Belize Electricity Limited and ASR/BSI's power generating company, Belcogen, are in a dispute about electricity rates - and it was before the Supreme Court today.
Its a disagreement over money that started sometime last year. The press had learned about it and kept asking for details, but, the lead personalities from BSI chose not to address it, saying only that they were in discussions to try and resolve it.
Well, it appears that those talks have broken down, and the two sides are looking to litigation to resolve the issue.
We've since found out that BEL is disputing the rate at which it buys power for the national grid from Belcogen.
There's a power purchase agreement between the two companies that's at least 10 years old now. That agreement set out the rates at which BEL would buy the power that ASR produced using bagasse.
We understand that BEL was disputing a portion of that bill, and they withheld payment of approximately $713,000 which Belcogen said the electricity company owed them.
That dispute has been before Justice Courtney Abel for some time now, and today, he ruled that it must be resolved by an arbitrator.
Outside of court, Belcogen's attorney outlined the elements of the dispute to us:
Eamon Courtenay, Attorney
"The issue between the parties is that there is a power purchase agreement under which the energy from Belcogen is sold to BEL at an agreed rate. It has been in existence way back from 2007 and a dispute has now arisen last year in which BEL is saying that the tariff that is set out in there was not approved by the public utilities commission and therefor it is invalid. Therefore they had stopped paying the correct rate. Under the power purchase agreement where a dispute like this arises is to go to arbitration. We invited BEL to agree to an arbitrator, they didn't agree and so we had to come to court to ask to make an order that an arbitrator is appointed. We had long arguments. The public Utilities Commission itself has applied to join these proceedings to stop it from going to arbitration. The judge dismiss that application from the public utilities commission and eventually made an order last month that the matter should go to arbitration."
"We have now agreed that the former court of appeal judge of Belize Dennis Morrison is going to be the arbitrator to resolve the dispute between the parties. The tariff in the power purchase agreement is set and has a clause for it to escalate on an annual basis. The argument from BEL many years into this. As you can imagine they have been selling power for over 8 years, is that the rate is not approved by the PUC. Clearly that makes no sense and it's incorrect. As a matter of fact all power purchase agreements and rates must be approved by the PUC before you can start generating power and selling power to BEL. There is no doubt about that, they I really don't understand their argument quite frankly, it seems that their files might be incomplete because they are suggesting that they don't have anything from the PUC itself confirming the approval of the rate. They just need to check their files. This has been a matter that has been going on for years. To the extent that they dispute applicability of the escalator, that is a matter that the arbitrator is going to interpret the formula set out in the power purchase agreement, confirm, in our view, that the rate and tariff is correct, confirm how the formula is to be applied, and that in fact the rates that we have been charging to BEL are correct. The amount that was in dispute they haven't paid over the last year or so. It is about $800,000 and yesterday they sent a cheque paying that amount without prejudice and maintaining their position but said 'here's the money and if we are correct then Belcogen should repay them'."
We contacted BEL's public relations department, and via email, the company says, quote, "Over the period 2015-2017 BEL has paid over $47 million for power purchased from Belcogen. However, a dispute has arisen over rate payments for the same period, for which BEL withheld approximately $713,000 from Belcogen." End quote.
The electricity company says that they entered into discussions with Belcogen to try to resolve it, but, quote, "Belcogen ended the Mutual Discussions that were being conducted with BEL and referred the dispute to the court. The court has decided that the matter should go to arbitration."
Explaining why they paid the money, BEL says that in a separate, but related matter, they have requested that the Public Utilities Commission review the rates being charged by Belcogen. From their perspective, Belcogen has been unable to satisfactorily justify the its rates, which are, quote, "considerably higher than the Power Purchase Agreement between the two parties." End quote.
BEL says that the PUC has agreed to conduct a review, and that's why they decided to pay that 713 thousand dollars they were withholding, without prejudice. They say that if the PUC's review of the rates is in their favor, it is expected that Belcogen will reimburse BEL for all overpayment, which will include the 713 thousand dollars in question.
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