June 9, 2008
Press Release: Belize’s Canadian-owned power company has threatened blackouts if electricity rates don’t go up immediately.
In his address to Belize Electricity Limited shareholders last month, Fortis CEO Stanley Marshall said a rate increase is needed to ensure the company has the cash to purchase power from neighbouring Mexico. “Without power from Mexico, Belize Electricity Limited will be forced into rotating blackouts,” said Marshall. “Immediate action is required.”
Fortis is the majority owner of Belize Electricity Limited which can only raise electricity rates after applying for and being awarded a rate increase by Belize’s Public Utilities Commission (PUC). It applied for an increase earlier this year but was turned down.
According to CEO Marshall, rising oil prices and the regulator’s decision not to allow a 25 percent rate increase are to blame for putting his company in “financial crisis.”
But PUC chairman, John Avery, in an interview with Belize’s Channel 5 News, said the Commission cannot take BEL’s claims about a cash flow crisis seriously and will not allow BEL to pass unreasonable costs onto customers.
Fortis owns 70 percent of Belize Electricity Limited, the country’s monopoly buyer and distributor of electricity to nearly 70,000 customers.
In a sweetheart deal, Belize Electricity Limited buys hydropower from another Fortis company, the Belize Electric Company Limited(BECOL) at a rate of 9 US cents per kilowatt-hour, well above the cost of hydro in North American jurisdictions.
BEL complains about cash flow, said Avery, but ‚”they are freely giving over their cash to BECOL.”
BECOL owns and operates the country’s two hydro facilities, Mollejon and Chalillo, that flooded the Macal River Valley.
Critics also say BEL is over-charging for its diesel-fired electricity, paying more than 25 US cents per kilowatt-hour for about ten percent of its total supply.
BEL gets about half its power supply from Mexico for 16 US cents per kilowatt-hour, up from 3 US cents per kilowatt-hour several years ago.
BEL has been awarded successive rate increases from the previous government that was voted out of office earlier this year, largely over its mishandling of utility privatization.
Another factor contributing to BEL’s high costs, the regulator said, is that BEL’s dispatch plan has the company taking more power from expensive sources, such as diesel, even when cheaper sources are available.
The regulator also found that BEL has double billed customers for a $35 million transmission line.
BEL’s profits, meanwhile, have jumped 58 percent in the last two years, from $18.9 million in 2005 to $30 million in 2007 – money that BEL says has gone into capital upgrades around the country.
Following BEL’s objections to the regulator’s decision not to raise rates, the PUC has commissioned an independent expert to review the case and report back no later than June 11th.
According to BEL, BECOL’s third hydro plant, which is expected to come online in 2009, will help reduce its power costs.
In 2003, Fortis escaped an injunction to stop construction of the Chalillo dam. Two out of five Privy Council judges wanted the project stopped, saying the dam’s environmental impact assessment, which was paid for by the Canadian International Development Agency, failed to comply with Belize’s Environmental Protection Act, and wasso flawed by important errors about the geology of the site as to be unacceptable.
For more information, CONTACT:
Grainne Ryder, Policy Director, Probe International, Toronto
Phone 416 964 9223 ext 228
Candy and George Gonzalez, Belize Institute of Environmental Law and Policy BELPO), and We Belizeans Against the Dam (WeBAD) in Cayo (downstream from BECOL’s dams).
Phone 501 824 2476