The linked image cannot be displayed. The file may have been moved, renamed, or deleted. Verify that the link points to the correct file and location. PUBLIC UTILITIES COMMISSION FINAL DECISION THRESHOLD EVENT REVIEW PROCEEDINGS for Belize Electricity Limited 31 December 2005
Legal Framework The Public Utilities Commission (PUC) is authorized under the Public Utilities Commission Act (No. 39 of 1999) to serve as the economic regulator for the electricity, water and telecommunications sectors in Belize. The primary duty of the PUC is to ensure that the services rendered by public utility providers in all three sectors are satisfactory and that the charges imposed in respect of those services are fair and reasonable. The PUC has the power to oversee the rates that may be charged in respect of utility services and the standards that must be maintained in relation to such services. In addition, the PUC is responsible for the award of licenses and for monitoring and enforcing compliance with license conditions. Sector specific legislation provides the legal framework for the PUC to carry out its duties and functions in a particular utility sector, as obtains in the regulation of the electricity sector, the Electricity Act (No. 13 of 1992) as amended by Act No. 40 of 1999 (the Act ) and the Electricity (Tariffs, Charges and Quality of Service Standards) Byelaws, 2005 (the Byelaws ). The Byelaws govern the procedures for Review Proceedings. Threshold Event Review Proceedings (TERP) On December 20, 2005 Belize Electricity Limited (BEL) filed an application to the PUC for a Threshold Event Review Proceeding (TERP) as provided for in byelaw 35(1) of the Byelaws. The TERP is a review mechanism established to provide for (1) the recovery, outside of an Annual Review Proceeding (ARP) or a Full Tariff Review Proceeding (FTRP), amounts of $3,000,000 or more accrued to the Cost of Power Rate Stabilisation Account (CPRSA) since the last review proceeding and, (2) the revision of the reference cost of power to reflect updated forecasts. In filing the application with the PUC pursuant to the Byelaws, BEL provided relevant supporting data. Pursuant to byelaw 37(1) of the Byelaws, on the same day that BEL filed its application, public notice was given that BEL had entered into a TERP in which they were requesting approval for an increase in electricity tariffs to (1) recover the amount of $6,175,083, being the cumulative amount deferred to the CPRSA for the months July through October, 2005, by way of an increase in the Mean Electricity Rate (MER) of $0.006 per kilowatt hour 1
through to the end of the Full Tariff Period (FTP), June 30, 2009 and (2) adjust the forecasted unit cost of power (sales) from $0.210 per kilowatt hour to $0.258 per kilowatt hour. The aggregate increase requested by BEL as filed was $0.054 per kilowatt hour. In accordance with byelaw 37(2) of the Byelaws the public notice also invited written comments to be submitted to the PUC by interested parties within 10 days of the issuance of the notice. No written comments were received by the PUC. The PUC has considered the application for an increase in electricity tariffs as it relates to (1) the recovery of any deferrals into the CPRSA above the $19,292,000 already provided for in the FTRP of 2005, (2) the recovery of any further deferrals into the CPRSA for the period July 1, 2005 to November 30, 2005 and (3) the provision for an increase in the unit cost of power. During the proceedings the PUC engaged BEL in responding to queries on the application and providing documents as required to be reviewed/audited to verify information being presented. 2
Exercise of Regulatory Authority The PUC with the authority given under the Electricity (Tariffs, Charges and Quality of Service Standards) Byelaws, 2005 S.I. 145 of 2005 read along with other governing legislation and based on the results of the review proceedings hereby renders the following final decisions: Decision 1: Threshold Event Amounts and Recovery The PUC HEREBY APPROVES a total of $8,419,035 accrued to the CPRSA, being the sum of $1,569,886 (the amount accrued during the period January to June 2005 above the $19,292,000 already provided for in the July 2005 FTRP Final Decision) and $6,849,149 (the amount accrued during the period July to November 2005), to be recovered through an increase of $0.006 per kilowatt hour in the CPRSA Adjustment element of the MER. The following calculations form the basis of the above decision: Actual Values, 2005 Jan June July Aug Sept Oct Nov Reference unit cost of power (p) $/kwh 0.246 0.221 0.217 0.221 0.227 Volume of electricity sales (E PS ) MWh 31,630 31,788 31,965 29,591 28,622 Cost of power of electricity sales (COP PS = p x E PS ) $ 000 7,770 7,037 6,939 6,525 6,507 CPRSA balance:30/6/05 $ 000 20,862 Forecast Values, 2005 Jan June July Aug Sept Oct Nov Reference unit cost of power (p*) $/kwh 0.184 0.184 0.184 0.184 0.184 Volume of electricity sales (E PS *) MWh 32,353 30,637 30,668 29,955 29,087 Cost of power of electricity sales (COP PS * = p* x E PS *) $ 000 5,953 5,637 5,643 5,512 5,352 CPRSA balance:30/6/05 $ 000 19,292 where * denotes forecast 3
