Last week on Uncut the Chairman of BEL Andrew Marshalleck didn't have much favorable to say about the Public Utilities Commissions.
He said that basically - they were a hold back - in the consummation of commercial arrangements between BEL as a power purchaser and power suppliers who want to sell energy to the company.
Well, the PUC says that's not right at all. They say they have a proven track record of approving power purchase agreements that work for the utility and are beneficial to consumers.
We spoke to Ernesto Gomez, the Director of Tariffs, Standards & Compliance about it today at the PUC office:
Jules Vasquez
"He's arguing that the PUC acting as the intermediary, as the fixer between these two parties it slows the progress and in fact he says, it has accounted for unacceptable delays that you all delayed the consummation of the commercial relationship for so many years for a fractional savings. How would you respond to that?"
Ernesto Gomez, Director, Tariffs, Standards and Compliance
"You find out that the 30 megawatts of solar from BECOL was presented to this commission when they took office. This commission look at it, realize that it was not part of any process and say here what, it's good that you all want to do generation in Belize, but you already have 15 megawatts of solar that was approved in 2013 and yet there has not been presented to the PUC any power purchase agreement for approval. So rather than looking for more, lets conclude what's already on the table. So we ask BEL to carry out a lease cost expansion plan that would determine the entire of the country so we can put out a request for proposals to satisfy that need. The lease cost expansion plan that submitted to PUC would be analyse, put to the public consultation, check with other stakeholders like the ministry, the government for policy compliance and then put out to the world for competition and in which the BECOL solar can participate, we would like them to participate."
"In the other hand after we presented that to BEL BEL on the 22nd January 2022 submitted its first draft for a power purchase agreement with BAPCOL 15 megawatts of solar."
"So from 2013 to 2022 is the first time we are seeing it. We looked at it, we realize that you know its a good start. There are several little things that need to be complemented."
Jules Vasquez
"So why was it delayed 9 years?"
Ernesto Gomez
"We don't know. We are not the negotiating team. They negotiate with 2 licensees; the one that will purchase and the one that will sell. When their negotiation finishes then they present to us for approval to see if we are willing to pass that to the consumer."
Jules Vasquez
"But was there in your opinion an unacceptable delay on the part of the purchaser, on the part of BEL?"
Ernesto Gomez
"I would not be able to say that. I would not be able to comment on that. I believed that it would have been done faster."
The BEL Chairman also criticized the PUC for delivering only a marginal reduction in the agreed tariff with BAPCOL. But today the PUC Rep said those small numbers add up to a lot over the life of the contract:
Ernesto Gomez, Director, Tariffs, Standards and Compliance
"The price was set at 8.5 cents US per kilowatt hour and the power purchase agreement was for 15 years with an extension of 5 years and an additional 5 years, which makes it 25 years. The extension was of the contract as is, which means that the price would stay at 8.5 cents throughout the 25 years of contract."
"We look at it, they also supplied a financial model. We looked at the financial model, put into our regulatory model and applied benchmarking of similar size plants of the region and we came up with a levelized price of 25 years of 5.83 cents US per kilowatt hour."
"So the PUC wrote both companies and tell them hear what, this is our price. BAPCOL replied saying we agree on the levelized price of 5.83 cents, but he says we would like a step pricing, so that for the loan of 15 years. Say they had a 14 years loan with a grace period, they want to be able to cover their operation expense, their financing and a little bit for their shareholders. So they made their own calculation and they proposed that what is for the first 15 years, the rate would be 8.38 cents and for the rest from year 16 to year 25 at 2.02 cents US for per kilowatt hour, which when you levelized it, it turns out to be 5.93 cents which is just about our levelized cost which is world benchmark and everything."
"We put it back to the commission, commission agreed and that's how it stays."
Jules Vasquez
"Explain to me over the 25-year life of the contract, what in real terms in the most real terms you can explain what are the savings that the PUC's intervention created over the life of the 25-year contract?"
Ernesto Gomez
"Jules, I like my Excel sheets - my calculations. I won't be able to give you a number on the top of my head, but the savings is somewhere between half a million to a million dollars on the movement of price."
We'll have more from this interview tomorrow.
