Barbados Light & Power Company Ltd v Barbados Renewable Energy Association

• Jurisdiction: Barbados
• Court: Fair Trading Commission (Barbados)
• Judge: Dr. Donley Carrington,Ms. Ruan Martinez,Mr. John Griffith,Mr. Samuel Wallerson,Dr. Ankie Scott-Joseph
• Judgment Date: 20 November 2023
• Docket Number: NO. FTCUR/BLPCMTNRDEC 01/2023-20230307

In the Matter of the Fair Trading Commission Act, Cap. 326B of the Laws of Barbados;

And in the Matter of the Utilities Regulation Act, Cap. 282 of the Laws of Barbados;

And in the Matter of the Utilities Regulation (Procedural) Rules, 2003 and the Utilities Regulation (Procedural) (Amendment) Rules, 2009;

And in the Matter of the Application dated the 30th day of September, 2021 by the Barbados Light & Power Company Limited for A Review of Electricity Rates (the ‘Application’);

And in the Matter of the Decision of the Fair Trading Commission on the Application dated and issued February 15, 2023 and numbered 01/2023.

And in the Matter of an Application by Barbados Light & Power Company Limited for a Review and Variation of the Commission's Decision issued on February 15, 2023.

Barbados Light & Power Company Limited

Applicant

and

Barbados Renewable Energy Association

Energy Division: The Ministry of Energy and Business Development

Mr. Kenneth Went

The Cooperative Society Ltd

Ms. Tricia Watson and Mr. David Simpson

Business Development Division: The Ministry of Energy and Business Development

The Barbados Association of Retired Persons

Intervenors

Before:

Dr. Donley Carrington Hearing Chairman

Ms. Ruan Martinez Commissioner

Mr. John Griffith Commissioner

Mr. Samuel Wallerson Commissioner

Dr. Ankie Scott-Joseph Commissioner

NO. FTCUR/BLPCMTNRDEC 01/2023-20230307

FAIR TRADING COMMISSION

DECISION

Table of Contents

Application for Stay	7
THE ISSUES	8
ISSUE 1: THE THRESHOLD QUESTION	10
ISSUE 2: COMMISSION'S JURISDICTION OVER SIF	12
The Applicant's Position	12
Watson/Simpson Team's Position	13
Public Counsel's Position	13
BSEC's Position	13
Commission's Analysis	14
The Commission's Conclusion on Jurisdiction	23
ISSUE 3: USE OF THE SIF	25
The Applicant's Position	25
The Watson/Simpson Team's Position	26
Public Counsel's Position	26
BSEC's Position	27
Source of Funds	27
SIF Regulations	29
Amended Trust Deed	37
Other Issues Concerning the SIF	39
ISSUE 4: DEFERRED TAX LIABILITY	43
The Applicant's Position	43
Watson/Simpson Team	43
Mr. Ricky Went	44
BSEC	44
The Commission's Analysis	44
ISSUE 5: USE OF REGULATORY LIABILITIES	46
The Commission's Analysis	46
ISSUE 6: RETROACTIVE RATEMAKING	48
Watson/Simpson Team's Position	50
The Applicant's Reply	51
Commission's Analysis	51
Applicant's Failure to Realise Authorise RoR	58
ISSUE 7: LEGITIMATE EXPECTATION/ESTOPPEL	59
Watson/Simpson Team's Position	61
Commission's Jurisdiction – Principles of Public Law, Equitable Principles	61
Legitimate Expectation – Legal Principles	62
Commission's Analysis	65
Estoppel	72
Conclusion on Legitimate Expectation Estoppel	72
ISSUE 8: USE OF TEST YEAR 2020	73
The Applicant's Position	73
Watson/Simpson Team's Position	73
Mr. Went's Position	74
The Commission's Analysis	74
Insurance Expense	76
ISSUE 9: USE OF IFRS DEPRECIATION RATES	77
The Applicant's Position	77
Watson/Simpson Team's Position	79
The Commission's Analysis	79
ISSUE 10: ENERGY STORAGE DEVICE	83
Applicant's Position	83
Mr. Went's Position	84
The Commission's Analysis	84
ISSUE 11: NOTIONAL CAPITAL STRUCTURE	86
The Applicant's Position	86
Mr. Went's Position	87
Commission's Analysis	88
PROCEDURAL FAIRNESS/NATURAL JUSTICE	90
ALLEDGED ADVERSE IMPACT	91
DISPOSAL	94
ORDER	96

BACKGROUND

1 On October 4, 2021, the Barbados Light & Power Company Limited (the Applicant) made an Application for a Review of Electricity Rates, dated September 30, 2021 (the Application). The Fair Trading Commission (the Commission) gave its decision on the Application on February 15, 2023 (the 2023 Decision). On March 7, 2023, the Applicant filed a Notice of Motion for Review and Variation of the Commission's 2023 Decision, supported by an affidavit of Mr. Roger Blackman, the Applicant's Managing Director ( Review & Variation Motion).

