Request to increase cost of electricity rejected
The Office of the Regulator has knocked back a request from the Electrical Power Corporation (E.P.C.) to increase the cost of electricity over the next four years.
Two months ago the E.P.C. Chief Executive Officer, Tologatā Tile Lei’a Tuimalealiifano, wrote to the Regulator, Lefaoali’i Unutoa Fonoti, requesting to increase the flat rate energy charge from 39 sene to 42 sene in their 2018 Multi Year Tariff Review.
The proposal was revealed in a letter dated September 14, 2018 sent to Lefaoali’i Unutoa Auelua-Fonoti.
Tologatā said in his letter that the E.P.C. is concerned that the failure to increase the power charge to 42 sene will impact on the overall financial performance of the organisation.
“The financial performance of the corporation would be adversely affected if the tariff does not allow for the recovery of actual costs for the production of electricity through the energy charge,” he wrote in his letter.
But Lefaoali’i, in response to the concerns raised by Tologatā, said the E.P.C. did not provide sufficient information in their letter to her Office, which explains why increasing the charge is important.
“To clarify, during the 2018 Multi Year Tariff Review process, E.P.C. presented its proposal to the Office of the Regulator before making its written submission, and on both occasions E.P.C. requested to fix the energy charge at 39 sene for 12 months—instead of Office of the Regulator reviewing on a monthly basis, as per the earlier practice.
“Furthermore E.P.C. submitted information in support of the .39 sene electricity charge, which was analysed in detail by the Office of the Regulator and resulted in the approval of the .39 sene—as opposed to EPC’s to the 42sene—which was only brought to Office of the Regulator’s attention, when they were consulted on the Determination and Order.”
According to Lefaoali’i, during the final phase of the process (consultation of the Determination and Order with EPC), E.P.C. changed their minds and requested to change .39 sene to .42 sene, yet the supporting documents that they provided for the process were in favour of .39 sene and also during the consultation phase, the stakeholders were consulted on the .39 sene as opposed to corporation’s .42 sene.
Tologatā, in his letter to Lefaoali’i, pleaded with the Office of the Regulator to reconsider its earlier position stopping the increase in the energy charge component of the tariff.
“We had originally proposed a fixed rate of .39 sene based on aggressive projections of our generation mix and a forecasted cost of diesel,” he said.
“However, that forecasted cost of diesel was way lower than the actual as your Office can see from the actual EC submitted and approved for the first three months of the financial year.”
He said the corporation’s financial performance would be adversely affected, if the tariff did not allow for the recovery of actual costs for the production of electricity, through the energy charge.
However, Lefaoali’i made it clear that they had no intentions to stifle the corporation’s operations.
“My paramount responsibility is to ensure that decisions required of me are made independently and transparently and in accordance with the Act.
“At that I am confident that my Office and I ran the process and made proper considerations and arrived at a rate which was effectively weighed prior to approval,” she added.