With the Gov­ern­ment’s firm stance against the elec­tric­i­ty rate hike pro­posed by the Reg­u­lat­ed In­dus­tries Com­mis­sion (RIC), con­cerns mount over the long-term fi­nan­cial health of the T&T Elec­tric­i­ty Com­mis­sion (T&TEC).

In­ter­viewed at a TSTT func­tion last Thurs­day, Pub­lic Util­i­ties Min­is­ter, Bar­ry Pararath said he in­tend­ed to take a pro­pos­al to Cab­i­net to re­ject the rec­om­men­da­tion of the RIC to in­crease elec­tric­i­ty rates for com­mer­cial (by be­tween 37 per cent and 51 per cent) and res­i­den­tial cus­tomers, from 15 per cent to 64 per cent .

The re­jec­tion rais­es crit­i­cal ques­tions about how the util­i­ty com­pa­ny would sus­tain its op­er­a­tions, mod­ernise ag­ing in­fra­struc­ture and main­tain re­li­able ser­vice—es­pe­cial­ly in the face of ris­ing costs and con­tin­ued re­liance on pub­lic sub­si­dies.

Econ­o­mist Dr Ronald Ramkissoon cau­tioned that with­out clar­i­ty on the fund­ing source for con­tin­ued sub­si­dies, sus­tain­abil­i­ty re­mains un­cer­tain.

“It’s not a good idea un­less we know where the mon­ey for sub­si­dis­ing elec­tric­i­ty is go­ing to be com­ing from and they need to tell the pop­u­la­tion that...Un­less, of course the Gov­ern­ment has thought about it, has a plan and they know where the mon­ey is go­ing to come from to con­tin­ue to sub­sidise elec­tric­i­ty,” he said.

For­mer pub­lic util­i­ties min­is­ter Mar­vin Gon­za­les al­so ex­pressed con­cern over the sus­tain­abil­i­ty of the sub­sidy, ques­tion­ing its fund­ing source.

He warned that the Gov­ern­ment’s de­ci­sion could po­ten­tial­ly dri­ve TTEC’s sub­sidy bur­den from TT$700 mil­lion to TT$1 bil­lion—a fis­cal strain that may pres­sure the na­tion­al bud­get and force a re­align­ment of spend­ing pri­or­i­ties.

The 2023 RIC rec­om­men­da­tion to raise elec­tric­i­ty tar­iffs was ground­ed in a need to align pric­ing with ac­tu­al costs and help T&TEC re­duce its de­pen­den­cy on Gov­ern­ment sup­port.

How­ev­er, the Gov­ern­ment’s re­jec­tion, like­ly shaped by so­cial and po­lit­i­cal con­sid­er­a­tions—in­clud­ing con­cern for vul­ner­a­ble house­holds—leaves a sub­stan­tial fund­ing gap.

Ramkissoon echoed the need for a bal­anced ap­proach.

“We would like an econ­o­my in which prices are ef­fi­cient and the econ­o­my is ef­fi­cient­ly run. And we would like that the prices we pay for util­i­ties, et cetera, are rea­son­able. The poor and those at the low­er end of the eco­nom­ic spec­trum should be helped in re­spect of the cost of util­i­ties. I think that that is im­por­tant.

“And I think it is not aban­don­ing the poor but you need to do that in a way in which the econ­o­my re­mains ef­fi­cient, that there is growth and we should have a prop­er econ­o­my, a prop­er­ly man­aged econ­o­my over time...We need a prop­er­ly man­aged econ­o­my, sus­tain­able.... What­ev­er you do, you want to make sure it is sus­tain­able over time,” Ramkissoon ad­vised.

He al­so un­der­scored a trou­bling trend in so­ci­ety: the ca­su­al dis­re­gard for ba­sic util­i­ties such as elec­tric­i­ty and wa­ter, of­ten viewed as lim­it­less and free by some.

