A new page in Kilowatt history was written on Wednesday, October 7, 2009 when proceedings associated with our Company’s first rate hearing in 26 years commenced at the Lloyd Erskine Sandiford Centre.
Not only does this hearing represent an important milestone for our Company, but it also provides an opportunity to gain a better understanding of the rate making process, as well as to build a consciousness of the scrutiny that the Company has to undergo as a regulated public utility. The current legislation calls for our rates, and principles on which these rates are based, to be reviewed every five years. This period can be extended at the Commission’s discretion. However, it is certainly not anticipated that we would go another 25 years without a hearing.
This hearing further represents the culmination of over two years of preparation, involving numerous studies, the compilation of documentation required under the Utilities Regulation Act, and an application to the Fair Trading Commission (FTC), filed on Friday, May 8, 2009, for a review of our basic electricity rates charged to customers
The application and subsequent rate hearing is coming at a time when the Company is preparing to replace some of its existing generating plant which is nearing the end of its operational and economic life, along with other replacements and upgrades that are required to continue to provide a safe, reliable and efficient electricity supply to meet consumers’ needs. Unfortunately, the rate hearing is also coming at a time when many Barbadian consumers are being impacted either directly or indirectly by the current economic downturn. However, after giving careful consideration to all of the issues, the Company found it necessary to proceed. We recognize that a reliable and efficient electricity supply along with other critical infrastructural services are going to play an important role in Barbados’ ability to make it through this difficult economic time successfully and for the country to be prepared for when we get out of it.
Providing electricity is very capital intensive and many of the projects take several years in planning and construction before being brought into operation. These require raising large sums of money from lenders and investors several years prior to implementation of these projects. The Company is not able to put things on hold now and still have them available at short notice when they are required.
Raising the money for these projects requires that the lenders and investors have confidence that their money can be repaid and earn adequate returns respectively. The current rate of return is not adequate to give them this confidence.
It is hoped that the outcome of the current rate hearing, which is scheduled to run from October 7 to 23, will address these issues and ultimately, help us "To be an energy service provider, delivering word class service and reliability."
The first of our team members to give evidence on the first day of the proceedings, was our Managing Director, Mr. Peter Williams. While he remains on the stand, he will be giving evidence about the General Memorandum; the Rate of Return and the matter of Self Insurance.
As the days progress, Mr. Williams will be followed on the witness stand by
Hutson Best, Chief Financial Officer (Rate Base; Income Statement, Revenue Requirement, and Five-Year Financial Forecast)
Robert Camfield, Consultant (Cost of Capital Study and Marginal Cost of
Mark King, Chief Operating Officer (Capital Expansion Plan)
Mike O’Sheasy, Consultant (Cost of Service Study and Rate Design)
Stephen Worme, Chief Marketing Officer (Sales Forecast and Rate Design)