The Energy Commission represents both the consumers and the Government, but the Government also gets paid for the electricity we use through oil import taxes. Belco is entitled to ask for a rate rise to supply the electricity we want, however, they do need to acknowledge that we are all linked together. So far the discussion about the future of our electricity system has not included the consumers: historically Belco has told consumers not to worry, they will take care of – but now we want to be included in the debate.

I would not dispute that investment is needed in our electricity system: Belco needs to retire some of the generating engines, and these will need to be replaced. However, the behavior and values of consumers have an impact on how and how much electricity is generated. The most progressive jurisdictions, and other islands, are investing in energy efficiency. Vermont has found that meeting demand through efficiency investments is half the price of meeting demand through building more generating capacity. Consuming less power is a double winner for consumers: we win when we pay a lower bill, and Belco doesn't need to buy as many new engines resulting in lower capital investment and less debt to be paid for by consumers through electricity rates. But we must work together: significantly reducing consumption requires investment in a smarter grid, customers to be educated to behave differently, and they need to trust the utility.

However, neither Belco nor the Government have any incentive to promote efficiency, in fact quite the opposite. Belco's revenue is based primarily on the number of kilowatt hours (kWh) sold, so lower electricity sales mean lower returns. In addition improving efficiency is primarily an operating expense – and the current formula for setting rates is based on return on investment (actually return on equity, or RoE), which again is a disincentive for targeting efficiency. A further confounding factor, which is rarely discussed, is that the Government also benefits from higher electricity sales: Taxes on oil have just gone up from $15.10 a barrel to $23 a barrel – so the more oil that Belco burns to generate more kWh sales, the more income the government gets. We need to examine and fix these incentives to enable us to work together. There are alternative rate models for 'decoupling' electricity revenue from sales volume which would ensure a fair income to Belco while still supporting reduction in demand. Why aren't we exploring this?

Efficiency alone is not going to replace all the aging engines, so Belco will need to build more generating capacity – but they have not told us what they are planning to build. Mr Higgins says that Belco is going to "burn gas, do solar, do conservation": I think we deserve a better answer than that. How much can we reduce demand through conservation? Will Tesla's new battery technology make solar a better investment by smoothing intermittency or helping to supply peak demand? Is Belco going to invest in IT to have a smarter grid? A smarter grid would allow peak and off-peak pricing and increase grid reliability, and therefore reduce the number of generators we need. Another question is how important a part of our island values is energy independence and a healthy balance of payments? The answer might change the decision between renewable energy and burning more fossil fuel to generate energy.

So yes, Mr Higgins, I agree we all need to invest in our electricity system – but only once we know what we are investing in. Mr Takahashi, Belco's CFO, pointed out that "lenders and debt capital providers have a prior call on cash flow, and if you can't pay your lenders you're at risk of bankruptcy" therefore capital investment – borrowing to buy new generating capacity – is what will put Belco at risk of bankruptcy, and the island at risk of blackouts, not just lack of income.

If we are going to trust Belco with our money we should know what it is being spent on. It is patronizing to ask us to hand over the money without giving us a voice in the debate; we all live here, and we are all stakeholders. Yes, Mr Higgins, we agree that we don't want "the island to go dark", but this island belongs to all of us, when you ask us for more money, give us the information so that we can make an informed decision and move forwards together.

Dr Judith Landsberg is on the Greenrock Board of Directors and represents Greenrock in Energy Policy discussions. She also holds a Masters in Environmental Management from Duke University with a focus on Energy Policy.

About Greenrock

According to The Footprint Network, which measures the ability of the planet to produce resources and absorb waste, our resource use and waste production is 60% more than the earth can produce or absorb annually.

This overshoot is the result of decisions that we each make every day. We seek to generate debate and to influence people to change their behaviour.We strive to be catalysts: Success for us is when we can Change the Mindset so that sustainable use of resources is included in decision-making for individuals, government or businesses. ... read more

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