“Many of us would leave the lights on for­ev­er. We will not tell our fam­i­ly to take off the lights, we will run the wa­ter. And it hap­pens. We see it all around us, whether to wa­ter the plants, wash the car, what­ev­er. But some of us un­der­stand what we think is free is not free. There are cer­tain things we con­sid­er to be free but in­deed, they are not.

“Some­body some­where is pay­ing for it. Ei­ther the tax­pay­ers and some­times I won­der if the plan is go­ing to be to in­crease cor­po­rate and in­di­vid­ual in­come tax be­cause that is one way Gov­ern­ment gets mon­ey,” Ramkissoon added.

Gon­za­les fur­ther not­ed that T&TEC prob­a­bly owns State-owned Na­tion­al Gas Com­pa­ny over $ 5 bil­lion, de­scrib­ing this is­sue as the ele­phant in the room as he added the util­i­ty com­pa­ny cur­rent­ly can­not ser­vice its loans.

“No­body wants to hear from Bar­ry Padarath. That state­ment he made is very su­per­fi­cial and it sounds good, it might pro­vide the head­lines that he’s look­ing for but you have se­ri­ous is­sues that he’s not pre­pared to talk to the coun­try about,” Gon­za­les said.

He fur­ther warned that un­less T&TEC is grant­ed the abil­i­ty to re­cov­er mod­est rev­enue for the ser­vices it pro­vides, the util­i­ty would be forced to re­ly more heav­i­ly on Gov­ern­ment sub­ven­tions—fund­ing that is in­trin­si­cal­ly tied to the State’s rev­enue stream.

This de­pen­den­cy, he cau­tioned, could com­pro­mise T&TEC’s ca­pac­i­ty to de­liv­er re­li­able ser­vice to cit­i­zens, ul­ti­mate­ly weak­en­ing the broad­er na­tion­al econ­o­my.

Be­fore the Gov­ern­ment’s de­ci­sion un­rav­elled months of care­ful plan­ning, the pro­pos­al to re­vise elec­tric­i­ty rates had rep­re­sent­ed more than fig­ures—it was a vi­sion.

Be­hind it stood a team of pro­fes­sion­als led by Dawn Cal­len­der, for­mer chair of the RIC, com­mit­ted to nav­i­gat­ing the com­plex ter­rain of util­i­ty reg­u­la­tion with pur­pose and fair­ness.

In light of the Gov­ern­ment’s pro­pos­al to re­ject the RIC’s pro­pos­al, the Busi­ness Guardian reached out to Cal­len­der for her per­spec­tive.

She em­pha­sised her long-stand­ing com­mit­ment to main­tain­ing the neu­tral­i­ty of reg­u­la­to­ry in­sti­tu­tions when it comes to po­lit­i­cal dis­course.

“Though I am no longer at the RIC, and, more­over, its chair­man, I have main­tained a stat­ed pol­i­cy that we not com­ment on po­lit­i­cal as­pects of reg­u­la­to­ry de­ci­sions. This is not a con­ve­nient state­ment, but a prin­ci­ple to which reg­u­la­tors ad­here. As reg­u­la­tors, our work fo­cus­es on the eco­nom­ic as­pects of bal­anc­ing the needs of the util­i­ties with the in­ter­est of con­sumers. The de­ci­sions of any gov­ern­ment are po­lit­i­cal and I would not com­ment fur­ther on those,” she said.

On the po­ten­tial fi­nan­cial im­pact to T&TEC, Cal­len­der ex­plained gen­er­al­ly, the util­i­ty does not ‘lose’ be­cause when it does not col­lect ad­e­quate funds from its con­sumers, the Gov­ern­ment, which is an im­por­tant stake­hold­er, could sub­sidise the dif­fer­ence.

This op­tion is well with­in the re­mit of any Gov­ern­ment, she added.

