Chairman of CoopEnergy Trevor Browne issued the following clarification statement in reply to the following comment made by Dr. Roland Clarke – Blogmaster
This issue is perhaps at the very heart of the current impasse in the ongoing Rate Hearing, and even more fundamentally in the dismal lack of progress of the proposed energy transformation for Barbados.
It is quite clear that EMERA thinks that BLPC belongs to them, and that they therefore have the option to do as they please in exercising that ‘ownership right’. We are also aware that Dr Clarke has been a paid consultant to the Government of Barbados and perhaps has been able to convince local officials that this is the case.
As a direct result of this thinking, the Ministry of Energy has been pursuing a policy of promoting competition in the energy market in an effort to ensure that BLPC / EMERA are not allowed to dominate and exploit customers using this monopolistic advantage.
Unfortunately, Barbados is much too small for such competitive – styled development in such a critical utility. Due to better economies of scale, centralised administration, responsibility for performance, and better compatibility of equipment and maintenance systems, it is significantly more efficient to have a unified, collaborative approach to such national development.
WHO OWNS BL&P?
The Barbados electric utility is well over 100 years old. It is established by the Laws of Barbados as an entity created for the public good. BLPC is regulated by the Fair Trading Commission (FTC) and its day-to-day administration is leased – via a long term franchise, through a license issued by the Minister of Energy. The current lease expires in 2028, having been issued in 1986 for a period of 42 years.
Under the license, the Franchise Holder is required to upkeep the infrastructure in tip top shape and to plan and prepare for new innovations and improvements. No major changes can be implemented without the written approval of the FTC. The Franchise holder is unable to sell anything, buy anything, retire anything or give away anything without such prior written FTC approval. They must also maintain a FTC approved minimum standard of service during the franchise period.
The Franchise holder is unable to raise rates or to offer discretionary rates (even to employees) without specific FTC approval.
Come 2028, unless the Minister of Energy is somehow disposed to continuing the current quagmire by extending the present arrangement, the BLPC / EMERA franchise ends, and a new Franchise Holder may well be appointed to take over what is left at the end of the BLPC/EMERA term.
Obviously then, the Barbados Electric Utility is owned by the people of Barbados, is regulated by the FTC, and its day-to-day operations are leased, by the Ministry of Energy, to the most appropriate bidder at renewal time.
Electric Utilities require high levels of capital investment. The Laws of Barbados provided for the capitalization of BLPC by way of raising share capital, and also by various investment instruments which could be issued by the franchise holder. For over 100 years, BLPC shares were held by a range of electricity stakeholders ranging from foreign speculators, Government, the NIS, BLPC employees, the general public and other businesses. The Board of Directors also reflected the broad range of stakeholders until 2013.
In 2013, for some reason yet to be explained, The FTC permitted EMERA to acquire 100% of the share capital by forcibly displacing all other stakeholders from the equity holdings, and subsequently as well, from the Boardroom. It is to be noted that the very same FTC refused a request from SOL to purchase BNTCL on the grounds that this would be anticompetitive for the oil market.
The FTC more recently refused the sale of BICO on similar anticompetitive grounds. Not all Barbadians buy ice-cream, nor does all Barbadians buy oil directly, however every single resident of Barbados is directly impacted by the cost of electricity. As intervenors, we await FTC’s explanation for this critical variation in policy.
This situation maybe confusing to those who think that BLPC is a regular company that was created by its shareholders to achieve their own specific objectives. However it simply means that EMERA owns 100% of the allocated share capital of BLPC, which continues to be fully subject to the Laws of Barbados, to the regulation of the FTC, and most critically, to the decision of the Minister of Energy come 2028.
Meanwhile, the BLPC records clearly show that exactly 100% of all costs associated with BLPC operations have been borne by its customers – the residents of Barbados. Total investments by all others so far, has been zero dollars.
Perhaps it is becoming clearer to Dr Clarke why we may not have sought his advice for CoopEnergy to date, as we have a completely different view of the status quo than the one that he has accepted.
We can also say, for the record, that CoopEnergy has already submitted our formal application for consideration by the Minister of Energy in the allocation of the new Franchise – which is imminent.
We have also already made contact with our Co-operative partners at the International Cooperative Alliance (ICA) in order to access all of the needed technical, financial and regulatory support that will be required to remake Barbados into a model of Co-operative Ownership in the energy sphere.