I previously informed Barbadians that the Fair Trading Commission’s decision on the BLPC’s application for the recovery of the rental and operating costs of 11 MW of temporary generator units through the Fuel Clause Adjustment, dated October 29, 2024, was very wrong based on the evidence, and very bad from a rate regulation perspective.

Appeal

In the Fair Trading Commission process, a party to the proceedings can appeal the decision. It is called a Review. Yesterday, November 19, my co-intervenor and I filed the Review request within the 14 business days of being served with the FTC’s Decision as is required by law.

Limited Grounds for Review

Although this is a very bad decision, the applicable law significantly limits the grounds on which a party can appeal or seek a review. For example, the Commission chose to “dispose of the matter by Written Hearing”, effectively ensuring that the rate case would be hidden away from public scrutiny that citizens have become accustomed to when we are being asked to pay increased electricity rates. The Commission’s decision to not have a public hearing deprived the intervenors of the opportunity to cross-examine the BL&P’s witnesses on its evidence. The Commission must have been aware that this restriction would allow critical evidence to go unchallenged to the benefit of the Barbados Light and Power. Although this action was fundamentally wrong and prejudicial to the public and the pro-consumer Intervenors who are working in the public interest, having the private hearing, via documents only, is not unlawful and it is therefore not grounds for review.

There are other wrong and prejudicial actions taken by the Commission, and incorrect findings and rulings made by the Commission, but they are not legal grounds for review.

I’ve said before that this decision is one of the worst decisions handed down in years by the FTC or, for that matter, any of the other many Regulatory bodies in Barbados charged with regulation and oversight of entities operating in the public domain. This is no secret. But as bad as the decision is, it obviously will not be challenged by the Barbados Light and Power because it gives them what they want, even as the FTC acknowledged Barbados Light and Power’s imprudent management of the national grid. It will not be challenged by the Barbados Renewable Energy Association (BREA) that likes say that it is acting in the interest of the consumer, but that instead strongly supports the Barbados Light and Power, which is one of its member companies, and indeed has been on record publicly, as supporting the application for the rate increase, and as supporting the Decision granting the rate increase.

That leaves the pro-consumer intervenors Barbados Consumer Empowerment Network (BCEN), Mr. Ricky Went and his team and, of course, yours truly.

I respect the work of BCEN and Mr. Went and his team. However, the Review/Appeal process is primarily a legal process, and most intervenors are not equipped, and are therefore understandably hesitant, to do battle in that arena. I might also add that since the Public Counsel’s impactful appearance that contributed to the defeat of the Light and Power’s Motion for Review of the rate case ruling in the 2023 Review Hearing, the Barbados Government has not appointed a Public Counsel, and the Office of Public Counsel remains under-resourced, thereby ensuring that the option of being assisted by Public Counsel is closed to intervenors.

That being said, I have submitted our Motion for Review of this latest Decision. I have appealed this decision because it is decidedly in the public interest that such a bad and technically wrong decision, one that will set dangerous precedent that will work against the consumers’ and indeed the country’s interests, must not be allowed to stand.

Let me just outline some of the grounds for review of the Decision that have been included in my appeal filed with the FTC.

Fuel Clause Adjustment

The Fuel Clause Adjustment, which we also call the FCA, is what we term in the field a “pass through” “rider” or Automatic Adjustment Clause. It is used primarily for administrative efficiency to minimise administrative costs that would, like all other costs, be ultimately passed on to ratepayers.

In the case of the FCA, it is recognised that the price of fuel is highly volatile and that it would be unfair for the utility to bear the costs of erratic fuel price increases. We can, and have, seen world oil prices double in a matter of weeks. And we know that the Utility has no control over these fluctuations. Would it be practicable for a full, pubic rate case in order to adjust electricity rates in response to every increase in world oil prices? No it would not. And nobody is calling for that either. Utility regulators have acceded to Automatic Adjustment Clauses or riders to allow the utility to adjust its rates, WITHOUT A RATE HEARING, in very limited and specific circumstances.

What kind of circumstances? It is universally understood and accepted that cost recovery may be permitted via a rider, ONLY if the costs for which recovery is being sought are:

i. Volatile AND
ii. unpredictable AND
iii. outside of the control of the utility AND
iv. outside of the utility’s manageable costs.