That said, Cal­len­der said the new rates had been pro­posed to take ef­fect from 2023 and were in­tend­ed to pro­vide fund­ing of ap­prox­i­mate­ly $29 bil­lion over five years to en­able T&TEC to con­tin­ue to pro­vide ef­fi­cient ser­vice lev­els and to up­grade its equip­ment/ser­vice.

She said this amount may have been $12 bil­lion more than what was col­lect­ed un­der the old arrange­ment. 

Af­ter all of this work was done by the RIC un­der her stew­ard­ship, how does Cal­len­der feel that it is about to be shelved?

“ I am very sat­is­fied that the board I led was able to ful­fil its man­date. With­in the scope of our au­thor­i­ty, we dis­charged our du­ties well and made all ef­forts to bal­ance the in­ter­ests of our var­i­ous stake­hold­ers and to ex­plain the ra­tio­nale for the de­ci­sions tak­en. The ex­er­cise was al­so ex­cel­lent ex­pe­ri­ence for our staff who were made even more pro­fi­cient to com­plete fu­ture re­views. We de­liv­ered a prod­uct with which we were sat­is­fied and those who must make oth­er de­ci­sions must as­sume the re­spon­si­bil­i­ty to ful­fil their role,” she said.

Pub­lic Util­i­ties Min­is­ter Bar­ry Padarath fired back at Gon­za­les’s crit­i­cism, la­belling it “shame­less” and de­void of moral au­thor­i­ty.

“He has no moral au­thor­i­ty to be ask­ing any­one about where the mon­ey is com­ing from. He sat and par­tic­i­pat­ed first hand in a gov­ern­ment that al­lowed a $5 bil­lion debt to ac­cu­mu­late be­tween T&TEC and NGC. Their on­ly pay­ment plan was to im­pose harsh tar­iffs on the pop­u­la­tion who were al­ready reel­ing from an econ­o­my that the PNM crashed. 

“In­stead of ad­dress­ing the over $1.5 bil­lion dol­lars in out­stand­ing re­ceiv­ables that was ac­cu­mu­lat­ed un­der his tenure as min­is­ter of pub­lic util­i­ties be­tween min­istries, State en­ter­pris­es and T&TEC, the PNM at­tempt­ed to dri­ve the com­pa­ny in­to the ground with their own so­lu­tion be­ing hard­ship on cit­i­zens with new elec­tric­i­ty rates,” Padarath said.

He chal­lenged why the for­mer Cab­i­net sat on the RIC’s rec­om­men­da­tions for near­ly two years with­out ac­tion.

The Pub­lic Util­i­ties Min­is­ter how­ev­er, as­sured that in the com­ing days the Gov­ern­ment would say more about the process to re­ject the rates.

Look­ing ahead, Padarath em­pha­sised that fis­cal re­cov­ery would not come from high­er util­i­ty rates or in­creased tax­a­tion.

“We in­tend over the next five years to im­prove the qual­i­ty of ser­vice to the pop­u­la­tion, re­duce the com­pa­ny’s debt and out­stand­ing re­ceiv­ables. It is am­bi­tious how­ev­er achiev­able in the five years,” he out­lined.

He al­so un­der­scored the Gov­ern­ment’s com­mit­ment to at­tract­ing for­eign in­vest­ment, ex­pand­ing re­new­able en­er­gy—par­tic­u­lar­ly so­lar and wind—and strength­en­ing the man­u­fac­tur­ing sec­tor.

“We in­tend to fo­cus on invit­ing more pro­pos­als for so­lar en­er­gy with oth­er multi­na­tion­als, ex­plor­ing wind en­er­gy and en­cour­ag­ing the in­jec­tion of cap­i­tal in­vest­ment in­to the en­er­gy and non-en­er­gy sec­tor,” he said, adding that man­u­fac­tur­ing is an area that must be ex­pand­ed.

“There­fore, elec­tric­i­ty and wa­ter rates im­pact all of these sec­tors. The for­mer min­is­ters used to op­er­ate in si­los. To­day our Gov­ern­ment works across min­istries in tan­dem,” Padarath added.