after we signed the agreement,” Johnson said.
      The president made it clear that this was not a decision they would be rushing to because at the end of the day, they also needed to consider the best interest of customers.
      “Before we raise any type of alarm, our treasurer, who is an economist, is going to crunch the numbers for us so that we can present to our members and make a determination. After the meeting we would be hoping to go to Government with a proposal on the way forward,” he added.
      When contacted, Paul said it was difficult to determine by how much poultry and meat prices would increase or the type of lag time before they are felt by consumers.
      The increase will impact feed prices differently in various livestock sectors. At eight per cent, the cost of chicken feed will go up by about $5 per bag while that for dairy cows will rise by $3.
      “If the price of feed goes up, then of course we must adjust the price in the market; there isn’t anything much that you can do. If there are some persons who believe they can hold prices, then its up to them, but you cannot realistically expect livestock operations to operate below the cost of production . . . . We are in a place where we are being impacted by what is going on in the rest of the world and it is not unusual for prices to go up, but I believe farmers will act responsibly and would only increase prices as is necessary,” the BAS chief said.
      He said the move did not come as a surprise to the livestock farmers, as the global shocks have been contemplated for some time.
      “This is a prolonged period of managing these high prices. However, I hope that we do not have a situation where some individuals use this as a reason to justify any increased importation of poultry or pork products into this country. Farmers overseas have a greater advantage as they have economies of scale,” he added.
      President of the Barbados Egg and Poultry Producers’ Association Stephen Layne, and president of the Barbados Dairy and Beef Producers Association Annette Beckett, also weighed in on the issue.
      Layne concurred with Paul that poultry producers have no choice but to reflect expenditure in their selling price. Beckett, on the other hand, pointed out that with dairy prices set by Pine Hill Dairy, farmers have no means of recouping this added cost from the customer.
      In a press release late Wednesday, Pinnacle Feeds Ltd said the new prices will take effect from March 15, as it was no longer able to absorb the raw material price increases and must adjust its prices “if the company is to remain viable and continue to support” the local community.
      The company explained that with the ongoing war between Russia and the Ukraine, coupled with strong demand from China and uncertainty over the supply from South America due to adverse weather conditions, “Pinnacle Feeds Ltd continues to be adversely impacted with respect to the price of the primary inputs to our plant, namely corn and soya beans”.
      It added: “With the price support from the Government having ended February 2023, we are no longer able to absorb the raw material price increases and must adjust our prices.”

      Source: Nation

  2. How hard can it be to produce feed for livestock using something other than corn?

    We heard of cassava. We heard of seaweed, We are now hearing about insects.

    But all that happens is that we sit around and wait for the price of corn to rise.

    How hard can it be to produce feed for livestock using something other than corn??????

  3. ” One of the most vocal intervenors in the last electricity rate hearing is suggesting that the Barbados Light and Power Company’s (BLPC) controversial removal of the nearly $100 million from its Self-Insurance Fund should be referred to the Director of Public Prosecutions (DPP) for action.”

  4. Mole Hill mountains, simple issues cannot be solved by SIMPILIST POLTICAL APPOINTED MINDS, TURD WORLD OPERATIONS FRONT AND CENTER. Barbados is the laughing stock of the Caribbean if not the world, a small country of some 300,000 cannot remotely operate on a level of most moderately sized North American or European “CITIES”. Prime example of how socialism and free education in a a society can run amuck, not even necessary to play any race cards for justifications, although the SLAVERY respondents will be in prime form.


      FTC ruling ‘may impact’ utility company’s upgrade plans
      By Colville Mounsey colvillemounsey@nationnews.com
      The Barbados Light & Power (BL& P) Company says the recent ruling by the Fair Trading Commission (FTC) could impact plans to modernise this country’s electrical grid.
      This is because the reduction in the rate of return, combined with the other related decisions issued by the FTC, would substantially reduce the rate adjustment request, the BL& P’s manager of regulatory affairs, Adrian Carter, has told the Sunday Sun.
      This is the first time the utility company has commented on the FTC’s verdict which was
      rendered last month.
      Carter said the rate the BL& P had originally requested was “considered appropriate to maintain the reliability and stability of the electricity grid”.
      He further cautioned that Government’s push to 100 per cent renewable energy could be under threat as a result.
      “The stability of the electricity grid continues to be impacted by the current high level of renewable energy penetration, while Government’s policy targets of 100 per cent renewable energy (RE) generation by 2030 will add even higher penetrations. The grid will not be able to support these high levels of renewable generation unless the utility is allowed to obtain the financial resources to invest in the critical infrastructure to support a reliable grid,” Carter explained.
      “We note with interest the recent comments by the FTC’s chief executive officer Dr Atherley-Ikechi during the 2023/2024 Estimates and Revenues, where she stated that the introduction of renewables will require the modernisation of the grid in order to maintain the level of service. However, the FTC, in its decision, has limited the BL& P’s ability to source the revenues necessary to modernise the grid in support of this renewable energy transition,” he added.
      In its ruling on February 15, the FTC demanded that the utility company adjust a significant number of their assumptions, including a downward revision in the rate of return, on which the 11.9 per cent increase requested in the company’s 2021 application is calculated. The rate of return on the rate base of 8.79 per cent was denied.
      The commission instead approved a rate of return of 7.47 per cent to be used in the computation of the revenue requirement. It was further ordered that the amount of working capital to be included in the revenue requirement shall be recalculated to account for the FTC’s adjustments in the operation and management expenses determined in the decision.
      It was also determined that the financial capital
      structure of equity, 65 per cent, and debt, 35 per cent, used by BL& P in the determination of its rate of return was denied. Instead, the BL& P was granted a financial capital structure of equity, 55 per cent, and debt, 45 per cent, for rate-making purposes in the determination of the rate of return.
      The BL& P spokesman said the decision had further implications for the company’s ability to attract much-needed investment. Carter put the country on notice that while the BL& P was committed to the renewable energy push, the decision now limits their level of investment in this initiative.
      “Further, what is also deeply troubling for us is the negative message this decision sends to investors, particularly the retroactive nature of the decisions taken by the FTC. The FTC, in
      this decision, appears to have changed decisions it made several years in the past. It is understandable that changing the rules years after decisions were made will make investors nervous about investing regardless of who the investor is, be it bank, credit union or pension fund, etc.
      “We see this as a potentially significant threat to the transition to renewable energy. BL& P will continue to do what is necessary to support the development of our country and the renewable energy transition. However, the FTC’s recent decisions, unfortunately, will have an impact on the level of investment the BL& P is able to undertake,” he said.

      Source: Nation

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