The Challenges as BEL Transitions - The 4.1.1 Print E-mail
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Thursday, 17 May 2012 00:00

BEL Corporate HeadquartersSince Thomas Edison's first power plant lit up 800 light bulbs in New York City on the evening of September 4, 1882, electricity has become our most prevalent energy form. It drives a nation’s economy and powers smart technologies that enhance our quality of life. This philosophy is no different in Belize. When the previous owners of BEL decided that the best course of action was for government to take over BEL, the government did. The options were not many, and a responsible government would ensure that the country is not plunged into rolling blackouts. Electrical energy has become one of those all important inputs for private and business consumers. As the new BEL approaches its first anniversary, it is imperative that we reflect on the transition, what has transpired and the future goals and objectives. Of course, we must be mindful of the challenges that were faced and the challenges to be faced in the future.

The cog of the wheel to greater prosperity has to do with having the needed financing for expansion as the population continues to grow, and the natural expansion progression to increase access. BEL had loan covenants and other costs that still have to be met and as much as possible, we want to be assured that there is a reduced or zero dependence on government subsidies. The new CEO, Jeffrey Locke, exercised a very business-like and financially appropriate strategy when he eliminated the secondary layer of management. Under the previous management structure, there was a layer of vice presidents, which was costly to the company. The CEO decided that the company could hire one more senior manager and maintain the same level of efficiency. This reduced the company’s overall expenditure, but increased the customer care index of the company. The focus then was on customer service and customer care.

In December of 2011, BEL filed for a rate reduction, something that the people of Belize have not heard of. The company indicated, within its business plan that it needed to make some 117 million dollars in investment to ensure that the same level of efficiency would be maintained, while expansion work was taking place. The regulator, the PUC, reduced the average per kilowatt hour (kWh) by 6.14%.  For consumers, this meant that the cost of electricity usage as a percentage of their monthly expenditure was reduced.  To maintain efficiency and long-term sustainability, BEL is not without challenges.

BEL dispatches power purchased from Comision Federal de Electricidad (CFE), BELCOGEN, hydro. In times of emergency or for black starting, if the system fails, then their gas turbines are utilized. Imported power from Mexico is indexed to the price of oil; therefore, if the price of oil goes up then the cost of power goes up. BELCOGEN utilizes the byproduct bagasse (biomass), which is converted to electricity. Hydro-electricity is another source, but of course the amount of generation is dependent on the amount of rain that the country receives. In dry weather, the amount of electricity generated is reduced. During the dry weather, most of the dispatched power might have to be from CFE, which would be the most expensive power. If the BELCOGEN plant is inconsistent then the forecasted supply might not be realized. One of the primary reasons that the Fortis-led BEL had problems was as a result of not being able to meet purchase and invoice commitments. There were negotiations for a more favourable price, which was made more feasible because of the change of ownership from private to public. This does not eliminate the fact that CFE power prices are indexed to the price of oil.

The CEO mentioned the need to further explore renewable sources of energy, such as, solar, wind, and geo-thermal, since we already utilize hydro. Worthy of mention, at this point, is the fact that the country now has an energy plan that provides excellent guidance on the way forward. The renewable energy technology (RET) can be quite expensive at initial startup, but in the long run, the benefit will far exceed the cost. The reduced cost will also include pollution reduction or negative externality. These sources of supply can be added to the national grid and greatly increase access, especially with the topography of Belize. With a low population density, the cost of expansion can be very expensive, but in the long term, there should also be further reduction of carbon emissions. Belize is already among the countries with the lowest levels of carbon emissions.

It is noteworthy to mention that even with the reduction in electricity rates, BEL is still meeting its loan covenants and is not at risk of default. This can only be achieved if the company operates efficiently and ensuring that waste is reduced. The CEO also has assured the employees, all 270 plus of them, that their jobs would not be lost.  So, with a rate reduction, employee retention, and loan amortization schedules being met, the company maintains its viability. Recently, some employees, who were not satisfied decided to protest. The public’s understanding of the protest was that it had to do with termination within their ranks. They called for the CEO’s head, which seemed premature, because if they had a collective bargaining agreement (CBA) and it stipulated that discussions should be addressed to the human resources manager, then that should have been the process. We should not bypass or attempt to bypass processes and adherence should be two-fold. The present position is that the two sides are in mediation and not arbitration. Mediations are usually conducted to find win-win solutions, not win-lose, or lose-lose. The mediation is not open to the public, but it is the hope that the situation will be resolved in an amicable manner that is beneficial to all. BEL will have challenges going forward, but with the good stewardship of the government, the Board, management and employees, and consumers, there is every assurance that the lights will burn even brighter.

Last Updated on Thursday, 17 May 2012 05:50