Regulator sets record straight over E.P.C. loss
The Regulator, Lefaoali’i Unutoa Auelua-Fonoti, has rubbished claims by the Electricity Power Corporation (E.P.C.) that they are losing money because her office was slow in making decisions.
The Regulator instead says the power company is "making excuses" for shortcomings in its own financial management.
The Samoa Observer revealed yesterday the Government utility had incurred losses of more than $374,000 between July and September last year.
The E.P.C's Chief Executive Officer, Tologata Tile Tuimaleali'ifano, said the figure was only likely to rise. The Corporation blamed a change to its pricing structure and a slow decision by the Regulator to approve it for the dent to its bottom line.
But Regulator Lefaoali’i disagrees.
“The losses are due to E.P.C.'s overspending," she said in response to questions from the Samoa Observer.
"The E.P.C. has caused the delay to the process and for them to blame it on the Regulator is ridiculous, patently absurd and [them] making excuses as always."
In an e-mailed response to questions, the Regulator said the government-owned utility was given ample time to submit their complete tariff filing before the end of the 2017-2018 Financial Year.
There was, the Regulator said, a January deadline for its multi-year tariff submissions.
“The Regulator sent several reminder letters to E.P.C. of its submission in early January," Lefaoali’i said.
“However In May 2018, five months later [the] E.P.C. finally submitted its proposal for the [multi year tariffs] for Financial Years 2018-2019; 2019-2020 and 2020/2021.
“This shows the continuous non-compliance by EPC of Orders of the Regulator and this delay in submission has caused postponement in implementation of the M.Y.T. review by the Office of the Regulator and delay in approval of the electricity tariffs.
E.P.C. Chief Executive Officer Tologata told the Samoa Observer the $350,000 losses in the outlined in the E.P.C.’s quarterly report for July – September 2018 published by the Ministry of Public Enterprises, will likely to balloon even further.
He explained that energy charges are composed of the cost of fuel and diesel.
“[We submitted] the request at the time the cost of the energy charge was cheaper and the approval [came] six months after and when we finally implement[ed] it, the cost of fuel and diesel has increased and we [lost] revenue in the end," he said.
“We have to fork up the difference of the cost.”
Lefaoali’i explained the role of the Regulator is vital in ensuring that any changes in electricity or tariff proposals by E.P.C. follow this thorough assessment because everyone is greatly impacted by price of electricity.
“It is very unreasonable and inconsiderate of E.P.C. to submit their proposal in May and expect the Regulator to make a decision within a month for it to be effective on the 1st July.
“The Regulator ensures we follow the requirements of the Electricity Act and due process because many lives are impacted by these changes in electricity tariffs.
|The E.P.C. blames the delay of implementation of the M.Y.T. as its reasons of accumulating losses.
“However according to its Quarterly Financial Reports submitted to the Regulator, the main causes of these losses are due to E.P.C.’s overspending.
“In fact, the Report states that its electricity sales budgeted for FY 2018/2019 are lower than actual electricity sales.
“The actual total income [...] is more than budgeted by $2,000,000. However, according to its actual expenses spending it has ridiculously gone over budget by $2,000,000,” the Regulator said.
Lefaoali’i said under the Electricity Act Part 4, Section 20 (3) the Regulator must make a decision to accept, reject or modify any application regarding tariff change within 6 months of receiving the application, for the record since establishment of this process the Office of the Regulator has had the onerous task of cutting down time in the execution of its role. Lefaoali’i said this is due to E.P.C.’s continuous delay in submitting its proposal.
“As such O.O.T.R. has never utilized the full six months as provided by the Law and also given that E.P.C. always proposed a different tariff structure every year.
“In the execution of the review process it includes the Public Consultations carried out for Government bodies, Business Community, Non-Government Organizations, Sui o Nu’u & Sui Tama’ita’i o Nuu and Pulenuu for both Upolu and Savaii.
“This is important because any change in the electricity tariffs affects everyone and it is the role of the Regulator to inform the electricity consumers of the impact of these changes.”
Afterwards the O.O.T.R. would then compile the feedback and analyse the proposed changes by E.P.C.
“Most of the time, O.O.T.R. would have to write to E.P.C. for more information to support its application and especially to justify changes especially any increase they proposed.”
The Regulator in this process government Ministries must also be consulted to verify other factors affecting the tariff i.e. Ministry of Finance (Debt servicing component of the tariff), Samoa Bureau of Statistics (affordability of low income users to pay electricity), Ministry of Public Enterprise (the financial performance of EPC) etc.
“After our analysis, the Draft Determination and Order would then be sent to EPC for their comments. After addressing any issues the Final Order and Determination is then sent to E.P.C. for implementation.
“Most of the time E.P.C. do not submit their comments within the time frame given by the Regulator but rather asking for extension.
“[The] E.P.C. must inform the public 15 days (prior to date Order becomes in effect) of these changes in electricity tariffs before implementation.”