On June 26th the Public Utilities Commission will issue its final decision on Belize Electricity Limited’s request for a 13.4% rate increase. Government has maintained that BEL doesn’t need an increase and now government says they’ve found a way for BEL to save $7.5 million annually in the cost of power from Mexico. The Prime Minister’s Senior Financial Advisor Manuel Esquivel visited Mexico City along with consultant John Mencias earlier this month where they met with officials of the Commission Federal de Electricidad of Mexico, CFE for short.
CFE refused to reduce the cost per kilowatt hour of energy sold to Belize but they did agree to some concessions. They will reduce the monthly firm capacity charge, reduce the firm capacity lock in period from 30 to 20 days, and an increase in number of hours of purchase excess firm capacity without penalty after “economic energy.” It sounds very complicated but Esquivel and Mencias says the bottom line is that BEL will be paying less and so should consumers.
John Mencias, Consultant
“We are estimating 0.0175 dollars per kilowatt hours which is 1.75 cents per kilowatt hour as estimated as a result of these concessions that we were able to get from CFE. These conditions affect the cost of power and the cost of power is a pass through so any way you take it, either through the RSA account or directly, customers will benefit directly. This will not go to BEL.”
Angel Novelo, Reporter Newspaper
“So it is a win-win situation for BEL?”
John Mencias,
“It is a win situation for the customers for sure.”
Manuel Esquivel, Senior Advisor
“What the consumers get is a smaller light bill. Whatever the savings are to BEL as a consequence of these agreements will have to pass directly on to the consumer. If the PUC decided there is no rate increase we would still be willing to get CFE to grant these concessions to BEL on the condition that the rate would go down by the same amount. If the PUC decides that there is going to be some increase to the consumer, then the effect is we would say if you want these further concessions, regardless of what the PUC has agreed, the rate that you will charge must come down by these amounts.”
Alfonso Noble, Guardian Newspaper
“Will these be in effect come August?”
Manuel Esquivel,
“No, no. They are in effect if BEL passes the savings on to the consumers. The Mexicans had no reason to make these concessions, as far as they are concerned, if it would not benefit the people.”
BEL is currently negotiating a new contract with CFE. The new contract comes into effect on august 1st and these changes will be included in the contract if BEL agrees to pass on the savings directly to consumers. A fourth and consequential concession that hasn’t been finalized is a change in the billing periods for purchases from CFE from every 30 days to every 90 days. A change that would be key in reducing BEL’s cash crunch. These concessions were worked out between government and the company.
So is BEL satisfied? Well a spokesperson says that the negotiations between government and VFE have yielded better results than they’ve been able to get in their own negotiations. A company representative says the savings will help but increasing oil prices could eventually wipe out those savings. The company however still maintains it needs the 13.4% increase in rates.
Prime Minister Dean Barrow will visit Mexico later this month and this is expected to be one of the issues on the table for discussion with the Mexican President.
