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by Adele Ramos-Daly
BELIZE CITY, Thu, Jan. 05, 2006
Electricity consumers were hit with another rate hike on New Year’s Day,
January 1, 2006, when the Belize Electricity Limited (BEL) increased
rates from an average of 39 cents per kilowatt hour to 44.1 cents per
kilowatt hour (kwh).
A residential consumer who uses 136 kwh has seen her bill increase $17
in six months.. Her bill increased by $7.80, from $42.38 cents to $50.18
in July, 2005, and by another $9.58, to $59.76 this month.
Meanwhile, a commercial customer who uses 10,000 kwh will see a hike of
$1,085 as of January 1.
The Belize Water Services (BWS) will pay 32% (or $150,000) more for
electricity, while the Government of Belize will have to find an
additional $1.5 million to keep the streets lit at night.
The New Year’s Day rate hike was the second rate increase for
electricity consumers in six months, the last one having been
implemented in July, 2005, when the Public Utilities Commission (PUC)
approved an increase of 12%, from 34.9 cents per kilowatt hour to 39
cents.
BEL can go back to the PUC for another rate increase if the forecasted
cost of power is at least $3 million more than current projections.
Additionally, BEL is scheduled for another annual rate review shortly
and prices may shoot up yet again by July.
Consumers who use more than 150 kilowatt hours of electricity a month
will be especially hard-hit, since the Government intends to impose a
10% General Sales Tax (GST) on their light bills as of July 1.
Currently, no one pays tax on light or water, only on telephone.
Previously, we had been told that with the construction of the Chalillo
hydro, electricity rates would be buffered, since the price of hydro
would be cheaper than any other source. Well, for now, prices remain
high at 21 cents per kilowatt-hour, more expensive that the average cost
of Mexican power that BEL buys from CFE – Comision Federal de
Electricidad.
Official estimates show that diesel generation by BEL, which accounts
for about 10% of power, is the most expensive at almost 90 cents per
kilowatt-hour in some instances. Projections for the price of diesel
generation place it at a high $1.08 per kilowatt-hour in late 2006.
The cost of power that BEL buys or generates is passed directly on to
consumers. Since 1999, BEL has operated what is dubbed the “rate
stabilization account.” This is an account into which increases in cost
of power are deferred, rather than being charged to consumers right
away.
The PUC says that with the latest rate increases, the current amount in
the RSA, which is roughly $27 million, should be paid back to BEL by
2009.
If the cost of power declines between now and then, customers won’t see
a simultaneous drop in rates, but instead BEL will be allowed to recover
what’s in the RSA earlier, says PUC chairman, Dr. Gilbert Canton. On the
other hand, if cost of power continues to climb, electricity rates will
climb also.
When we asked what level of profits is factored into current electricity
rates, Canton told us that it is in the region of 12%.
When Chalillo was commissioned in November 2005, BEL immediately
announced that it would seek a rate increase of 10%. When it made its
filing with the PUC on December 20, 2005, BEL requested a 14% hike.
BEL argued that the PUC had already established a mechanism whereby, if
the cost of power turns out to be more than $6 million above their
estimates (the threshold event), there would an almost automatic rate
increase to recover the excess cost.
The PUC legalized this new rate setting scheme on December 20, 2005,
when chairman Canton and Minister of Public Utilities, Hon. Ralph
Fonseca, passed a new Statutory Instrument (#145 of 2005). It
furthermore reduced the threshold figure to $3 million.
With this latest increase, electricity consumers are seeing a total
increase of 26% in the average electricity rate since July 2005.
Residential customers are seeing an increase of 25% on average while
commercial customers are seeing an increase of 12%. Industrial 2
Customers, Citrus Company of Belize and Spanish Lookout see an increase
of 48% on average.
Together, the two rate hikes give BEL an additional $34 million for
2006—9.2 cents more per kilowatt hour at a projected usage of 374
million kwh.
PUC says that most of the increase is attributed to cost of power, with
a small amount going to reduce the rate stabilization account and the
bulk to pay for expensive power.
Current estimates indicate that the second most expensive power is
coming from hydro, generated by BEL’s sister company, the Belize
Electric Company Limited (BECOL). Canton says that the reason for the
high price is that the reservoir for the hydro is low and so Chalillo is
not generating as much as was anticipated.
The price of hydropower from BECOL is, incidentally, projected to fall
by eight cents per kwh between September and October 2006, while the
price of Mexican power is projected to increase by 8 cents per kwh as
between July and August.
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