2 The Review & Variation Motion raises questions of errors of law, errors of fact and important matters of principle. The errors of law the Commission is said to have committed were set out as follows:

• “(i) The Commission failed to discharge its statutory obligation enunciated under section 10 of the Utilities Regulation Act to set fair and reasonable rates through its inconsistent application of the adjustments relative to the test year.

• (ii) The Commission acted in excess of its jurisdiction, and therefore ultra vires, by directing the Applicant to take certain actions regarding the SIF when it had no jurisdiction to do so and had previously acknowledged that it has no jurisdiction under its enabling legislation to oversee the SIF or to direct the Applicant to take action regarding it.

• iii) The Commission provided no written reasons or insufficient reasons or other reasonable basis upon which to conclude that it considered or properly considered the evidence submitted by the Applicant on the matter of its prior referral of the withdrawal from the SIF to the Commission.

• (iv) The Commission provided no written reasons or insufficient reasons or other reasonable basis upon which to conclude that it considered or properly considered the evidence submitted by the Applicant on the matter of its Accumulated Depreciation and its prior applications to the Commission for approval of depreciation rates between 2013 and 2022.

• (v) The Commission breached the Applicant's right to procedural fairness by alleging that the Applicant had not been transparent in its provision of evidence without stating what evidence provided by the Applicant was opaque or inconsistent or demonstrated material discrepancies and allowing the Applicant the opportunity to be heard on any such allegation. [paragraphs 68 and 69 of the Commission's Decision]

• (vi) The Commission exceeded its jurisdiction, and therefore acted ultra vires, in its ruling on treatment of deferred tax liability.

• (vii) The Commission breached the requirements of natural justice and procedural fairness by failing to follow mandatory procedural rules set out in its enabling legislation and the URPR, failing to act in a timely manner, causing inordinate delay in the hearing and determination of the Application and admitting late intervention without just cause resulting in prejudice to the Applicant including the determination of the Application on the basis of dated information.

• viii) That the Applicant had a reasonable and/ or legitimate expectation that the 99.5 million withdrawal from the SIF would not be treated capriciously by the Commission based on the Commission's representation that the Applicant did not require its approval.

• ix) That the Applicant had a reasonable and/ or legitimate expectation that its recording of deferred taxes as current year income for the year 2018 would not be treated capriciously by the Commission based on the Commissions representation to the Applicant that the same should be done.”

3 The Applicant contends that the Commission made the following errors of fact in its 2023 Decision:

• “(i) The Commission failed to properly consider the evidence submitted by the Applicant concerning Accumulated Depreciation.

• (ii) The Commission failed to properly consider the evidence submitted by the Applicant concerning the 5MW Energy Storage Device (ESD)

• (iii) The Commission failed to properly consider the evidence submitted by the Applicant at Schedules F of the Application concerning the Capital Structure.”

4 The important principles of law raised by the Review & Variation Motion were defined as follows:

• “(i) The Commission violated an important principle of regulatory ratemaking by engaging in retroactive ratemaking outside of legally established principles about when this is appropriate.

• (ii) The Commission violated an important regulatory principle by selecting a test year (2020) and then inappropriately using data from other years on a selective basis.

• (iii) The Commission violated the important regulatory principle of regulatory certainty and consistency by making a ruling on the SIF in its Decision which was contrary to a written direction given to the Applicant on a previous occasion on the same matter and which apparent reversal of opinion undermines public confidence and that of the Applicant and other regulated entities in the stability of the Commission's decision-making process and prejudices the Applicant.

• (iv) The Commission violated the important regulatory principle of regulatory certainty and consistency by making a ruling on deferred taxes in its Decision which was contrary to direction given to the Applicant on a previous occasion on the same matter and which apparent reversal of opinion undermines public confidence and that of the Applicant and other regulated entities in the stability of the Commission's decision-making process and prejudices the Applicant.”

5 The Applicant contends that as a result of the errors which the Commission allegedly committed, it is entitled to the following orders:

• “ 1. AN ORDER pursuant to Rule 55 (1) of the URPR that the Motion and the grounds upon which it is made meet the threshold test and that the Commission should review the Decision;

• 2. AN ORDER pursuant to Rule 56(1) of the URPR granting a stay of those parts of the Decision which require the Applicant to

  • (i) Declare a regulatory liability of $99.5 million in connection with the...