Belco accuses regulator of ‘inaccuracies’

  • Investment trend: Belco produced this graph showing its year-by-year capital investments to counter comments made by the Regulatory Authority

    Investment trend: Belco produced this graph showing its year-by-year capital investments to counter comments made by the Regulatory Authority

Belco has accused the new electricity-sector regulator of getting it wrong on the utility’s track record on investment in infrastructure.

And the power provider went on to say the Regulatory Authority was hampering Belco’s ability to provide a safe and cost-effective electricity supply, because of its failure to produce a supervision framework within its first ten months overseeing the power sector.

The utility was responding to the Regulatory Authority’s claim that there had been a “chronic and long-term lack of investment in generating assets and transmission network by Belco”.

Belco stated: “Over the past 12 years, Belco has invested $350 million into constructing new peaking generators and upgrading infrastructure, systems and facilities as part of its annual capital expenditure programme.

“On an annual basis, Belco continues to invest approximately $20 million into infrastructure, system and facility upgrades.

“We estimate these costs will escalate based on the challenges that come with the continued use of its aged assets and infrastructure.

“The RA’s suggestion that there has been a ‘chronic and long-term lack of investment in generating assets and transmission network by Belco’ is factually inaccurate.”

The RA, which also oversees the telecommunications sector, was given responsibility for the island’s electricity sector too by the Electricity Act, as of October last year.

Yesterday, the regulator said its licensing framework for the electricity industry had been finalised and had received ministerial approval last month.

The three types of licence will cover bulk generation, one for renewable and one for non-renewable, and another for transmission, distribution and retail.

Belco is eligible for a bulk generation licence and the TD&R licence, the RA stated.

In its commentary, the RA added that others apart from Belco had expressed interest in acquiring licences.

Belco said there were “a number of inaccuracies within the RA’s press release concerning the status of its licensing regime”, but said the claim of a lack of investment in plant by the utility was the most egregious.

Belco said that as per its ongoing 25-year planning cycle, the need to invest in its generation plant and transmission and distribution infrastructure was identified no less than 12 years ago.

Since June 2005, Belco said it had been successful in achieving the necessary planning and environmental approvals.

“Unfortunately, however, over the past 12 years, Belco has been unsuccessful in achieving the other required regulatory approvals from the various government administrations and regulatory bodies to build that replacement generation and upgrade T&D assets/facilities to mitigate challenges that would come with aged infrastructure,” Belco added.

“After extensive consultation with the RA, Belco submitted its Capital Plan to the RA in February 2017. The Plan was returned by the RA without having been considered.

“It is unacceptable that ten months after the RA assumed oversight of the electricity sector, the continued absence of the necessary regulatory regime, has, and continues, to hamper Belco’s ability to provide Bermuda with the safe, consistent and cost-effective electricity supply it requires.”

As a regulated entity, Belco must receive the required regulatory approvals before it can proceed, the utility added.

“Through two government administrations and three regulatory bodies (including the RA), Belco has been denied these necessary permissions and has been unable to proceed with the larger infrastructure projects (ie replacement generation, transmission and distribution upgrades and conversion to liquefied natural gas) that are critically needed to provide the country with consistent, safe and cost effective electricity.

“As a result, Belco now finds itself and the country at a major tipping point.”

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Published Aug 16, 2017 at 6:12 pm (Updated Aug 16, 2017 at 11:37 pm)

Belco accuses regulator of ‘inaccuracies’

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