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RIC in Collusion with T&TEC
Posted: Thursday, March 9, 2006

By Stephen Kangal

It has become increasingly clear to participants that with every edition of the RIC consultations held on the proposed 45% rate hike for T&TEC including at the National Consultation held on 7 March at the Crowne Plaza that the RIC is doing a PR con- job at the bidding of T&TEC/OWTU using these consultations as a rail-roading fašade.

This exorbitant rate determination (more than 100% over 5 years) is looming as a done deal irrespective of the rising tide of negative feed back received from consumers. In fact it was amazing that RIC insulated representatives of T&TEC from public scrutiny/participation at these consultations. Although present they were not allowed to address the concerns of consumers. The RIC is doing an excellent proxy job for T&TEC.

The RIC never admitted to the 45% increase for residential consumers nor the 55% for commercial customers the latter of which will also be passed on to consumers. In fact the RIC described this increase as "nominal". No wonder why commercial interests were absent from the consultations. Why must consumers be levied with a disaster tax when the RIC does not have a tax imposing competence? Why does not T&TEC take out commercial insurance on its plant and machinery and keep its hands off our millions on which it will realise interest and charge VAT?

Consumers must be alerted that in addition to the 45% immediate increase in April 2006 there will be annual increases of 10% until 2010. Powergen and Trinity are receiving 33% of their gas free from Government, 33% at a very subsidised price and only 33% from the open commercial market. Why must our rates be therefore compared to other Caribbean tariffs when 70% of the operating cost of T&TEC takes the form of subsidised gas (27%) and power (43%) that is a local additive?

In the rest of the world electricity tariffs are determined using economic considerations and the sliding scale rule. That is to say as the consumption of kwh or units of electricity increases beyond certain fixed amounts the price per unit of consumption decreases because of economies of scale. The RIC has proposed the very opposite in that consumption amounts beyond 400kwh (units) are now priced at 32 and 35 cts per unit. The RIC has stepped beyond its remit by establishing new social policy criteria on pricing electricity It has substituted the ability of consumers to pay for the real economic and business cost of supplying electricity. This is a form of discrimination and violation of due process that infringes the equality/property provisions of the Constitution. Government must now intervene to save us from the laiissez faire manipulations of the RIC and scale down the increases.

Although requested to undertake a study to assess the indirect effects of the proposed rate increase on the Retail Price Index and food prices the RIC did no such study. It is misleading consumers by positing that inflation from the hike will only increase by 0.3% when we know what ripple effects the last gasolene price hike caused. The RIC is opening a dangerous Pandora's box.

The RIC has made several promises at the consultations that it will serve as an effective consumer protection agency with T&TEC to ensure high quality service at the lowest possible price. The RIC as constituted at present is not equipped by expertise and manpower to perform this role satisfactorily. In fact the RIC no longer operates as an independent regulatory agency. It has completely sold out to T&TEC and the OWTU based on the position it adopted in treating with the T&TEC application for a rate review, the exorbitance of its draft rate determination and the weak defence of this position.

Why is the RIC condoning the continuing costly and unnecessary involvement of T&TEC in the gas supply contracts to Powergen/Trinity Power when those contracts should have been re-negotiated directly between the latter and the NGC on the same terms? Why this expensive layer of bureaucracy and middle- man?



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