Bridgetown.
The Fair Trading Commission (FCC) issuing a motion to reveiw the the fuel adjustment clause on the bills issued to customers of the Barbados Light and Power Company(BL&P). The reveiw will take place after the FCC released the findings of a report on fuel clause adjustment.
A source told Trakker News that the review will allow for the adjustment to be calculated based on historic instead of projected data.
The fuel clause adjustment is a mechanism designed to recover the cost of fuel oil used in the generation of electricity and is adjusted by the FCC on the price that customers pay for each kilowatt hour of electricity as the cost of fuel used to generate electricity rises and falls.
According to the source, the FTC which to improve its ability to verify and audit the fuel clause adjustment calculation which they think will significantly enhance the transparency of the billing process.
It is to this end that the commission intends to initiate a motion to review the FCA and proposes that it should be based on the actual energy generated and fuel costs that are incurred by the BL&P in the generation of electricity.
The source said that several members of the FTC's is of the view that the electricity generated and the fuel expenses incurred in the previous month should be used to calculate the fuel clause adjustment calculation
The motion therefore proposes that the power company should move from the use of projected to historic data.
Additionally, the commission proposes that the BL&P may, at its discretion, continue its practice of smoothing the adjustment, that is, spreading fuel costs over more than one month to reduce the impact of large fluctuations on customers. The issue of smoothing is expected to be addressed in the motion.
The commission argues that maintaining the fuel clause adjustment at a constant level for several months will result in significant under or over recovery relative to actual fuel costs incurred by Light and Power.
This will then expose the company to increased financial risk if there is significant under recovery, while significant over recovery would mean an unnecessary burden on customers.
The FTC in its review also made it clear that while it acknowledges that there are several benefits associated with monthly meter readings, it is aware of the associated increased costs.
As it relates to the production of electricity, the FTC is of the view that as a priority, the BL&P should replace the steam turbine generators with a more efficient generating plant in order to reduce input fuel costs.
The BL&P submitted its integrated resource plan last month for approval of the commission.
Among ITS recommendations are the retirement of the two steam turbines, the construction of a new generating plant, the use of renewable energy options and energy efficiency measures.
