Five Smooth Stones? Battle Continues with Canadian Energy Conglomerate: NOTICE OF MOTION FOR THE FAIR TRADING COMMISSION TO ORDER BLPC LTD TO AMEND ITS APPLICATION

On Friday, September 9th, 2022, as an intervening party to the Barbados Light and Power’s rate increase request, the Intervenor Team of Tricia Watson and David Simpson filed a motion with the Fair Trading Commission (FTC) requesting that the FTC order Barbados Light and Power Company Limited to amend its rate application based on the FTC’s decision and orders in the recent Depreciation review case, dated March 25, 2022.

<strong>Ms. Watson said</strong> “<em>Our latest motion is intended to persuade the FTC to prevent the BL&P from proceeding with its rate application which, as a consequence of the FTC’s recent Depreciation Decision, is now known to be based on incorrect rates and calculations</em>.  In this case Barbados Light and Power would be allowed to recover the cost of its investment in generation assets through depreciation. Depreciation calculations are key to value of the assets that are included in the rate base. Annual Depreciation expense is a key component in the revenue requirement calculation. Despite these concerns being raised by multiple intervenors over the past 6 months, the BL&P is still using incorrect rate information that is at odds with the FTC’s recent Depreciation Decision dated March 25<sup>th</sup>, 2022.

Ms. Watson saidOur latest motion is intended to persuade the FTC to prevent the BL&P from proceeding with its rate application which, as a consequence of the FTC’s recent Depreciation Decision, is now known to be based on incorrect rates and calculations.  In this case Barbados Light and Power would be allowed to recover the cost of its investment in generation assets through depreciation. Depreciation calculations are key to value of the assets that are included in the rate base. Annual Depreciation expense is a key component in the revenue requirement calculation. Despite these concerns being raised by multiple intervenors over the past 6 months, the BL&P is still using incorrect rate information that is at odds with the FTC’s recent Depreciation Decision dated March 25th, 2022.

The March 25th Depreciation Decision states, “Based on the information provided by the Applicant, the Commission does not approve the depreciation rates requested for Generation Plant.”

Example of discrepancy:

A 2019 filing by the BL&P shows the full depreciation of the steam plant as per a 2017 study (and a subsequent 2018 regulatory report), it is noted as “off the books” with a “written down” value of $0.00. Data released by the BL&P confirm that post-2018 when the plant was shown as written off the books, Steam Plant contribution to the national grid has dwindled from over 25% in its heyday to under 5% at present.  Other operational data released by the BL&P also confirm that one of the Steam Units is no longer in service and is being used as a source of spare parts. Alarmingly, in July of 2020, their updated schedules shows this same Steam Plant being valued at BD $15 million.

Impact on consumers:

Barbadians risk higher electricity rates based on incorrect information!

For example, the un-amended Application seeks Depreciation rates to the tune of $5M/year for what is left of the one remaining Steam Unit, which has not significantly contributed to the grid for over 5 years. Further, with the commissioning of the new Clean Energy Bridge, it is very doubtful that the remaining Steam Unit, S1, will ever be brought into service again.

In addition, should the FTC approve the flawed application, it is conceivable that Barbadian ratepayers could still be paying for this non-operational Steam Plant for years until the next rate review.  Were that review to be in as little as 5 years time, ratepayers will have paid over $25 M for a generation plant that has not really worked reliably or efficiently since 2011, as the BL&P had predicted.

Desired Results:

  1. For the FTC to order the BL&P to adjust their application to show amendments that reflect the true depreciation rates and calculations for all assets.
  1. For the BL& P to amend the application as instructed and consequently show amendments to the revenue requirement and to the requested rates.
  1. For the FTC to discontinue the ‘Interim Rate Review’ and confirm that they have not conducted or made any decisions in respect of interim rates because:
    1. The FTC cannot make decisions on the basis of the incorrect depreciation information.
    2. The interim rate relief proceeding is not lawful under Barbados Law because the FTC does not have the legal authority to grant an interim rate, or any rate, without a public hearing and without considering the full facts of the case in conjunction with intervenors. According to Barbados law, without a full review the FTC cannot grant a rate and consequently cannot grant an interim rate. The Watson/Simpson team filed objections in the interim rate proceedings in May of 2022.

Tricia Watson and David Simpson are an Intervenor Team in the Application Pursuant to Section 16 of the Utilities Regulation Act Cap 282 of the Laws of Barbados for the Review of Electricity Rates filed by the Barbados Light and Power Limited with the Fair Trading Commission on October 4th 2021.

 As “Intervenors”, we are concerned about anything that could possibly result in rate hearing or decision that is not just.  Misinformation, misleading information or simply inaccurate data or inappropriate actions can place Barbadian residents and rate-payers at risk of an unjust result that would have a negative financial impact on the average resident or business.  We will continue to monitor and call out any steps or missteps in the process that can result in an unjust outcome.

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