BRIDGETOWN, Barbados – The Fair Trading Commission (FTC) has turned down an 11.9 per cent increase in electricity rates that had been sought by the Barbados Light and Power Company (BLPC) and will instead announce by Christmas what the new rates consumers here will have to pay.
Chairman of the FTC Rate Hearing, Dr Donley Carrington, told a news conference that the BLPC must first comply with the February 15, 2023 orders issued by the commission before a determination of the final rate base could be made.
In February, the electricity company was ordered to return to the drawing board to recalculate its rate data and resubmit its findings to the FTC. But the utility company filed a motion for the commission to review that decision and change its orders. The company had also sought and was given a stay of execution on those orders.
However, in handing down its ruling Carrington said the stay has now been lifted and the BLPC has to comply with those orders and respond accordingly.
“The BLPC’s request to have a notional financial capital structure of equity 65 per cent and debt 35 per cent in determining its rate of return is denied. The commission maintains the approved notional 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,” he told reporters.
“The BLPC’s request for a rate of return of 8.79 per cent on the rate base . . . is denied. The commission has maintained its decision in granting a rate of return of 7.47 per cent as previously stated in the February 15, 2023 decision.
“The BLPC’s motion for the review and variation of the commission’s decision dated February 15, 2023, is dismissed. The commission will now formally review the applicant’s compliance filing, require amendments as necessary and thereafter issue the final order outlining rates,” Carrington said.
He added that the interim rates, which became effective September 16 last yea, are to continue to be billed through to the date to be determined in the final order and that the issue of refunds, if any, will be addressed in the order.
Those interim rates have been capped at 50 per cent of the requested rates for all customers with the exception of rates to be charged to BLPC employees for whom 100 per cent of the rates requested is approved.
In a statement, BLPC said it was “deeply” concerned about the FTC’s decision and that it only became away of the FTC decision to issue its ruling on Monday through a notice posted on the commission’s social media platform.
“As at the time of the press conference, Light and Power had not been provided with a copy of the decision nor formal notice through appropriate channels of its delivery. Light and Power is deeply concerned by the FTC’s ruling, and will review the decision before providing further comment”.
Carrington also announced that BLPC’s application to recover the undepreciated portion of the five-megawatt energy storage device (ESD) and operating expense in the base rates is denied and will continue to be recovered through the fuel clause adjustment (FCA).
The commission also concluded that it did not act in excess or without jurisdiction by directing the power company to take certain decisions concerning the self-insurance fund (SIF).
“Pursuant to Regulation 8 of the Insurance (Barbados Light and Power Company Limited) (Self-Insurance Fund) Regulations 1996 as amended, it is unlawful to use money in the SIF to pay dividends to shareholders. It was impermissible for the applicant to use money collected in rates from customers for deferred tax liabilities to pay dividends to shareholders, Carrington said.
The FTC also dismissed the BLPC’s claims that the orders made by it amounted to retroactive rate-making or that they were exceptions to the rule against retroactive rate-making..
“The applicant’s claims for legitimate expectation and, or estoppel arising out of alleged representations made by the commission to the applicant concerning the SIF and the over-collection for deferred income tax liability, must be rejected.”
