‘Power
producers ripping off T&T’
TG/Shirley Bahadur
Hazel
Brown
By
Asha Javeed
The
Trinidad Guardian
Port
Spain
Petroleumworld.com 02 12 06
Consumer
rights activist Hazel Brown believes the big issue in the Regulated
Industries Commission (RIC) draft determination for T&TEC’s
rate increase is the price of gas that will be passed through
to consumers.
To
the RIC’s credit, she said, it was the first time the
public was afforded a copy of the Power Purchase Agreements
(PPA) between Powergen and Trinity Power.
“You
can see the evidence that these gas contracts are scandalous
and disgusting and something needs to be done,” said the
outspoken Brown in an interview with the Business Guardian last
week.
“The
cost for generation they pay to Powergen and Trinity and the
system by which they get paid is really a rip-off,” she
explained.
Brown
spoke about how the domestic customers would be treated when
the increase came to pass by March 1.
T&TEC
had applied to the regulators for a rate review in 2004 and
the RIC determined that the measure will result in, at most,
a 1.7 per cent increase in electricity bills.
Brown
explained that from what she can discern from the RIC’s
300-plus page document, T&TEC buys gas from the National
Gas Company, transports it and converts it.
“That
raises a question of efficiency,” she noted.
She
observed that RIC stated that the system loss is “substantial”
yet allowed 90 per cent of the pass through cost to be paid
by consumers.
“That
is no way to deal with something which is 70 per cent of your
cost, being sold at the wrong price and is still being wasted.
This is unreasonable.”
Brown’s
suggestion was for the RIC reduce this amount.
“Let
T&TEC go and find who is responsible for this arrangement
and renegotiate. The consumers shouldn’t have to pay for
T&TEC’s inefficiency given the fact that a lot of
it is being wasted.”
RIC’s
chairman Denis Pantin explained in a public consultation held
on Monday at the Old Fire Building in Abercombry Street, Port-of-Spain,
that the generation costs which comprise about 68 per cent of
total cost of supplying electricity (conversion cost—41
per cent and fuel cost—27 per cent) are uncontrollable.
This
is because the natural gas sales from NGC are denominated in
US dollars and escalate by four per cent annually.
He
pointed out that the RIC has disallowed generation costs in
the sum of $578 million over the next five years.
Brown
believes that customers are not aware of the additional fees
that will now be added to the bills.
In
addition, she slammed the RIC’s decision to set up a Natural
Disaster Preparedness Fund which it suggested should be funded
by a billing fee which will be charged for customers.
Residential
customers will be charged a flat fee of $1 per billing, commercial
customers will pay $5 and industrial customers will pay $90
per billing.
This
sum will be deposited in an escrow account and can only be withdrawn
with written approval from the RIC.
Pantin
had said the RIC arrived at this decision because it learnt
from Jamaica, where electricity rates went up seven per cent
after the electricity infrastructure was damaged following Hurricane
Ivan in 2004.
But
Brown questioned the RIC’s authority to make this decision.
“This
has nothing to do with the fixing of rates. The money that is
going to be realised is going to be put in a separate fund—it
is not going toward the cost of providing electricity. They’ve
not been able to relate it—either the usage or the cost
of providing the service and that makes it a tax. And that is
outside the competence of the RIC,” she said.
She
said the way you would usually deal with rebuilding infrastructure
was through insurance.
The
RIC disallowed promotional and branding costs, amounting to
$10.9 million for the period 2006-2010.
This
decision did not find favour with Brown.
She
said while she was happy that the RIC had managed to clamp down
on the company’s overall operating expenditure, making
its proposed operating expenditure $280 million lower than T&TEC’s
submission, she believed the company should have an advertising
budget.
“This
is especially for those teams which they sponsor. That is unreasonable.
T&TEC has to make a contribution, which should be transparent
and justified. And why shouldn’t sporting groups and other
activities benefit from this contribution?”
The
RIC had argued that T&TEC was a monopoly and extended advertising
was unjustified.
The
Trinidad Guardian
Thursday 9th February 2006
