Why Light & Power Needs A Rate Adjustment
On Monday, October 4, 2021 The Barbados Light & Power Company (Light & Power) filed an Application for a rate review with the Fair Trading Commission (FTC).
The Rate Application is only the second one filed by our Company in nearly forty (40) years requesting an adjustment to its electricity base rates. The last increase in base rates occurred in 2010, over eleven years ago. Light & Power has been able to defer a request for a general rate adjustment through careful cost management, restructuring of the business and process innovations. However, the significant increase in costs and necessary investments, like the new 33MW Clean Energy Bridge plant at Trents, St. Lucy compels us to seek an adjustment in electricity prices. These expenditures are needed to maintain a safe, reliable and resilient electricity service that meets customers’ needs for a continued high quality supply.
We recognise that there is no ideal time for a rate adjustment and Light & Power acknowledges that with the impacts of the COVID-19 pandemic our customers are experiencing economic challenges at this time.
With this in mind, Light & Power has proposed rates to contain the impact to customers’ bills. For example, we have proposed that increases should be no more than $6 for those customers using less than 150 kWh in a month. These customers account for 35% of the Domestic Service tariff group, and are assumed to consist mostly of low-income customers. The typical bill increase resulting from the proposed rates is estimated to range from 5% to 20% depending on the tariff on which customers receive their service.
An estimated 10% reduction in fuel costs anticipated from the commissioning of our new 33MW Clean Energy Bridge plant by the end of 2021, is expected to substantially mitigate the impact of the proposed increase in rates even further.
While cost of living in Barbados has increased almost 40% since our last rate increase, Light & Power has invested in efficiencies and managed costs such that we are able to limit the increase being sought to 11.9%, substantially lower than the increase experienced by our customers for other goods and services in the country.
As a regulated entity, Light & Power is required to file an application for approval with its regulator before it can adjust its prices to customers. Light & Power also seeks approval to implement a more cost reflective rate structure that will be better suited to facilitate the changes expected in the newly reformed electricity market and our country’s transition towards 100% renewable energy generation.
Since the last allowed rate adjustment in 2010, Light & Power has made rigorous efforts to control costs in supplying electricity. Our company has managed expenses prudently and responsibly along with employing other key initiatives and measures to avoid having to seek a rate adjustment. Very few businesses can say that their rates or prices have remained unchanged for more than a decade. However, after more than a decade of not filing for a rate review, an adjustment is now necessary to enable Light & Power to modernise our electric grid and facilitate the achievement of the national energy policy goals.
You can count on us to continue to safely provide you with energy that is cost effective and reliable.