These requirements are very strict, to protect the consumer, because rate increases that are passed through to the consumer via a rider do not undergo the normal scrutiny occasioned by a rate review.

In recent decisions, the Commission has itself ruled exactly in this manner. We introduced in our written arguments in this latest case the 2018 Energy Storage Device (ESD/Battery) decision, and the 2023 CETR (the Battery Storage) decision, both of which are Fair Trading Commission decisions that uphold these principles. Now, suddenly, without explanation, the Commission tosses these principles out of the window and grants the Light and Power’s wishes to get ALL of the costs for the units, not just the fuel used, as a pass through to rate payers through the Fuel Clause Adjustment. This is one ground for review.

We have noticed that the BLPC is relentlessly pursuing the exclusion of intervenors by pushing rate setting mechanisms that get around the evidence based public rate hearing process that has served Barbados’ consumers and businesses very well for 70 years. The objective is to abandon rate cases that involve public hearings, because intervenors and rate cases involve scrutiny and accountability for the utility, and frankly, for the regulator. What is quite unfortunately happening as well, is that the FTC and the Barbados government are enabling and supporting this assault on a rate setting process that exists to ensure that the people that have to pay the rates, meaning us, the rate payers, that we can have a say in those rates, by participating in the rate setting process. The Light and Power doesn’t want us in their business, we are to just shut up and pay, and the decision of the FTC in this last case will undoubtedly set a precedent that excludes consumers from having a say in setting of rates in Barbados because, as the FTC said in the 2018 Battery Storage application by the Light and Power to pass those costs directly to rate payers via the Fuel Clause Adjustment,

“The adaptation of the FCA also mitigates the need for an overall rate review.”

This move by the government away from citizen inclusion in the process for setting the rates to be paid by us, and borne by us when they are passed to us in the escalating prices for goods and services, this move towards secrecy and elitism in setting rates for this essential service, will kill any chances of achieving energy justice in Barbados. This must be rejected!

Breach of Legal Principles

The Commission also breached a number of fundamental legal principles, including procedural fairness, and principles of natural justice. We offer an example of one such breach below.

In this written hearing, Intervenors requested some of the most basic and automatic data required to evaluate a rate increase request. For example, Annual Regulatory Reports and Annual Financial Statements, public documents, which the Light and Power refused to provide. Further, the FTC, who itself had the documents, also refused to share them them with intervenors and would not order the Light and Power to produce the information for intervenors.

To add insult to injury, a review of the Commission’s written Decision confirms that, in conducting its own analysis, the Commission utilised data in those and other documents, to which it had denied intervenors access. Apart from being quite shocking, these actions, both on the part of the Commission and the Light and Power, are unlawful and, with respect the Commission, are grounds for appeal.

We have challenged the decision on other grounds via multiple other examples of breaches by the Commission but will not elaborate on those at this point. We are not seeking to argue this case in the media. Suffice it to say, however, that we wish to keep the public informed of the developments in this case.

We were somewhat surprised at how effective the Barbados Light and Power was at containing all news on this rate increase application while it was in progress; this in contrast to the widespread, self-congratulatory media blitz that ensued when the Commission announced a decision in Light and Power’s favour. It could be argued that absence of the public eye on these proceedings might have well have influenced the Decision. It is therefore vitally important that the public be kept informed because you are the ones that have to pay the increased rates next month when you are trying to have a little Christmas cheer in what the PM referred to just 2 days ago in the Parliamentary debate as “these difficult times”. Because I understand how you will be affected during this festive season and in 2025, particularly in January, which is always a difficult month for householders, I have also asked the FTC to suspend its decision while the review is heard.

Tricia Watson is an Intervenor in the Application for the recovery of the rental and operating costs of 11 MW of temporary generator units, filed by the Barbados Light and Power Limited with the Fair Trading Commission on January 29th 2024.

As an ‘Intervenor’, I am concerned about anything that could possibly result in a process 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. I will continue to monitor and call out any steps or missteps in the process and any poor decisions that can result in an unjust outcome for consumers.