Barbadians will have to pay higher electricity bills from this year, but the Fair Trading Commission (FTC) has pulled the plug on the Barbados Light & Power Company Limited’s (BL&P) request for a bigger increase.
This relates to BL&P’s bid for pre-approval of investments and cost recovery through the clean energy transition rider (CETR) and not its substantive rate increase case which the company has appealed to the High Court.
BL&P was seeking to recover revenue of $131.3 million for its $684.89 million Clean Energy Transition Plan (CETP) Project (CETP Project 1) and estimated that a residential customer using 250 kilowatt-hours (kWh) of electricity would have seen their monthly bill increase by about $41 (21 per cent) over a three-year period ending in 2026.
However, in its May 6 decision, the FTC approved $31.4 million on $182.6 million in investments.
The regulator said a BL&P domestic customer using 200 kWh per month, whose bill before the implementation of the CETR is $128.45 before value added tax, will have to pay $17.67 more a month between this year and 2026.
For these individuals, it is estimated there will be a $5.20 monthly increase this year, $5.78 more in 2025 and an additional $6.69 a month in 2026.
BL&P’s investment cost recovery related to investments in 90 megawatts (MW) of battery energy storage systems (BESS) ($115.15 million), independent power producers’ (IPP) interconnection ($8.54 million), synchronous condensers ($6.9 million), automatic generation control ($540 679) and the distributed energy resources aggregation and control platform ($167 429).
The FTC has approved cost recovery of 15 MW ($22.2 million) for 2024 and all of what BL&P applied for in relation to automatic generation control systems, distributed energy resources aggregation and control platform and IPP interconnection.
It added that cost recovery for the remaining 75 MW of BESS (about $93 million) and synchronous condensers ($6.9 million) was not approved, citing uncertainty in relation to cost.
Reacting on Wednesday to this latest FTC decision, BL&P said any movement on the CETR application is “a step forward in the journey towards sustainable energy solutions for Barbados”.
The company, however, “expresses disappointment at the approved 15 MW battery storage capacity, which represents only one-sixth of the 90 MW stated in the application, creating a further challenge in the company’s ability to immediately expand grid capacity in a way that meets Barbados’ existing and anticipated renewable energy needs.
“Understanding the critical role of battery storage in advancing renewable energy, we are carefully analysing the implications of the FTC’s decision. Once this assessment is complete, we will expand on how the decision fully impacts Light & Power’s plans for
the electricity grid,” the utility stated.
“Light & Power’s dedication to a cleaner, greener energy future for Barbados remains steadfast. We reiterate our commitment to working closely with regulators and stakeholders, including the Government and the Fair Trading Commission, to navigate the challenges ahead, in order to realise our shared vision for a more sustainable and energy-independent future for Barbados.”
The bulk of the revenue – $115.1 million – which BL&P was seeking to recover via the CETR related to the 90MW of BESS. The near $560 million in investments related to this alone would have seen monthly residential bills with usage of 250 kWh increasing by $35.84 over three years.
The FTC stated in its decision that the energy transition “warrants investments in BESS to mitigate the impact of increasing renewable energy on the grid” and that the need for 90 MW is “a reasonable position” raised by BL&P.
However, it concluded the lack of adequate assessment of all critical costs related to the investment “makes it extremely difficult for the commission to grant approval for the full capital expenditure associated with the 90 MW BESS”.
Regarding the synchronous condensers, the FTC noted there were devices which were electrically configured to absorb and provide reactive power to an electrical grid.
While the Commission “is generally of the view that the proposed investment to procure synchronous condensers will enhance service delivery”, it questioned whether BL&P preference for new devices was “based on the most cost-effective option”.
“It is the position of the Commission that as stated in the Integrated Resource and Resiliency Plan 2021, [BL&P] is required to assess the feasibility of repurposing retired generators as synchronous condensers before the estimated costs for the new synchronous condensers is approved,” the FTC said.
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