LIME Rate Hearing Overdue

Reduce Telephone Rates
This is a call on the Political Directorate to do something about the telephone rates. It seems a serious contradiction that as we speak of economic recession and of reduction of prices to the consumer, one company is allowed to continue with not just high rates, but unreasonable rates to the consumer.

It is our contention that the existing rates for land lines is prevailing against Sections 10 - 14 of the Utilities Regulations Act. Nowhere has the Price Cap Mechanism replaced the legislation governing utility regulation in Barbados; in fact it falls within the scope of the legislation. BANGO in its submission to the FTC with respect to the Review of the Price Cap Mechanism urged the FTC to hold a hearing into the reasonableness of the rate hikes which the telephone company imposed on its customers over a three year period; 2005-2008.

According to the Utilities Regulations Act (URA), the company must show reasonable cause for increases of 71% when in 2005, the same FTC ruled that the company did not require an increase. How could things have changed so drastically? Why was a hearing not prescribed as the method of Review of the Price Cap although all the consumer advocates put up reasonable cases for a hearing? The FTC simply rejected the idea of a hearing and instead held a consultation, but the question remains, does the legislation give the FTC this kind of lattitude?

No! The legislation requires every price hike to be accompanied by a total scrutiny of the company and the company has to show reasonable cause for rate hikes URA Section 10; the burden of proof is on the company URA Section 14.

More important is the provision for review methods prescribed by the URA Section 15 which states as follows:

• 15 (4) In carrying out a review, the Commission shall hold a hearing in accordance with section 33 of the Fair Trading Commission Act.
• 15 (5) At a hearing referred to in subsection (4),
• 15 (5) (a) an interested party is entitled to appear in person or be represented by an attorney-at-law; and
• 15 (5) (b) a consumer is entitled to be represented by Public Counsel.
• 15 (6) For the purposes of this section “consumer” means a person using a utility service set out in the Schedule for domestic purposes

Whatever the FTC held in 2008 did not amount to a review if we are to follow the legislation quoted above. This company has shed more than half of its employees in Barbados; lowering its costs and reporting super profits. This is a cost which would have been considered in setting the rate, which would now be drastically reduced. If in 2005 a rate hike was not allowed because at the time, the company was earning profits in excess of the statutory 12% limit, it is unquestionable that right now they are further exceeding the statutory limit. The question is, how far past the Statutory Limit is reasonable, when in truth and in fact, the statutory limit is already reasonable?

There is no doubt in our minds that if Cable & Wireless came under the scrutiny of a hearing to Review its application of the Price Cap right now, Bajans could expect a drastic reduction in landline rates. So why is this not happening? This company which claims to love Barbados so much, has our land line rates up in the air; our cell phones rates up in the air; Internet rates up in the air; sending home workers; making super profits and providing a lousy service. When we take all of these factors together, a rate reduction is inevitable.

Three years ago, Barbadian householders were paying an average $28 for communications; basically a landline. The monthly bill to the average consumer of landline, cell phone and internet is now more than three times the total spend on telecommunications than in 2005. Many are in the range of five to ten times what they were spending in 2005.

Yes, it is one thing to say that Internet and cell phones were not so popular back then, the point is that for the consumer to be virtually laden with these costs for developmental technology in order to keep up and compete with the rest of the world, is very unreasonable considering that the company was making 14% in profit on the landlines alone and that the landline is the base or the carrier of these other services. Not only are these services a free ride on the landline, they are at a higher rate than the landline; producing a higher monthly bill to consumers than the landline would.

It is not only ridiculous but totally unreasonable for Barbadians to be saddled with such high telecommunications costs; from Price Cap to the interconnection agreements. This Government has spoken about the ill-effects of monopolies and against such monopolistic practices and we are calling upon the Prime Minster to act in the interests of people of this country and its development and carry out his promise to deal with monopolies by starting with a Review of C&W's application of the PCM, which has dealt a severe inflationary blow to many Barbadian consumers.

Money for bottles 2

Yes, anonymous, kudos to the entrepreneurs for creating a business to make money and improve the environment. But haven't you noticed that we don't have a socialist state where Government does everything. So why the "shame on government" old chap. Government's role is to enable not replace business!!

Electricity rate hearing

If Barbados Light & Power gets an anticipated rate increase this year then we can add, if memory serves me correctly, telephone rate increases of four per cent to those after August. Latest information is that an application from BL&P will be with the Fair Trading Commission within 10 weeks. So consumers do not have much time to galvanise themselves as Intervenors. Some good news though is that at least one organisation is seriously considering approaching the Office of Public Counsel. Although the OPC no longer has the experience of Barry Carrington who has moved on to the Ministry of Energy it does have some resources. And I repeat : this will not be an across the board increase in electricity rates. BL&P has made it clear that it considers that business has been bearirng the burden of electricity rates for consumers and this should change. BL&P has been quite transparent in that it has been meeting with consumer bodies and has been frank in their discussions. Kudos to them but these are still very difficult times, breadwinners are out of work for months, prices are still on the rise and life is harder for the more disadvantaged among us. Many are just holding on.

Electricity rate application

I had cautioned consumers via this blog last year that the electricity rate application would not be a request for a simple rate increase. In other words in a worst case scenario which assumes the company gets everything it wants Barbados Light & Power Co. Ltd consumers would not be paying a five or 10 per cent increase in rates across the board. Confirmation of this has come from none other than Peter Williams, Managing Director of BL&P following the decision by the Fair Trading Commission last month to grant the company all the depreciation rates requested.
So what are the implications?
Well we have to wait on the application in another two months or less to get these details.
Currently, the electricity bill is made up in two ways : a Fuel Adjustment Clause and usage rate. So if the fuel charge goes up and we use more electricity our bills are higher on both accounts.
If I interpret what Mr. Williams has confirmed correctly the company will be seeking a new mechanism or an additional way of charging consumers.
I had assumed, and I speak subject to correction, that some consumers, in a worst case scenario, could end up spending more on fuel adjustment, more if their usage goes up and more under this yet to be revealed mechanism to be revealed.
The looming rate case could have major implications for the cost of service for business and consumers alike, especially small businesses. Electricity is a major cost in any business hence there could be major implications for business as well ordinary consumers with limited incomes, exagerated moreso by the global financial meltdown.
Hallam Hope
caritel@hallamhope.com
(246) 424-0894
(246) 822-1414