FTC to review BL&P’s fuel cost claim

Barbadians will have to pay higher electricity bills if the Barbados Light & Power Company Limited (BL&P) gets approval to recover fuel costs for temporary power generation it is proposing to rent and install.

The utility company said Thursday that there was an “urgent need” for additional diesel generating units, warning that “without an adequate reserve margin, there is an increased risk of power outages which can have severe consequences for customers and the functioning of the economy”.

BL&P anticipates the units will be needed by May 1 for a duration of at least 12 months, or until additional firm generation capacity becomes available.

It has, therefore, applied to the Fair Trading Commission (FTC) to recover the cost of renting 11 megawatts (MW) of temporary Aggreko diesel generating units through the Fuel Clause Adjustment (FCA) paid by customers.

FTC chief executive officer Dr Marsha Atherley-Ikechi confirmed the commission recently received the BL&P application and she said a process, which would culminate with an oral or written hearing involving intervenors, was underway.

BL&P estimates it will cost $856 046 to rent and operate the 11 MW of temporary generation plant each month. This excludes fuel costs, which vary from month to month.

The company said the impact to the FCA, inclusive of estimated fuel savings from utilising the rental units is projected to be less than one cent per kilowatt hour.

In a January 29, 2024 affidavit accompanying the application, BL&P manager, regulatory affairs, Adrian Carter, said: “Given a scenario where the rental cost of the Aggreko units was approved for recovery through the FCA, the FCA for the month of January 2024 would have been three per cent higher and the impact to the average domestic service (residential) customer consuming 255 kWh would have been a two per cent ($3.17) increase in the electricity bill”.

The company said in a news release that its filing related to the temporary power generation underscored its commitment to meeting the evolving energy needs of Barbados.

It explained that while it typically plans and makes projections for expected demand and accommodates for moderate growth, this year the expectation was for “higher than usual growth in electricity demand due to ongoing construction of residential and commercial projects plus the continued up-take in customer electric vehicles (EV) and air-conditioning”.

The company called the rental of the units “essential to provide adequate generation capacity, ensuring operational reserve and addressing forecast electricity demand coupled with delays in the installation of battery storage and firm renewable generating capacity that was projected to come online”.

BL&P managing director Roger Blackman said, “While existing installed generating capacity exceeds the forecast electricity demand this year, the 11MW of rental generation will increase operating reserves which can be quickly dispatched to address any emergency situations that may arise such as unplanned outages of existing units.”

He explained that the timing for this rental generation is especially important as electricity demand is expected to be further bolstered this year with Barbados set to host the T-20 Cricket World Cup finals and other fringe events.

BL&P deems the existing FCA to be a mechanism for transparent and fair cost recovery, as it “allows for the timely adjustment of fuel costs to reflect changes in operational expenses, ensuring a balance between affordability for customers and maintaining a reliable power supply”.

Atherley-Ikechi said that having received the BL&P application about two weeks ago, the process started with the FTC reviewing it “to make sure that it complies with all the requirements of the Utilities Regulation Act and the Procedural Rules”.

“We have accepted the application and the next step would be issuing procedural directions and asking intervenors to express their interest in the process which leads to the hearing,” she said.

Once the intervenors are approved, they and the FTC are likely to seek additional information from BL&P, and ultimately “a determination is made considering the information that is brought before the commission, our research, and the input of the intervenors”, Atherley-Ikechi added. There is currently no set timeframe for the process.

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