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Load Shedding in Belize: A Perspective on How We got There

BEL

Posted: Tuesday, May 14, 2024. 11:46 am CST.

By Andrew Marshalleck:

I write, first off, to thank Mr. Landy Espat for his well-written piece on the persistent load shedding problem in Belize in spite of his call therein for the resignation of the leaders of BEL  of whom I am one. All views on this topic are welcomed and the resultant discussion will ultimately benefit all.

If, as Mr. Espat suggests, BEL failed to take decisive action to prevent such power crises including investing in upgrading facilities, investing in alternative energy sources, and improving overall generation capacity to handle peak demand, then I, as the Chairman of BEL, would be the first to resign in accordance with Mr. Espat’s call. But that premise has no basis in fact.

The lack of investment in alternative energy sources and in improving generation capacity is not  and cannot be the result of any failure on the part of BEL simply because those activities are not within the responsibility of BEL. In fact, BEL has been and continues to be prevented from engaging in investments in the generation of electricity in Belize by the current regulatory regime and government policy. Under that regime and policy, BEL must not invest in alternative energy sources and bears no responsibility for procuring generation capacity other than requesting such additional capacity and thereafter negotiating a power purchase agreement with the producers that are selected by the PUC to provide the capacity requested.  Such has repeatedly so informed and requests for additional capacity go back to  2013 and the required capacity has simply never been provided.

The current regulatory regime requires that BEL purchase electricity from “Independent Power Producers” and transport and sell that electricity to consumers over its transmission and distribution lines, switches, and substations. When you hear it said that BEL is a Transmission and Distribution Company, that is what the statement means.

Independent Power Producers refer to power producers who are independent of BEL because BEL is not permitted to negotiate and settle supply prices with itself. The underlying rationale is that if the market for electricity generation is open to competition, it will drive down prices of electricity and contain any adverse economic effect of BEL’s monopoly.

There is nothing conceptually wrong with that rationale. The trouble is that the market for electricity generation is not an open one which allows for any true competition in supply. Competition is in fact state-managed. The state decides who gets to compete, and it is in this decision-making process that the regime fails to deliver. Since 2013, the system for managed competition has not only failed to produce cheaper sources of power for Belizeans but it has failed to make such sources of power available any at all.

BEL is well aware of this problem and has repeatedly and long since warned not only the relevant authorities but also the general public of the consequences of this failure. But BEL is subject to, and not in control of the regulatory regime or the policy. Despite the policy and in the face of disapproval by the regulator (as published on its website), BEL leadership nonetheless went forward and upgraded the GT at Westlake and bought a GT for San Pedro and is having them commissioned in order to ameliorate the consequences of the anticipated generation shortfall in the short term.

The process for upgrading the GT at Westlake commenced close to two years ago and the decision to purchase the additional GT was made in or about August last year. BEL took these actions because it knew this current state of affairs is where we were headed and wanted to ameliorate the consequences for the very reasons Mr. Espat outlined in his piece. Those investments, by the way, cost in total close to $80.0 million, which sum BEL had to find from its own resources. BEL did this at the opportunity cost of much needed improvements to its transmission and distribution infrastructure, including advancing the procuring of the second submarine cable for San Pedro.

Just imagine where we would be today if such bold action had not been taken by the leaders at BEL. We would be without even a prospect of seeing the proverbial “light at the end of the tunnel” even more so as we approach the peak of the high demand season of May through July for both Belize and Mexico.

BEL also commissioned studies and plans for a solar farm and identified a potential location for the farm. BEL did the same for battery storage in San Pedro. The government has taken over the plans BEL prepared to do solar and for batteries and are now directly responsible for these projects. BEL welcomes this initiative by the Government given the challenges to BEL involved in financing these projects at low interest rates. Had BEL not moved pro-actively and ignored the constant reminders that it was not to be involved in generation and batteries, those projects would have been nearly a year behind from where they are now.

We, like everyone else, must now hope that these projects are realized as promised. We will continue to do everything in our power to assist with their realization. We will, however,  go even further to plan for what is to happen if these projects are in fact, for any reason,  not realized by the Government. That is the extent to which the leaders of BEL go in their efforts to secure electricity supply for its Customers.

Without doing too much violence to privacy and given the public interest in the matter, I offer two short quotations only taken from reports and correspondences sent to the relevant authorities by BEL on the subject going back a number of years to give a snapshot of BEL’s foresight and what BEL did in fact.

  1. Communicated July, 2019: “BEL has, however, come to the conclusion that it can no longer depend on supply from CFE (Mexico) as the major source of stable and cheap bulk power supply into the grid… BEL’s long term energy supply strategy is currently being recalibrated to wean BEL off its dependence on CFE for cheap, baseload power supply and instead use them mainly for grid and voltage support …”

 

  1. Communicated August, 2021: “BEL sees the procurement of this production facility as a continuing urgency. We must avoid the eventuality that demand rebounds strongly over the next two years and delays in procuring the facility finds us short on supply altogether, unable to meet market demand during peak periods even with support from Mexico. We therefore ask … that …[you] take the next steps towards initiating the retendering process as soon as possible.”

 The retendering process [for a gas-fuelled power plant] has still not been initiated to date. It was instead apparently decided that the requested production facility should not be built.

As is demonstrated above, there was clearly no lack of foresight by BEL and there was certainly no lack of initiative. BEL in fact acknowledged the possibility of the circumstances which have now come to past and warned of the consequences well in time for action to be taken to avoid or ameliorate them.  I am not sure what else could have, in fairness, been expected of BEL and its leadership team.

And in fairness to all involved, we cannot ignore that Mexico. Guatemala, Honduras and Costa Rica have all declared energy crises during the last six weeks or so for issues not altogether dissimilar to those being experienced here. The energy crises are all grounded in one way or another in prolonged heat and a lack of rain coupled with a lack of investments in needed facilities recognized as necessary only in hindsight.

The heat and dry are not unknown in this geographic area. Prolonged drought is in fact one of the reasons posited for the decline of classical Maya civilization in this very region. Archaeologists theorize that the Maya resorted to a strategy of sacrificing their children to bring rain. The inclination is now apparently to seek to resolve the energy crisis brought on by heat and drought by first sacrificing the leaders of BEL.  

Surely we are now capable of a more rational and scientific approach to the problem. If we are not smart enough or willing to adopt sensible solutions, the crisis will simply become chronic and we risk history repeating itself.

How long ago?

Please note that the opinions expressed in this article are those of the author or sources and do not necessarily reflect the official policy or position of Breaking Belize News.

 

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