Difference between Actual and Forecast Values Jan June July Aug Sept Oct Nov Difference in Cost of $ 000 1,817 1,400 1,296 1,013 1,155 Power (ΔCOP PS = COP PS - COP PS *) Cumulative ΔCOP PS $ 000 1,817 3,217 4,514 5,527 6,682 Interest $ 000 167 @12%:30/11/05 CPRSA $ 000 1,570 1,570 1,570 1,570 1,570 1,570 balance:30/6/05 Total $ 000 1,570 3,387 4,787 6,083 7,097 8,419 Decision 2: Cost of Power The PUC HEREBY APPROVES a revised forecast unit cost of power (sales) of $0.255 per kilowatt hour for calendar year 2006 which is an increase of $0.045 per kilowatt hour above the $0.210 per kilowatt hour previously forecasted in the 2005 FTRP. The $0.255 per kilowatt hour unit cost of power (sales) is equivalent to $0.224 per kilowatt hour reference unit cost of power. Regulated Values Regulated Parameter FTRP Final Decision 2006 TERP Adjustmen t TERP Final Decision 2006 Reference unit BZ$/kWh 0.185 +0.039 0.224 cost of power Unit cost of power (sales) BZ$/kWh 0.210 +0.045 0.255 In the data filed with their application, BEL provided the PUC with a forecast of the Cost of Power (net generation) for calendar year 2006. Based on the PUC review of the revised forecast, discussions with the PUC and further analysis, BEL submitted a revised forecast on December 23, 2005. The revised forecast optimizes least cost dispatch in accordance with the terms and conditions of the governing Power Purchase Agreements and the internal BEL costs associated with operating the Gas Turbine and the Diesel Generators. The forecast also takes into account the increase in cost associated with the renegotiated contract with CFE to take effect in August 2006, the use of economic energy from CFE on an available basis in the first part of 2006, the impact of the dispatch profile for hydropower from Becol, and the introduction of new hydropower from Hydro Maya in the second half 4
of 2006. The cost of the power sourced from CFE and BEL generators is dependent on international oil prices which, having risen from an average of US$41.44 1 /barrel in 2004 to US$57.27 1 /barrel in 2005 are forecasted by the US Energy Information Administration to increase to US$64.40 1 /barrel for 2006. It was anticipated in the FTRP that oil prices would fall in 2006 and that there would be a greater mitigating effect from hydropower as a result of the Chalillo project thus reducing the dependence on the diesel generators, the gas turbine, and economic energy from CFE in the dry season. This is substantially different from what is now being projected as the realistic scenario. Economic energy purchased from CFE is more expensive than energy purchased off peak under the firm energy contract. Decision 3: Mean Electricity Rate The PUC HEREBY APPROVES the Mean Electricity Rate (MER) of $0.441 per kilowatt hour resulting from the decisions made in Decision 1 and Decision 2 above. The MER was calculated as follows: Regulated Values FTRP Final Decision TERP Adjustment s Regulated Parameters 2005/2006 Unit Cost of Power BZ$/kWh 0.210 +0.045 0.255 (sales) Value Added of Delivery BZ$/kWh 0.162 0.000 0.162 BZ$/kWh 0.015 +0.006 0.021 Cost of Power Rate Stabilisation Account Adjustment Hurricane Cost Rate Stabilisation Account Adjustment TERP Final Decision Jan Jun 06 BZ$/kWh 0.003 0.000 0.003 Mean Electricity Rate BZ$/kWh 0.390 +0.051 0.441 Decision 4: Adjusted Customer Tariffs The PUC HEREBY APPROVES the following Customer Tariffs allocated to the different classes of customers in a manner calculated to achieve the MER approved in Decision 3 1 West Texas Intermediate Spot prices 5
above. The new customer tariffs are to take effect on the first day of the month following the issuance of this decision. 6
FTRP Final Decision July 05 June 06 TERP Final Decision January June 06 Social Rate Customers Minimum Monthly Charge $4.00 $4.00 0 50 kw h $0.25 $0.26 Mo nthl y Ser vic e Ch arg e Residential Customers $5. 00 $1 0.0 0 0 50 kwh $0.25 $0.29 51 200 kwh $0.38 $0.41 Above 200 kwh $0.42 $0.46 Commercial Customers Monthly Service Charge $70.00 $100.00 0 10,000 kwh $0.41 $0.44 10,001 20,000 kwh $0.39 $0.43 Above 20,000 kwh $0.37 $0.42 Industrial 1 Customers Monthly Service Charge $75.00 $100.00 Monthly Demand Charge $32.00 $35.00 per kva Off Peak Energy Rate per $0.30 $0.32 kwh Peak Energy Rate per kwh $0.45 $0.46 Industrial 2 Customers Monthly Service Charge $75.00 $100.00 Monthly Demand Charge per kva $19.00 $21.00 7
Off Peak Energy Rate per $0.24 $0.26 kwh Peak Energy Rate per kwh $0.45 $0.46 Street Lights Energy Rate per kwh $0.44 $0.52 BY ORDER OF THE OFFICE SIGNED THIS 31st DAY OF DECEMBER 2005 Dr. Gilbert Canton Chairman 8