When you’re talking about the Public Utilities Commission, the most important thing to know is that there’s a new sheriff in town. We speak of Chairman John Avery, former Editor of the Guardian Newspaper who was known to use the pages of that paper to vent as an outspoken critic of the rate setting process between BEL and the PUC. Well now, he’s the man in charge of that process – and we can’t say if his often disapproving view of the rate setting mechanism is reflected in the initial decision on BEL’s request for an average 13% increase but we do know that the decision is a big “n-o.”
That was delivered on Friday evening at 5:00 and today, in a one hour session with the press, Avery explained that they looked at everything from BEL’s rate of return on investment to its operating expenditures. As regards the rate of return, BEL wants it between 10 and 15%, Avery told us the PUC is coming in lower than that.
John Avery, PUC Chairman
“What we determined as reasonable at this time may not correspond to what BEL believes is fair. What we allowed for in this initial decision was a 8 1/2 % return on the regulated asset value.
The biggest concern is that while everybody else has to be tightening their belts and suffering from the cost that we are all experiencing right now, the increases, BEL should at least forego a little of the huge profits they’ve been reporting. And when I say huge, that is the comments from the customers. I assume BEL would take a different stance on that. Under current projections, BEL will still or should realize revenues of well over $185 million. Of that about $129 we are allocating for power, for energy, which leaves well over $55 million for BEL to run its operations.
And so we felt that with over $55 million, BEL must be able to find a way to operate within that amount of money and still be financially viable. We believe that BEL can meet its expenses and should still end up with a surplus. It just might not be as big as they realized over the last few years.
BEL, there a concern about cash flow. Again, the PUC is of the opinion that BEL can better manage its cash flow. We understand they have a cash flow, they could have a cash flow problem. Again like I am saying there are certain obligations BEL made that as far as we are concerned has not had one impact on the delivery of their service and in fact has actually hurt BEL in terms of their financial obligations. We’re saying until you address those, then you really have no case to put before us.”
BEL today issued a release saying it will object to the initial decision. It has until May 12th to submit the objection. A release from BEL says that the decision, “will seriously undermine the company’s ability to deliver quality service.” The release adds that if the decision stands, it will, “put the company in an unsustainable position….and at a serious risk of defaulting on its financial obligations, some of which were guaranteed by the government of Belize.” Today Avery says he knows of no such government guaranteed obligations.
