BEL Seeks to Double Maximum Monthly Cost of Power Adjustment

Belize Electricity Limited is seeking approval from the Public Utilities Commission to increase the maximum monthly Cost of Power Adjustment, or COPA, from five percent to ten percent. The request comes as BEL says it is carrying close to $30 million in additional electricity costs that have not been passed on to consumers. Executive Chairman Ambassador Lynn Young says the company has been absorbing those costs while working with the Government of Belize to avoid a larger immediate impact on electricity bills for households and businesses.

Lynn Young, Executive Chairman, BEL: “The numbers change. We owe them something around twenty million Belize dollars overdue. Currently, some of the overdue to CFE is because we can’t get U.S. dollars to pay them. So we have some Belize dollars. We have enough Belize dollars to meet the June and July bill. Those are still outstanding, and the August. But we do not—and the money we got it was some assistance from the government to pay those bills—but we haven’t been able to get U.S. dollars because I think, like I said, the cost of fuel is affecting everybody, and I think it’s putting a strain on U.S. dollar availability in the country. CFE has given us—they haven’t threatened to cut us out directly. Under the contract we have with them they can make a demand for payment for overdue payments and if we don’t meet the demand by a certain time then they have the right to discontinue service. I know the Prime Minister has been in touch with the President of Mexico and I think at the political level they’re looking at that. We have a meeting scheduled with CFE tomorrow to discuss some of these issues also but we’ve been meeting with them monthly and our ambassador in Mexico has also arranged for us to go to Mexico to meet with CFE to discuss again as we try to work our way through this.”

Under the current regulatory system, legitimate electricity purchasing costs can be recovered through customer rates, but those adjustments must first be reviewed and approved by the PUC. Young explained that the current COPA limit does not allow BEL to fully recover the higher costs it has been facing, which have been driven by factors including increased fuel prices, higher costs for imported electricity, reduced hydroelectric production and the use of more expensive local generation. He said the additional costs could eventually be carried forward for recovery through future electricity rates, but the company and government have been exploring other options to manage the financial impact. Government support has included loans and capital assistance to BEL, with discussions also taking place around a proposed $73 million investment through preference shares. Young said the exact treatment of those funds has not yet been finalised.

Lynn Young, Executive Chairman, BEL:  “The government has been supporting BEL with, in some instances, loans, and also with capital investment in the company. So, to put it in context, under the law, the cost of power is supposed to be a pass-through. So we make our best efforts to try to get the lowest cost we can get, bearing in mind of course, that we have to keep the lights on. And so, under the law whatever we pay for power once we submit it to the PUC and the PUC sees that, yes these are legitimate expenses that the company had to pay, then those should be passed through in the rates. If those amounts of extra cost that BEL incurred to this point that haven’t been passed through amount to almost one hundred and thirty million dollars. Now, under the law, BEL should be entitled to recover that in future years in the rates. The discussions we’ve had with the government—why the government is supporting it and doing the investment—is so that we don’t have to pass on that one hundred and thirty million dollars that, under the law BEL is owed. Ultimately, in the long run, we have to get the cost of power down to give some relief to consumers and that’s what we are really working hard at—trying to get the cost of power down in the short term, with these small solar projects.”

Young said that while a higher COPA ceiling would give BEL more flexibility, it would not cover the full amount of the company’s additional costs. He said BEL’s longer-term solution is to reduce electricity costs through investments in renewable energy, including solar generation and battery storage, rather than continuing to rely on financial assistance or higher electricity charges. The PUC will now review BEL’s application before deciding whether the COPA limit should be adjusted.

Lynn Young, Executive Chairman, BEL: “So that’s one of the reasons why we got—not because we expect CFE to not supply us but we got the emergency diesel generation in place to be able to have sufficient in-country capacity so that when we lose service from CFE, we can supply the whole country. So the bottom line is that if CFE were to, today tell us they can’t supply us we do have enough in-country generation now that we can supply it. It’s just that it’s so expensive, because then we’re talking running diesel engines 24/7.”