Chairman of the Electricity Regulatory Authority Cline Glidden said Tuesday he fears the government has already agreed in principle to a new licence agreement with Caribbean Utilities Company.
If CUC were to have its licence renewed before the issue of recouping costs of Hurricane Ivan was dealt with, Mr. Glidden thinks the government would lose its negotiating leverage to prevent or minimize large electricity-rate increases.
‘The whole basis for my concern is that I believe the negotiations for increased rates and for the licence renewal agreement cannot be done separate and apart,’ he said.
In the announcement of its 2005 year-end results on 25 May, CUC said it was entitled to a 9 per cent rate increase effective 1 August.
However, the company said it had commenced discussions with government on alternative cost-recovery methods in effort to reduce the financial impact on consumers.
Mr. Glidden said he had not been advised of the nature of those discussions, even though he is still chairman of the Electricity Regulatory Authority.
‘The new government has not met with the authority,’ he said. ‘We called a director’s meeting last Wednesday, but received notice from the ministry instructing us to postpone all meetings until further notice.’
Mr. Glidden said the ERA had scheduled the meeting to present and discuss CUC’s year-end results.
Even though he is out of the information loop with what is going on between government and CUC, Mr. Glidden said he heard through his sources some of the details of what CUC is proposing as an alternative recovery method.
‘It is my understanding, that they’re suggesting a phased-in surcharge over three years,’ he said. ‘I think it’s a creative move on CUC’s part, and a feather in their cap, but I’m not sure if it’s sharing the pain or just deferring the payment by consumers.
‘And I’m not sure if it’s enough sharing of the pain, either, but it is something, rather than just raising the rates 9ine per cent.’
Still, Mr. Glidden said that if government has already indicated, it will agree to a new licence for CUC, the consumers will suffer.
‘The ace in the hole (in rate increase negotiations) has always been the extension of the licence,’ he said.
‘We’re not only talking about a 9ine per cent increase, because we’re already paying higher fuel-factor costs,’ he said. ‘And any electricity rate increases will increase costs to supermarkets and other establishments, who will pass those costs on to consumers as well.’
Some of the signs that make Mr. Glidden believe a deal is already done include Leader of Government business Kurt Tibbetts meeting with CUC only days into his administration.
CUC then announced plans to purchase new generators, something Mr. Glidden said had not been announced previously, which might indicate the company feels safe enough with the licence-renewal issue to make major capital investments.
‘How could they justify replacing these generators when they only have six years left on their licence?’ Mr. Glidden asked. ‘Have they been guaranteed that they will get a licence?’
Mr. Glidden said he was not sure if he would be asked to stay on with the ERA.
‘I haven’t resigned because I believe this issue is very important to the country,’ he said. ‘I am willing to serve and assist in any way, but only if there is still a reason to do so. If the government has already given into CUC, there’s no reason for me to stay on.’
The minister responsible for electricity utilities was in a Cabinet meeting all day Tuesday and unable to respond to this article before press time.
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