BEL complains that “rates for power from Mexico, which are indexed to oil prices, have escalated by more than 50% this year.”

“There is a real danger that BEL would have to approach the PUC for an
increase in electricity rates if oil prices continue to climb and the
NRDC [the US-based National Resource Defense Council] succeeds in
delaying the Chalillo project further,” BEL’s Chief Executive Officer,
Lynn Young, is quoted as saying in a recent company press release.

The Belize Alliance for Conservation NGO’s (BACONGO), backed by the
NRDC, in February filed a lawsuit against the National Environmental
Appraisal Committee and the Department of the Environment, claiming
that they had not followed procedure when they approved the
Environmental Impact Assessment for Chalillo last November.

The 7MW, US$30 million Chalillo hydroelectric project, which developers
said was to have come on stream ten months ago, has been stalled by the
legal battle.

In July last year, Young told Amandala that if they do not proceed with
Chalillo in due time, that electricity rates would have to go up.

When BEL was considering a rate increase last year, it had entered into
an agreement with Government to defer the recovery of $4.6 million it
said had to be passed on to customers because of rising oil prices.
That figure has grown significantly since then, BEL reports, but
electricity rates can only go up if the PUC approves a formal request
by BEL to recover the increases that have so far been absorbed by the
company.

Dr. Gilbert Canton, PUC chair, told Amandala this evening that
electricity rates are fixed for June 1, 2002 to July 3, 2003, and they
cannot be changed. Canton said that the last affirmed value of BEL’s
rate stabilization account is $11.4 million, and the PUC would decide
whether it would approve a rate increase when the account reaches $15
mn. One BEL source indicated, however, that the account already has
grown in excess of the $15 mn.

BEL and Government agreed last year to establish the rate stabilization
account to absorb price increases that would otherwise have had to be
passed on to consumers.

Young had previously told Amandala that BEL and GOB had agreed to defer
rate increases until Chalillo comes into operation, which BEL claims
would minimize rate increases.

Last April, the Government of Belize passed a statutory instrument that
limited the average electricity rate to 36 cents per kWh until 2002.
Social rate customers, who use less than 50 kWh, pay 21 cents per kWh,
while residential customers who use over 200 kWh, pay 41 cents per
unit. The rates are different for commercial and industrial customers.

The last rate reduction to residential consumers came in 1999, and BEL
had committed to 1 cent per kWh reduction each year (in
transmission/distribution charges only), but consumers may never see
this as long as oil prices continue to rise.

Canton indicated that when the cost of the power BEL purchases from its
suppliers increases, the value of the rate stabilization account also
increases. Since the beginning of this financial year, the cost of
power from Mollejón has increased by 1.5%, Canton informed, due to a
clause in an agreement between BEL and its supplier and sister company,
the Belize Electricity Company Limited, signed in 1996.

He further explained that the recent move to open the industry to
independent power providers (IPP’s) is guided by price concerns also.
The PUC has approved two bids – a proposal from 2.2 MW Hydro Maya, and
another from the Belize Sugar Industries’ BELCOGEN bagasse project.
However, final negotiations would be carried out between BEL and the
approved bidders to arrive at better prices.

BEL says that power from Chalillo would cost half the rate being offered by the IPP’s.

While the introduction of power from the new renewable energy options
like bagasse and the small hydro, would not bring down costs, Canton
affirmed that Chalillo would reduce the multi-million dollar rate
stabilization account significantly.

http://www.amandala.bz