Asha Javeed

Lead Ed­i­tor In­ves­ti­ga­tions

asha.javeed@guardian.co.tt

All cus­tomers of the Trinidad and To­ba­go Elec­tric­i­ty Com­mis­sion (T&TEC) may be faced with in­creas­es to their elec­tric­i­ty bills come next year.

The Reg­u­lat­ed In­dus­tries Com­mis­sion (RIC) has pro­posed that all rates—for res­i­den­tial, com­mer­cial and in­dus­tri­al users of elec­tric­i­ty—in­crease by vary­ing amounts:

1. Res­i­den­tial cus­tomers will in­crease from 15 to 64 per cent,

2. Com­mer­cial cus­tomers will in­crease from 37 to 51 per cent, and

3. In­dus­tri­al cus­tomers will in­crease from 58 to 72 per cent. For E class in­dus­tri­al cus­tomers, that range is from 119 per cent to 126 per cent.

In ad­di­tion, the RIC has pro­posed oth­er changes which it says are fi­nal:

All cus­tomers will now re­ceive a month­ly elec­tric­i­ty bill, as op­posed to one every two months.

The rate at which the res­i­den­tial bill is cal­cu­lat­ed is now di­vid­ed in­to tiers—from one to four.

Cus­tomer charge for res­i­den­tial in­creas­es from $3 a month (it was $6 bi-month­ly) to $7.50 a month.

For com­mer­cial cus­tomers, the cus­tomer charge has in­creased to $35.

For in­dus­tri­al cus­tomers, the cus­tomer charges in­creased by $50 for D class and $100 for E class cus­tomers.

A dis­con­nec­tion and re-con­nec­tion fee of $150 will al­so be im­ple­ment­ed.

The rate of in­crease will be de­ter­mined by the new tiers the RIC has for­mu­lat­ed for all cus­tomers as it moves to a month­ly bill. All elec­tric­i­ty bills will, there­fore, be dif­fer­ent for every­one de­pend­ing on their elec­tric­i­ty con­sump­tion.

To il­lus­trate, if you use 200 kilo­watt-hours (kWh) of elec­tric­i­ty and your bi-month­ly bill was $58, ac­cord­ing to the ad­just­ment, there will be a 22 per cent in­crease to $71. Now, with the new tier for the month­ly bill—the 200 will be di­vid­ed by two to 100 kWh a month, which would make your month­ly bill half of the $71 at $35.50.

But at $35.50, there are oth­er costs to be added on—cus­tomers have to add $7.50 as a month­ly cus­tomer charge, and the 12.5 per cent Val­ue Added Tax (VAT) to get the fi­nal amount owed to T&TEC a month. (See Ta­ble)

The pro­posed rate in­crease comes af­ter three years on the draw­ing board, 12 weeks of con­sul­ta­tions and about sev­en months of de­ter­mi­na­tion.

It is the first rate in­crease in elec­tric­i­ty in T&T in 17 years.

The RIC al­so in­tro­duced a new C-rate class for high den­si­ty cus­tomers for serv­er farms and da­ta or cryp­tocur­ren­cy min­ing.

How­ev­er, elec­tric­i­ty rates are set to in­crease an­nu­al­ly from 2024 to 2027.

With the in­creas­es, RIC chair­man Dawn Cal­len­der said T&TEC’s an­nu­al rev­enue will now move from $3.2 bil­lion to $4.8 bil­lion, which is a 50 per cent in­crease and will al­low it to man­age its $5 bil­lion debt to the Na­tion­al Gas Com­pa­ny (NGC).

Cal­len­der said it is now up to T&TEC to im­ple­ment the rates.

Dur­ing a me­dia brief­ing at Hilton Trinidad in Port-of-Spain yes­ter­day, she ex­plained that the rates pro­posed are max­i­mum rates that T&TEC can charge. How­ev­er, T&TEC can opt to de­crease the rates.

She said the rates were done to meet the de­mand by T&TEC, which it pro­posed in its busi­ness plan for 2022-2026 to the RIC.

“We re­al­ly think the out­come was fair,” she said, adding the RIC’s work was not di­rect­ed by any­one.

In the first in­stance, how­ev­er, the pro­posed in­crease is fi­nal based on the RIC con­sul­ta­tion ear­li­er in the year.

In the com­ing years when T&TEC opts to in­crease its rates, though, it will have to give the pub­lic 21 days no­tice.

Cal­len­der ex­plained that the RIC was cog­nisant of small busi­ness and res­i­den­tial cus­tomers and opt­ed not to in­crease the rates first pro­posed in the draft de­ter­mi­na­tion. For ex­am­ple, in the draft de­ter­mi­na­tion, it was pro­posed the rates for com­mer­cial cus­tomers be in­creased to 51 to 63 per cent. How­ev­er, in the fi­nal analy­sis, the rates pro­posed were 37 to 51 per cent. The same ap­plied to in­dus­tri­al cus­tomers—the draft de­ter­mi­na­tion of rates pro­posed were 72 to 87 per cent but were re­duced to 58 to 72 per cent in the fi­nal de­ter­mi­na­tion.

She not­ed that the full doc­u­ments on the rate de­ter­mi­na­tion will be avail­able to the pub­lic by No­vem­ber 1.

T&TEC was giv­en a copy of the rate de­ter­mi­na­tion ear­li­er this week.

T&TEC chair­man Rom­ney Thomas yes­ter­day con­firmed that the util­i­ty had re­ceived the doc­u­ment and it is un­der re­view. He said T&TEC will ad­vise the pub­lic in due course.

