GB Power promises $50m network spend

Wednesday, Oct 20, 2021 | 02:00 PM

o Amid wide-scale backlash to base rate proposal

o Monthly bills to rise $7-$20 for 58% of home users

o Gov't against any hike: 'GB has suffered enough'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Grand Bahama Power Company yesterday pledged to invest $50m over the next five years to maintain its network infrastructure, and admitted: "No one wants to see rates increase."

The energy monopoly, facing a furious backlash from the Government, businesses and civil society groups over its revised tariff proposals, told Tribune Business that residential customers faced with electricity base rate increases would only see a modest rise in their monthly bills.

Asserting that 42 percent of residential customers will see either a decrease or no change in their base rates, GB Power said the other 58 percent faced with an increase will see their monthly bills rise by an average of between $7 and $20 depending on consumption.

"As noted in today's release, 42 percent of residential customers will see a decrease or no increase in their bills," the utility reiterated. "Customers who consume 600 kWh (kilowatt hours) per month can expect an increase of about $7 per month under the proposed rate structure.

"Those who consume 800 kWh on average will see an increase of about $12 per month. Those who consume 1000 kWh on average will see an increase of about $20 per month."

Many are unlikely to be reassured, though, and the newly-elected Davis administration - sensitive to the potential social and economic fall-out, as well as the potential political implications - immediately issued a statement warning it is adamantly opposed to any increase in electricity rates on Grand Bahama at this time.

Issued in the name of Ginger Moxey, minister for Grand Bahama, it argued that Grand Bahama residents and businesses have "suffered enough" as a result of Hurricane Dorian and COVID-19, and no customer segment should have to endure a further hike in energy costs.

"The Government of The Bahamas has made immediate inquiries, expressed our deep concern and taken swift action," the statement said, disclosing that a Cabinet committee had been formed to engage with GB Power's regulator, the Grand Bahama Port Authority (GBPA), on the issue.

"The Government of The Bahamas will not support any rate increase on any portion of the customer base on Grand Bahama Island at this time, as it is our firm position that the people of Grand Bahama should not be further burdened on the heels of the economic stagnation caused by Hurricanes Matthew and Dorian, which was compounded by the global pandemic," the statement read.

"We have scheduled a meeting with GBPA and the Cabinet Committee in the next two weeks regarding this application, and will be very clear and direct with our message. The people and businesses of Grand Bahama have suffered enough, and are looking for compassionate leadership in governance and in corporate Bahamas."

The Cabinet committee features three ministers with strong Grand Bahama connections. Besides Mrs Moxey, they include her predecessor, Dr Michael Darville, now minister of health and wellness, and Obie Wilchcombe, minister of social services and urban development, who is also MP for West End and Bimini.

The committee's other members include Alfred Sears, minister of works and utilities, who has responsibility for Bahamas Power & Light (BPL), and Ryan Pinder, the attorney general. They have been charged, according the Government's release, with ensuring "the rights and interests of the residents of Grand Bahama are protected, consistent with the national energy policy".

The statement made several references to the Electricity Act, and the Government's duty to develop and uphold a national energy policy, even though GB Power is presently challenging the Utilities Regulation and Competition Authority's (URCA) authority to regulate it in the Supreme Court.

One potential consequence of this latest controversy could be renewed demands for URCA to assume regulation of GB Power. The Government, though, acknowledged that the electricity rate proposal is something that GB Power is mandated to submit every three years in accordance with the Regulatory Framework Agreement it has with the GBPA.

The GBPA now has to approve GB Power's submission, but first the application has to be fully published and undergo a 45-day public consultation process so that the views of Grand Bahama businesses and residents can be taken into account.

The GBPA yesterday said its decision will be communicated to the utility no later than December 1, 2021, having received the proposal on September 23. However, this was only made public via simultaneous releases yesterday, indicating that the 45-day consultation period must have begun.

Describing its proposal as the first electricity rate-adjustment application submitted since 2015, GB Power justified its plan on the basis that more than four out of ten residential customers - the lowest energy users, who are typically those on the lowest incomes and therefore more vulnerable - will either see their base rates remain the same or actually decrease.

As a result, the financial burden from the rate increases will in theory fall on those who have a better ability to pay and afford them, namely Grand Bahama's industrial and private sectors plus middle class and wealthy households.

While attempting to demonstrate a progressive approach to the base rate adjustments, GB Power said increases were needed to finance the maintenance of its generation and transmission and distribution (T&D) operations moving forward.

And, incorporated into its proposal, the energy monopoly said it had included a generation plan that will result in 15 percent of Grand Bahama's energy needs met from renewable sources by 2026. This, it added, involves independent power producers (IPPs) providing energy to GB Power's grid, thus improving supply diversification and security while reducing carbon emissions.

"Because of the decrease in load due to the impacts of Dorian and COVID, GB Power does not need to make significant investments in new generation. However, over the next five years we plan to invest [around] $10 million per year in maintaining generation and T&D investments, including AMI (smart metering) technology," the utility told Tribune Business.

"Additionally, via internal investments and in partnership with interested investors (IPPs), we will introduce utility-scale solar projects that will culminate with an investment in battery storage towards the end of the planning horizon.

"We are actively working with several credible IPP proponents, and we are continuing to develop our own 5 MW solar park which was deferred due to the passage of Dorian. The energy cost implications and carbon savings are dependent on many factors, such as the agreed price for renewable energy from IPPs, and the final size, efficiency, and completion date for the installations."

No figures were provided for the battery storage project, as GB Power described the base rate rises as unpopular but necessary. "We are sensitive to the state of Grand Bahama's economy. As with so many businesses in Grand Bahama, GB Power has not been immune to the economic challenges brought by Dorian and COVID-19," the utility said.

"We know no one wants to see rates increase. But the reality is that we need to continue to invest in our operations to maintain safe, reliable and increasingly renewable electricity service for customers for years to come."

Side-stepping queries on the Government's intervention, GB Power also defended its tariff structure after this newspaper questioned why the highest rates were being levied on its largest energy consumers when many other electricity users have adopted the opposite approach.

"It's important to note that our commercial rates do decline as those customers consume more, and the idea behind that is that this would incentivise them to grow their business, translating into jobs in the community and a more robust economy," GB Power replied.

"The rates for the residential sector increase with more use due to two factors: The cost to serve this sector and the desire to pass on lower rates to customers who use less power.

"We believe that we have proposed a rate structure that is in the best interests of customers and the utility - one that recognises and shields those families who are most vulnerable and encourages energy efficiency."