Last month, we reported that BEL asked the PUC for an increase in the average price of electricity, from $0.40 cents per kilowatt hour to a minimum of $0.43 cents per kilowatt hour with effect from January 1, 2026, through to the remainder of the Full Tariff Period ending June 30, 2028. We also told you that the PUC denied the request. But that's not all.
BEL didn't just ask for an increase - rather, they gave the PUC two options. One was to raise the average price of electricity, the other was to start introducing "dynamic pricing." The chairman of the board explained more.
Andrew Marshalleck, Chairman, BEL Board of Directors
"The reason for the request is that the actual cost of electricity being supplied to consumers are and have been exceeding the price that we charge consumers for that electricity. The result is the sustained losses on the part of BEL. Immediately after Covid, we have taken the position that we can carry those losses for a time and allow consumers a time for recovery from the ill effects of Covid, and we have carried those costs for a time. But those costs cannot be carried indefinitely by the as you can expect, if you're incurring those types of losses consistently and over a sustained period, the burden becomes increasingly more and more heavy until it eventually becomes unbearable."
"Well, it's nearing that point. So it necessitated that we make a request for adjustment in rates to cover that shortfall."
"Notwithstanding of all the various projects which are all, still ongoing, and we still very much look forward to having them, but they haven't been realized. So the financial situation in the interim is such that there needs to be an adjustment to prices to take account of these sustained losses. And what we did was to calculate that what the new price would have to be to cover the losses within a reasonable period. And we said that the numbers were showing you it should go from $0.40 per kilowatt hour to an average of 45.3 cents or thereabouts, to recover the whole thing. But we didn't ask to recover the whole thing. We asked for an adjustment to $0.43 starting January next year. But we also gave an alternative proposal, which is that it's either that we get these increases starting in January next year, or we introduced a whole new way of billing customers that doesn't involve these rate reviews, this complex review process and the fixing of fixed rates for long periods of time. But we move to what's called dynamic pricing, which is the price to the consumer changes with the actual cost of power on an hour to hour basis through each day, in each month, in each year."
So what is dynamic pricing? It essentially means that your usage wouldn't be charged based on a fixed rate, but rather it will depend on when you use electricity. For example, if you decide to use your washing machine during peak hours, you may find that your bill is higher than if you were to use it at night. And with this dynamic pricing comes meters that you would use to gauge when those peak hours will be, so you can schedule when you use your appliances and electronics. Now, just at first blush, this seems intrinsically skewed against low income customers who have less flexibility to shift their usage patterns. But Marshalleck sees it as fair. Here's how he put it:
Andrew Marshalleck, Chairman, BEL Board of Directors
"There are different ways of doing it. And we offer that as an alternative to the PUC. And they said, well, let's get the details of that alternative. So we have been working on a model, because if you look at it internationally and it's used throughout America, and it's used in Europe. There are lots of models and they're highly scientific. And with these days with software and IT technology where it is, the pricing function can largely be automated with complex algorithms. That has worked very well for many parts of the world, different models have worked, you know, to varying degrees, but it has shown that it has quite peak demand by close to 20% when people start rationalizing just their use of power so you don't get everybody rushing at the same time of day to use power and driving prices sky high. There is a 20% gain to be had if everybody starts to be more conscious about when they use it and being aware that depending on when you choose to use electricity, it will affect your final bill. So you'll get smarter choices and a more efficient use of the same available resources. Which means if you look at it from a from an economic perspective and you recognize that price and they always teach you this, ration stays good proper price makes up a better rationalization of of how the available energy is to be shared among consumers. And that's the idea."
Courtney Menzies:
"And how well do you think this will go over for the consumers themselves? Yes, it puts the responsibility on them. But now, they have to think, okay, I can't wash in the morning when the sun is out because everybody is washing in the morning when the sun is out."
Andrew Marshalleck, Chairman, BEL Board of Directors
"Well, what it is, is you need an infrastructure that provides consumers with the information they need to make good decisions in a real time way. And what that infrastructure is, is what we call smart meters. And we're making an effort to introduce smart meters, these are meters with an internet connection that provide release to the customer under the company real time information and make certain tools available to consumers and suppliers for the better supply and use of available power."
