O ME DAS O TE QUITO LA LUZ!

Belize Electricity Limited held its annual general meeting last night at the Biltmore where the company declared $29.9 million in profit for 2007 and a 10.3% rate of return on their investment. Sounds like good news but the AGM was far from a celebration for Fortis, BEL’s parent company. Fortis’ CEO and President Stanley Marshall says the company is in a cash flow crisis and unless government, through the Public Utilities Commission, authorizes a rate increase, rolling blackouts will be inevitable in a matter of weeks.
Stanley Marshall, Fortis’ CEO & President“We’re not estimating that by month’s end, the amount will be $33 million. This is the amount of money customers owe us for electricity they’ve already used and the cost of buying that power was not recovered in the rates. And I think Lyn will indicate a little later on, they are estimating in the month of May that BEL will pay more for the power it purchases than it recovers from its customers.
Let me tell you shareholders that we are now again at crisis levels and I say so much for the commitment to flow through the cost of power.
If BEL is to continue to meet its obligations to service customers, the Public Utilities Commission must flow through the full cost of power to our customers and enable BEL to earn a reasonable rate of return.
Fortis has delivered, as I say, on our commitment to the people of Belize. But on the corporate level, Belize has been the most frustrating jurisdiction I’ve ever experienced in my 30 years in the business. There has been repeated failure to deliver on what has been committed to the company a strategic investor in the country. I am saying to you tonight that regulatory issues must now be resolved and electricity prices must be increased to reflect the true cost of power before Fortis will make any additional investment in BEL. We will not do this time what we did back in 2006.
And I will also highlight for you the gravity of the situation, that if this is not done, BEL will not have the cash to purchase power from Mexico in the coming months. Without power from Mexico, BEL will be forced into rotating blackouts. Immediate action is required. I cannot understate the seriousness of this situation. If you look at the magnitude of the numbers involved, in my mind there is simply no alternative. The situation has been aggravated considerably by the refusal of the Public Utilities Board to recognize reality.
The cause of all this has been the price of oil of which none of us have any control but we cannot simply close our eyes to the situation and expect that service will carry on. And I say, that rotating blackouts are in essence inevitable. And we’re not talking about a long period of time, something has to be done within weeks.”
And Marshall says the rising price of crude oil is driving up their cost of producing and delivering power. He says that while the cost of hydropower from BECOL, another Fortis company, has been fairly stable – the same can’t be said for Mexico. And anyone that says different is, well here’s what he told shareholders.
Stanley Marshall,“The cost of power from Mexico was approximately 32.7 cents per kilowatt hour. So instead of the 21.1 cents you see there in 2007, Mexico power now costs us 32.7 cents. Just before I came over this evening, I picked up a copy of a paper and there is an article in it talking about our March rate application. Apparently somebody had made the argument that we should, instead of buying high costs power from our affiliate BECOL, we should have bought it from the low cost Mexican supply. I don’t what they’re smoking.”
The company’s request for a rate increase as part of the Annual Review Proceeding, or ARP for short, was denied by the PUC. BEL is appealing that decision. But even before there is a determination by an independent expert, the company today sent out a press release warning that with oil prices continuing to climb – instead of a 13.4% increase, they’ll need a 23% increase. BEL says that the present average energy cost of 32.9 cents per kilowatt hour is 14.6% higher than the what was requested in the ARP.
And what does the PUC have to say about all this? Well, when questioned today specifically about blackouts, PUC Chairman John Avery says that BEL is obligated to provide quality service but more concretely if there are outages, the company will lose out in sales – which will only make its situation worse. He added that, “BEL has certain issues it needs to resolve before it can come to us.”