The willingness of retailers to extend the social compact arrangement with the government may hinge on the outcome of the Barbados Light and Power (BL&P) rate hearing, says a consumer advocacy group.
Saying that the reluctance of this island’s retail sector to renegotiate the compact possibly stemmed from the cloud of uncertainty surrounding future electricity costs, Executive Director of the Barbados Consumer Empowerment Network (BCEN) Maureen Holder noted any rate increase will have wide-reaching implications.
Speaking on the impact high energy costs have had on production in Barbados, the consumer advocate suggested that consumers could expect higher mark-ups on goods and services.
“If BL&P gets the rate increase, it would be unrealistic to expect the retail sector to agree to terms and conditions that prevent them from making certain pricing adjustments on their goods and services. In other words, it is highly unlikely that the retail sector would agree to a compact that inhibits them from making upward pricing adjustments which reflect the increase in the cost of energy,” Holder said.
The social compact between the Government and the private sector capped prices on 45 items between the end of July last year and January 31 this year.
Even before it expired, some businesses had expressed reservations about entering another similar arrangement, saying they had recorded losses as a result of the price controls.
However, Barbados Chamber of Commerce and Industry officials indicated that fresh proposals were presented to the Government, though they were not disclosed.
Holder said in a statement released to the media that the negotiation of a new compact was only part of the issue.
She said if the country’s lone electricity company gets the increase it requested, “there is likely to be increased costs on almost every good and service provided in this country whether on a large-scale basis, medium to small basis or a mini or micro-basis”.
This, she stressed, will lead to further socio-economic problems and uncertainty, unless the government either offers a buffer or invests in more social safety nets, or if there is a positive shift in Barbados’ economic situation.
“Overall, BCEN’s position is that if the BL&P does not get the rate increase, then it seems more likely that the retail sector might be more inclined to enter into a new compact similar to what existed before,” Holder maintained.
The Fair Trading Commission was expected to make a decision on the BL&P’s request for a rate increase last month, before the end of the six-month compact, but announced that it needed more time to deliberate.
The power company has asked the FTC for a basic rate increase of no more than $6 for customers using less than 150 kWh of electricity in a month. The typical bill increase that would result from the proposed rates is estimated to range from five to 20 per cent.
On September 16 last year, the FTC granted the BL&P an interim rate increase of between $1 and $3 for domestic service customers. That rate will continue to be paid by consumers until any new basic rates are announced. (JB/PR)
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