DECISION ON FORTIS TCI RATE VARIATION APPLICATION

 

The Application

On July 11, 2018 FortisTCI Limited served on His Excellency, the Governor Dr. John Freeman a Rate Variation Application under section 34 of the Electricity Ordinance. The application requested an increase to the tariff of rates as a result of losses sustained after Hurricanes Irma and Maria in 2017 and increased expenditure required for rapid rebuilding and recovery efforts. The request was for the making of Regulations to increase the tariff of rates to customers by an average of 6.8% with immediate effect. The proposed rate increase was broken down by customer class as follows:

  • 5.5% to 5.7% increase in tariff of rates for residential customers
  • 7.9% increase in tariff of rates for all other customer categories

Regarding the Rate Variation Application submitted by FortisTCI, Section 34(3) of the Electricity Ordinance states:

(3) The Governor shall, within six weeks next following the date of service of a notice under subsection (1) by a public supplier, serve a notice on the public supplier giving his decision on the request made by the public supplier under that subsection.

Decision of the Governor

After considering the application, the Governor, on August 17th, 2018 served notice on Fortis TCI Limited, in accordance with section 34(3) of the Electricity Ordinance, refusing its application for an increase of the tariff rates. The refusal was based on the following reasons:

  1. There is a lack of impartial and neutral information and assessments regarding the efficiency of investments as well as benchmarking with comparators regarding the real costs of providing electricity services in the Turks and Caicos Islands, as well as the allocation of those costs to customer groups to ensure fair and equitable pricing.
  2. A cost of service study and prudency assessment will need to be conducted to enable an informed and reasonable decision to be made on the request for rate variation.

Fortis Response

On the 21st of August, 2018, Fortis TCI Limited, not being satisfied by the Governor’s response, served on His Excellency the Governor a notice requesting the appointment of a person to hold an inquiry into the reasonableness of the rate Variation Application. 

This notice by Fortis TCI Limited, is in accordance with section 34(4) of the Electricity Ordinance,  which states;  “Where a public supplier on whom a notice under sub­section (3) has been served is not satisfied with the decision given by the Governor in that notice he may, within the twenty-one days next following the date of service of that notice, by a further notice in writing served on the Governor, request the Governor to appoint a person to hold an inquiry into the reasonableness of the proposals made by the public supplier as specified in the notice under subsection (1) served by the supplier on the Governor.”

The procedures regarding electricity rate applications and the legal obligations of the Governor, are clearly set out in section 34 of the Electricity Ordinance. The Governor, having regard to these established procedures, responded to Fortis TCI request on the 25th of September, 2018, agreeing to appoint an independent expert to hold an inquiry into the reasonableness of the Rate Variation Application.

The details regarding the appointment of the independent expert inclusive of the date, time and venue for the holding of an inquiry will be published in the Gazette and announced using the various media outlets.  The procedures will be guided by the Commission of Inquiries Ordinance and is designed to ensure the person appointed to hold the inquiry, has the same powers to summon witnesses to give evidence or produce documents, to take evidence on oath and to administer oaths or require the making of declarations.