GPL calculates tariff increase of 27.62%
-board still to decide on actual amount
Stabroek News
May 18, 2003
The power company filed its final return certificate showing the need for a 27.62% increase in charges from June 1 as against the 21.68% increase in the interim filing in January and the average 16% increase implemented from April.
However, this new tariff is not going to be applied on bills issued from next month as Guyana Power and Light (GPL) is yet to decide on what increase to apply.
The company has been losing its large clients to self-generation because of the surging costs of electricity in recent years and with the firm now totally in government control, the aim would be to meet necessary expenditure to keep the operations going and to achieve a break-even point.
The board of GPL has retained the rate fixing mechanism, which has a guaranteed return of 20% on preferred stock and 23% on common stock, to allow for a return on capital employed.
This formula yielded on the audited statements for 2002 a shortfall in revenue of $2.1B as against the $2.6B initially calculated from the unaudited accounts. The filing with the Public Utilities Commission (PUC) is for a rate increase on December bills of 21.5% but with the additional loss of revenue in the first quarter of this year, the rate increase would have to be 27.62 per cent. The interim accounts had shown an accumulated loss of $500M while the audited accounts showed a loss of $149M.
The bad debt figures among others in the account were adjusted downwards. Bad debt in the unaudited accounts was $1.1B but was adjusted to $734M in the final accounts.
It is not clear with the adjustment in the loss position, why the rate required on December bills is still 21.5% and not lower.
PUC Chairman, retired Justice Prem Persaud, earlier this week indicated that the commission was still to be advised by the power company on what rate increases it would be applying on bills to be issued from June 1. The final return certificate was made by the statutory deadline of April 30, but the audited accounts were not forwarded to the commission at a later date.
The commission has no authority to fix rates for the power company and can only verify whether the calculations are accurate.
With fuel prices dropping, it is not clear how the board of GPL would look at new rates for the utility.
Chief Executive Officer of GPL, Robin Singh, was not in a position to speak on the rate increases to be applied from June 1 when contacted earlier this week.
The board is expected to make a public pronouncement on the matter. Chairman, Ronald Alli, could also not be contacted for comment.
GPL faces a number of challenges to stay afloat including raising financing to correct deficiencies in metering; stemming the commercial losses and keeping its large clients.
The board already indicated that its focus would be on commercial losses to yield quick savings to allow it to fix the technical system.
The new managers have to come up with a crisis business plan to take the company forward.
