The Public Utilities Commission’s (PUC) proposed meeting with the Guyana Power and Light Inc. (GPL) will be meaningless given that the former has been completely degutted of any authority of the GPL’s tariffs.
This is according to Chairman of the Alliance for Change, Khemraj Ramjattan, who noted that when the PUC was established one of its inherent powers was the regulation of the electricity rates.
The PUC status at that time was when the power company was initially privatized.
He noted that now that the company is back under Government control, “the situation is now so vastly different…Government can behave like private companies and not want to reduce rates; as such it should be regulated by the power company.”
The AFC chair explained that for the GPL to not want to be regulated by the PUC is tantamount to breaching the spirit of the law.
“I believe that the PUC is right for calling for a hearing and I believe that whatever its recommendations, they ought to be adhered to…You can’t just create the PUC, give it powers to regulate, and when it is now regulating you say no, it does not apply to us.”
In recent times, when the issue of PUC being excluded from the tariff decision-making process was highlighted, GPL officials had often referred to the Electricity Sector Reform Act 1999 (ESRA), which according to them already allows for regulation, hence the need for PUC to intervene was unnecessary.
However, a senior official at GPL has indicated that it is too early to adjust any tariff rates for electricity provided by the GPL, adding that there was also still the issue of its 2008 income to be reviewed.
Then there is the review of the 2009 budget for the power company.
The comments come in light of the fact that the AFC has adopted the position that, since the price of oil on the world market is in the vicinity of US$50 per barrel, the December electricity rates should reflect that reduction.
This position was prompted by a recent announcement by Prime Minister Samuel Hinds that, if the price was to fall below US$50 per barrel and remain below that mark, a decrease in electricity rates would be possible.
The comment was made in response to a question about when a possible reduction could be seen in fuel prices locally.
At the time, there was already a significant decrease in oil prices on the world market, then down from a high of US$147 per barrel to below US$65 per barrel. Present day prices for oil hover at the US$50 mark.
GPL is currently operating at just about break-even, when one considers its revenue against the total cost of operations, with fuel supply being one of the largest expenses, according to the official.
Earlier in the year, the total cost of operations far outweighed the revenue generated, which prompted the government to inject more than $3B into the company.
Another factor compounding the situation is the fact that the GPL is faced with 33 per cent technical and commercial losses.
This is a minimal reduction, as reported earlier, and the fact that the company has been more or less strapped for cash is the reason behind the very minimal decrease of about three per cent, given that the company had to almost cease investment in reducing the losses.
Ramjattan posited that he was almost certain that the administration would respond to the AFC call in the same way most minibus drivers responded to the reduction in fuel prices, blaming increased expenditure on spare parts. As such, the company will claim that it cannot reduce its charges.
People’s National Congress Reform Executive Member Aubrey Norton, in an invited comment, said that there should be an immediate reduction in the electricity rates.
He drew reference to the fact that the government was demanding a reduction in minibus fares as a result of the said reduction in fuel prices.
Norton added that a reduction of electricity prices will have a positive ripple effect on the country, in that there would be increased economic activity, resulting in growth of the economy, with increased revenue for the state.
He noted that it would also give a little more to the average Guyanese, in that it would be additional money in hand to spend on other needs, such as food.
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