Power company says raising tariffs is the only option left to get money for urgent projects

The island’s sole electricity provider has defended its decision to seek a rate hike, insisting it urgently needs the money to run projects crucial to providing reliable service to customers.

In fact, Barbados Light & Power Company (BLPC) Managing Director Roger Blackman said asking the Fair Trading Commission (FTC) for an 11.9% tariff adjustment was the last resort.

He insisted that before approaching the FTC, the company must be “internally satisfied that we have pulled every lever available to us and considered all options or alternatives.”

“We are facing a financial situation that requires urgent tariff relief and there are actually several projects that we have had to postpone, and of course every delay on a project has repercussions and even if they cannot be carried out immediately, in the long term, there could be impacts and are of concern,” Blackman said on the BLPC. New roundtable discussion forum for July.

He did not give details of which projects were delayed, but said financial constraints had affected the utility company’s ability to continue carrying out its maintenance program.

Acknowledging that there was “no ideal time for a company to ask its customers to pay more for services”, Blackman pointed out that the search for a rate increase in an economic environment also devastated by the COVID-19 pandemic was an absolute last resort for the BLPC.

“It is essential for us to continue to have adequate resources to achieve the level of service both in terms of resilience and reliability required by our customers,” he said.

“The increase in tariffs will allow us, as a company, to continue the pace of investment that we have made over the years in the electrical system and, consequently, the maintenance of the network that is necessary”, insisted the head of the BLPC.

Blackman said that since receiving the last rate increase more than a decade ago, BLPC has worked diligently to manage its operating costs and has redesigned its business processes.

According to him, during this period, the company has invested more than $700 million in modernizing its operations, strengthening the transmission and distribution network and facilitating the introduction of renewable energy into the network. .

Stressing that supplying electricity was “very capital intensive”, Blackman insisted that to sustain the business, “we need sufficient funding to pay for capital investments and to meet our operational costs”. .

He said rising inflation has dramatically increased the company’s cost of doing business and more recently supply chain challenges have compounded the problem and further reduced BLPC’s ability to do business. the necessary investments.

The BLPC filed a request for a base rate increase with the FTC on October 4, 2021. It is estimated that if granted, customers will pay between 5 and 20% more on their bills.

The electricity company is also asking for a temporary increase in tariffs.

Director of Client Solutions at BLPC, Kim Griffith-Tang How, said the interim rate increase was significant “because for our business, we need to continue to maintain our plants and our equipment and there are a number of customer projects with which we must continue to move forward to guarantee our customers a highly reliable service”.

“To do this is a very expensive activity. It is very expensive to do the things we need to do and so an interim tariff increase would help with that,” she added.

Meanwhile, Blackman said the government’s decision to cut value added tax (VAT) on electricity from 17.5% to 7.5% for the first 250kWh was commendable.

The measure, which comes into effect from August 1, 2022 to January 31, 2023, will see the government forgo millions of dollars in revenue as part of broader measures to provide relief to consumers burdened by the rising cost of living.

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