While the Public Utilities Commission rejected BEL's request to independently implement the adjustment, the company says it supports the regulator's decision to first test the mechanism through a regulatory sandbox:
Lynn Young, Executive Chairman - BEL
"To be honest, we respect the PUC's approach and decision. You know, all of us have a role and I understand what they're saying. You know, it's a way to monitor this thing and to try to because under the law, if they pass the law, it would be rigid. In the sandbox environment, they can make changes as they go along. So if they find that what we've put in place can be tweaked, then they can tweak it. So from that point of view, we welcome it. I'll say again, maybe a little too frank, but for a utility, you know, to get financing, to get loads, etc., you have to have a certain amount of regulatory certainty to show the banks and the lenders and the shareholders that, listen, the company is going to be able to service its debt obligations, right? And the PUC is aware of that, so I think going forward we'll be in a good position."
Reporter-
"So does this new mechanism increase BEL's profitability?"
Lynn Young
"No, because BEL is not allowed to make profit on the cost of power. So, again, the way it is structured, the value added of delivery, that 14 cents is where BEL makes its profit. If BEL wants to make profit, it has to manage its cost. We have to reduce our cost in terms of delivering the power to customers, but accounting-wise, we account for it and it shows as a loss on our financials. But strictly speaking, like I said, the 60 million in excess cost of power that the company paid last year, they didn't recover. The PUC in its decision has shown that there's like about 75 million that's owed to the company that over the future as cost of power goes down, hopefully the company will see that return to it."
