Higher light bills

. . . but FTC says it will be modest increase for customers

Barbadians are about to face higher electricity bills as the Barbados Light & Power Co. Ltd (BL& P) recovers the cost of fuel needed to operate temporary generator units.

In an October 29 decision, the Fair Trading Commission (FTC) approved BL& P’s application to use the Fuel Clause Adjustment (FCA) to recover the rental and operating costs of 11 megawatts (MW) of Temporary Aggreko generator units.

However, in issuing its ruling, the FTC said it would “immediately” be conducting an investigation into why the electricity company’s gas turbine unit 4 (GT04) was “unexpectedly” out of commission.

The regulator said this reinforced its view that BL& P’s maintenance of its generation resources “is questionable”.

Modest increase

In terms of by how much electricity bills will increase as a result of its decision last week, the FTC said the impact on customers “is a critical consideration [and] the proposed rate adjustment will result in a modest increase in monthly bills as the estimated $856 046 is passed on to customers”.

BL& P was contacted for a response to the FTC’s decision. In a January 29, 2024 affidavit accompanying the company’s application, BL& P manager, regulatory affairs, Adrian Carter, had said that “given a scenario where the rental cost of the Aggreko units was approved for recovery through the FCA, the FCA for the month of January 2024 would have been three per cent higher and the impact to the average domestic service (residential) customer consuming 255 kilowatt hours (kWh) would have been a two per cent ($3.17) increase in the electricity bill”.

Barbados Consumer Empowerment Network (BCEN), an intervenor to the application, said via its executive director Maureen Holder yesterday that it disagrees with the overall position that consumers should bear the costs for the temporary rentals of diesel generators through the FCA.

“This approach unfairly shifts the financial burden to consumers instead of holding BL& P accountable for its short-term infrastructure needs. Even if one argues that the cost increase is minimal – about three per cent, translating to approximately $3.17 on an average household bill for 255 kWh – this increase will affect households already facing financial strain,” BCEN argued.

“We are already faced with a situation in Barbados with stagnant wages and rising costs of living in essential areas like food, transportation and housing, therefore what would be considered ‘a small increase’ can destabilise consumers’ budgets.”

The consumer group added: “For those living pay cheque to pay cheque, an additional monthly charge might force difficult trade-offs, such as cutting back on other necessities. Therefore, although the two to three per cent increase may appear negligible, it constitutes a wider challenge, that is, the need for fair, consumer-centred utility management that considers the broader economic constraints faced by the public.”

The FTC said in its written decision that the rental of the 11 MW Aggreko units “is approved for a period of at least 12 consecutive months from the actual commercial operation date of the units.

“The possibility of approval for a further 12 months may be granted where the Commission is satisfied that market conditions sufficiently warrant the need for the additional capacity at that time,” the regulator stated.

The FTC said that in such circumstances, BL& P “will be required to formally inform the Commission of the need for the extension of approval, and any revised contractual details no later than four months prior to the expiration of the approved twelve months”.

Approved for recovery

It added: “Costs associated with the rental of the 11 MW capacity is approved for recovery via the FCA and shall commence one month from the date of this decision for the approved period.

“Costs to be recovered shall be contingent on the BL& P’s ability to demonstrate that the 11 MW Aggreko units are utilised and dispatched according to demand, taking into account the impact of fuel prices and fuel efficiency of all plant, thereby providing service to customers in the most cost effective manner.”

The FTC also decided that “where the utilisation of the 11 MW of capacity is found to be imprudent, that is, not being used and useful during the period of its operation, the quantum of costs recovered shall be reconciled and returned to customers”.

The decision also stated that BL& P “is not allowed to recover the nonrecurring costs past 12 months, if the asset is kept past that duration. If the asset is kept for a period shorter than the 12 months, the outstanding balance of the non-recurring cost will be spread over the remaining balance of the 12 months so that the impact on the consumer is mitigated”. (SC)

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