The island’s sole electricity supplier told a rate hearing today that it proposes to cap the bills of 41 000 low-income consumers at $6 monthly provided they don’t go over 150 kilowatts per hour of usage.
This position was put to the Fair Trading Commission (FTC) panel in the speed adjustment hearing, by the lead attorney for the applicant, the Barbados Light & Power Company (BLPC).
In his opening presentation on Thursday, Ramon Alleyne, King’s Counsel (KC), said the variety of domestic customers who stand to profit from this cover has increased by near 10,000 for the reason that last rate hike in 2010.
“The shopper charge increase on lower usage blocks can be kept below full cost of service to cut back bill impacts on lower usage customers, a lot of whom could have low incomes; while the shopper charge on the upper usage blocks can be at the fee of service,” the senior attorney submitted.
He told the hearing, “Relative to the bottom energy charge, the inclining block rate structure and usage blocks can even be retained. The rise on the primary block can be limited to an extra two cents per kWh to minimize the impact on the low-usage customers. The energy charges at the upper usage bands will vary from an extra 4 cents per kWh for the second usage block to an extra six cents/kWh for the upper block.”
The attorney told the commission chaired by Dr Donley Carrington, that in the opposite customer classes, the inclining block structure has also been used and there have also been limits to the rise on either the shopper charge, base energy charge or each.
“The BLPC acknowledges, nonetheless, that rate design is an art and a science as various objectives, a few of that are competing, have to be balanced and tailored to the circumstances of the environment wherein the utility operates. The BLPC has undertaken this delicate balancing exercise in a fashion that’s fair, based on the speed design objectives and cognizant of the necessity for rate stability,” declared the ability company’s senior legal advisor.
Alleyne also announced that the corporate proposes to disaggregate the recovery of fuel costs from consumers in light of the transition to 100 per cent renewable energy by 2030 and the decline in using fossil fuels.
“The fossil fuel costs will proceed to be recovered via the Fuel Adjustment Clause which was previously approved by the commission,” counsel submitted. Nevertheless, he added, the non-fossil fuel costs that are presently recovered under the Fuel Clause Adjustment can be transferred to the Renewable Purchased Power Adjustment (RPPA).
“The RPPA is being proposed to get well the prices of energy purchased from renewable energy sources. The rationale for this disaggregation is to facilitate the higher tracking of the progress toward the transition to 100 per cent renewable energy,” Alleyne informed the hearing held on the Accra Beach Hotel.
“Further, there can be increased transparency as consumers can even have the opportunity to recognise the true cost of RE as in comparison with fossil fuels. There can be no increase in bills in consequence of the implementation of the RPPA,” the BLPC’s legal counsel assured the panel.
Putting the case for a lift to the corporate’s revenue requirement, Alleyne explained that the requirement is the whole amount which have to be billed and picked up in rates from utility customers for the BLPC to get well its costs and earn a good and reasonable return.
“The formula applied to find out the corporate’s revenue requirement is similar formula that was applied within the 2010
decision. Consistent with the last rate review, the corporate’s revenue requirement has been developed with the intent to offer a chance to get well its prudently-incurred costs for providing utility services and to earn an appropriate return on invested capital, including a good return on equity,” he argued. Alleyne underscored that if the corporate was not granted the rise, its viability can be in danger and it will not have the opportunity to satisfy its expenses involved in supplying a service that’s secure, adequate and reasonable. He also contended that the corporate wouldn’t have the opportunity to proceed to deliver a secure and reliable supply of electricity to all customers in an environment where the fee of inputs to the BLPC’s operations had risen substantially.
In consequence, Alleyne told the commission that while the test 12 months revenue requirement on existing rates is $393.7 million, based on a proposed base rate of $825.8 million, a revenue requirement of $440.2 million is vital.
“Due to this fact, the applicant’s revenue requirement has increased by $46,4 million,” he argued.
The BLPC is in search of increases starting from $2 to $6 more monthly for domestic customers and between $4 and $10 more for general service users.
The hearing continues tomorrow at 9 a.m on the Accra Beach Hotel and Spa.