Sunday, December 17, 2017

How T&T must make  T&TEC pay its way

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Mark Fraser

 An ever-enriched national energy Treasury has enabled the State electricity utility, T&TEC, to continue supplying power at the low rates to which householders and businesses have became accustomed. The question of how long this can continue exercised members of the Parliament’s Public Accounts Committee in a session last Tuesday chaired by Opposition MP Colm Imbert.

The committee noted a chronic deficit in T&TEC’s accounts, including debt amounting to $2.5 billion to National Gas Company (NGC) and to Trinidad Generation Company Ltd (TGU). Discussions at the session reached the clear-cut conclusion that the vital utility, under present arrangements, remains simply unable to pay its way.

Indeed, the quantum of debt, disclosed to the important parliamentary committee, also profiled T&TEC as a basket-case entity. Its costs have been rising, and its equipment has been aging, with sadly negative implications for efficiency. 

Committee members inevitably raised fears about failure or collapse of electricity service to the public, as a result of malfunctioning of the old equipment with which the utility has to work. To which concern T&TEC officials assured that the commission never skimps on maintenance, to the extent even of deferring due payments as necessary.

In an appearance that came across as both well-informed and forthright, T&TEC officials inspired some confidence. General manager Kelvin Ramsook told the committee: “Reliability takes urgent and critical priority at T&TEC and therefore we don’t compromise on maintenance at all.”

This approach, however, only worsens T&TEC’s indebtedness. Instead of paying NGC for supplying natural gas, “that money is diverted in terms of the maintenance and major construction”. 

A companionable arrangement between two State entities, is hardly sustainable on a long-term basis. Annually, the committee heard, the T&TEC deficit reaches about $1 billion. 

In plain reality, the national electricity outfit must contend with higher and higher expenditure but is able to generate no rise in income over the years 2011, 2012 and 2013.  In 2012, however, negotiated pay rises hit the utility’s bottom line, including backpay liability of $100 million. 

Balancing its books will necessarily entail hiking electricity rates. This is something T&TEC can do only on the say-so of  the Regulated Industries Commission before whom an application is pending.

As T&TEC keeps the lights on, and generally powers T&T lifestyle and business, it is the Government that remains the guarantor of last resort. The assumption is untenable that matters should remain in this condition.

For T&TEC to pay its way, all consumers of electricity must also pay theirs. In the confident expectation of State subsidy, however, consumers eventually derive a sense of entitlement that is not indefinitely sustainable. Surely T&T can do better than that.