Thomas had told Guardian Me­dia pre­vi­ous­ly that a rate in­crease is nec­es­sary for the util­i­ty “to main­tain a de­pend­able sup­ply to its cus­tomers.”

Even with the in­creas­es, T&T will still have the low­est elec­tric­i­ty rates in the Caribbean. (See Ta­ble)

T&T Cham­ber:

Con­cern for Cit­i­zens

Fol­low­ing the an­nounce­ment yes­ter­day, the Trinidad and To­ba­go Cham­ber of In­dus­try and Com­merce (T&T Cham­ber) called on Gov­ern­ment and State en­ti­ties to care­ful­ly re­view the im­pact of the rec­om­men­da­tions be­ing ad­dressed in the con­text of all cit­i­zens.

“The se­ries of is­sues in­cludes in­creased fu­el prices, in­creased elec­tric­i­ty rates, prop­er­ty tax and over­all in­fla­tion. While we un­der­stand the ne­ces­si­ty to in­crease rev­enue gen­er­a­tion to con­tin­ue with the na­tion­al de­vel­op­ment plan, we urge cau­tion and con­sid­er­a­tion for con­sumers. Ul­ti­mate­ly, this can have neg­a­tive im­pacts on peo­ple if these costs are com­pound­ed and ap­plied si­mul­ta­ne­ous­ly,” it said in a state­ment yes­ter­day.

The cham­ber said there is “need for pro­mot­ing a bal­anced ap­proach which does not lead to un­nec­es­sary hard­ships which can neg­a­tive­ly im­pact the pub­lic, par­tic­u­lar­ly the low­er in­come sec­tor and the vul­ner­a­ble”.

“Lo­cal busi­ness­es con­tin­ue to op­er­ate with a de­gree of un­cer­tain­ty due to many ex­ter­nal fac­tors in the geopo­lit­i­cal space. There is al­so the for­eign ex­change dilem­ma and chal­lenges with food se­cu­ri­ty. The es­ca­la­tion in crime has al­so re­sult­ed in in­creas­es in op­er­a­tional costs and a no­tice­able change in con­sumer pat­terns. There is the risk of a vi­cious cy­cle de­vel­op­ing, where there is a de­crease in dis­pos­able in­come, a de­crease in com­pa­nies’ abil­i­ty to pur­chase goods and rein­vest and a fur­ther surge in crime as the re­sult,” it said.

The cham­ber added, “While we are look­ing for ways to catal­yse and sup­port the non-oil and gas sec­tor, as a na­tion we al­so need to en­sure that we do not un­in­ten­tion­al­ly re­strict lo­cal in­vest­ment op­por­tu­ni­ties to do so. Ac­cess to fi­nanc­ing lo­cal­ly is a de­bil­i­tat­ing chal­lenge to SMEs and oth­ers and their ex­pan­sion ef­forts can be negat­ed if a holis­tic view is not im­ple­ment­ed. We sug­gest that there should be an analy­sis and close col­lab­o­ra­tion be­tween min­istries and State en­ti­ties with re­gard to all de­ci­sions be­ing tak­en.”

Im­pact on the cost of liv­ing

Uni­ver­si­ty of the West In­dies econ­o­mist Dr Vaalmik­ki Ar­joon says the ex­ac­er­bat­ed cost of liv­ing through these rate hikes means part of the added pur­chas­ing pow­er com­ing from the in­crease in the min­i­mum wage for those in the low­er in­come brack­et will be erod­ed.

“Fur­ther, it will yet again com­pound the over­all cost of do­ing busi­ness lo­cal­ly. Con­sid­er man­u­fac­tur­ers whose ac­tiv­i­ties run for 24/7 and are classed as in­dus­tri­al. Us­ing the new rates pro­posed by the RIC, if an en­er­gy in­ten­sive D3 man­u­fac­tur­er has four plants which use a to­tal of over two mil­lion kWh, their elec­tric­i­ty ex­pense will in­crease by over $596,200. A much small­er D2 class man­u­fac­tur­er us­ing 57,000 kWh will see an in­crease in their bill of over $18,200,” he said.

“In­deed, the mag­ni­tude of these ex­ac­er­bat­ed costs will place even more fi­nan­cial bur­dens on man­u­fac­tur­ers. Us­ing the most re­cent da­ta from the Cen­tral Bank of Trinidad and To­ba­go, the man­u­fac­tur­ing sec­tor is un­der­utilised by al­most 35 per cent, and this ca­pac­i­ty un­der­util­i­sa­tion can wors­en with these in­creased rates. These costs can jeop­ar­dise the per­for­mance of this sec­tor—since the first quar­ter of 2021, the non-petro­chem­i­cal man­u­fac­tur­ers sub­stan­tial­ly in­creased their pro­duc­tion lev­els, en­hanced their ex­ports and for­eign ex­change earn­ings.”

Ar­joon ex­pects that all busi­ness­es will pass on this added cost to con­sumers in the form of high­er prices.

“This will com­pound the cost of liv­ing for all house­holds, as con­sumers will face these in­creased prices, plus their own high­er res­i­den­tial elec­tric­i­ty charges. In the short term, in­fla­tion will wors­en,” he said.

“High­er elec­tric­i­ty costs will al­so put pres­sure on busi­ness prof­itabil­i­ty, com­pound­ing their fi­nan­cial stress from the pan­dem­ic. The ris­ing prices will en­cour­age more work­ers to clam­our for high­er wages—over 220 thou­sand em­ploy­ees in the reg­is­tered labour force earn less than $6,000 per month and these high­er elec­tric­i­ty prices will low­er their pur­chas­ing pow­er fur­ther and con­tribute to ex­ac­er­bat­ed pover­ty lev­els.”