You'd probably need two hands to count the number lawsuits that are before the courts between BEL and the PUC; there are judgments, appeals, injunctions…all that.
But the biggest case is BEL's final appeal of the June 2008 Final Decision of the PUC in its Annual Review Proceedings. That's when the PUC set electricity rates that BEL thought were just plain wrong.
There were 13 grounds of appeal, highly technical arguments with the central sticking point being whether the PUC had engaged in what's called "retro-active ratemaking." As we said, highly technical, but in an 81 page judgment issued today Justice Minette Hafiz cut through it all - and in 17 summary points, denied BEL all its grounds of appeal.
It is a significant defeat for the utility company, but the PUC's Chairman John Avery was not triumphalist when he came out of court; he said even under the disputed rates, BEL continues to have some of its best years ever.
John Avery, Chairman - PUC
"In this case BEL didn't think we were fair with them and they came to court basically asking the judge to tell us that we need to increase rates. History has shown that the last two and a half years that the rates we did set at that time was more than enough for BEL and in fact BEL's financial position over the last two years has been better than any other time in its history."
Andrew Marshalleck, Attorney - PUC
"BEL challenged the lawfulness of the decision of the Public Utilities rate settings for the year 2008-2009 on a host of bases and none of them succeeded, so in short, the decision setting the rates for those years, for that year, stands and the challenges fall away. We of course expect a further appeal."
In a terse statement today, BEL said it is reviewing the decision. Since that disputed 2008 review, in 2009 the PUC also ordered the introduction of lower rates - but BEL also fought that - getting implementation put off with an injunction.
Since then, the PUC argues, BEL has been stock-piling money that should be for rate-payers.
Now that the case is out of the way and the injunctions will likely be lifted, we asked will rate payers be refunded?:
Jules Vasquez
"I remember at one time you had told me that BEL had accrued debts to the consumer, owed the consumer over 50 million dollars."
John Avery, Chairman - PUC
"Approximately 50 million dollars by now, however those are based on those rates. The rates that we changed in 2009 and any rate that we deal with going forward most likely will reduce that amount. When we net off all of it, it won't be 50 million dollars but BEL will still have collected more than would have been fair to consumers over the last two and a half years."
Jules Vasquez
"And how would you settle that in the consumers' favor? Or to be equitable at least."
John Avery, Chairman - PUC
"It will have to be settled in the next rate review. Whenever we do another rate review and we determine that BEL deserves so much money, well we will deduct what they have already collected from consumers."
Just a hunch… but we suspect that rate review will be another fight in the courts. But, speaking of fights, BEL might also end up finding itself on the other side of a law suit as Avery says because of this judgment, shareholders in the company - which includes the Social Security Board - may be able to take the utility company to court for back payment of dividends. That's because Justice Hafiz agreed with the PUC that The Mollejon Transmission Line which BEL put on its books in 2008 as a 36 million dollar investment had already been paid for by rate-payers between 2001 and 2005. That addition to the books caused BEL to report a loss, meaning no dividend for shareholders. But now those shareholders have the authority of a Supreme Court judgment to say that it should not have been booked.
Avery discussed that determination and the implications:
Jules Vasquez
"The judge in her judgment if I heard it right - upheld the PUC's determination, which was?"
John Avery, Chairman - PUC
"That that line was contributed capital and they shouldn't have paid BECOL to basically re-purchase that line they already owned. BEL owns this asset, BEL signed an agreement with BECOL to basically re-purchase this asset. That 43 million that BEL paid for that line in our opinion was basically a giveaway. So as far as we were concerned that isn't fair to consumers. Consumers cannot be burdened with that. However like you mentioned - this is a matter for shareholders, based on the judge's judgment and our opinion, BEL paid 43 million dollars to BECOL for no good purpose and that is money that really should have accrued to BEL to be re-invested in BEL, or should be shared amongst the shareholders."
Jules Vasquez
"Which includes Social Security."
John Avery, Chairman - PUC
"In Social Security or any other person who owned shares in BEL."
Avery says it is not a matter for the PUC because it is a accounting issue - and when the PUC made its assessment, it never factored in the 36 million dollars.
