THURSDAY AFTERNOON UPDATE: The Davis administration said it will not allow BPL to impose a late fee on the Bahamian people. It was only one of five considerations in a discussion to lower the company’s outstanding arrears, according to Acting Press Secretary Keishla Adderley at the OPM press briefing this morning.
BPL also released a statement (right) saying it did not have plans to impose a late fee on its customers at this time.
FROM EARLIER:
By Fay Simmons
Tribune Business Reporter
jsimmons@tribunemedia.net
Bahamas Power & Light (BPL) has received approval to impose a $5 monthly fee on the 80 percent of customers who pay their bill late as it bids to slash its $100m accounts receivables.
Shevonn Cambridge, its chief executive, yesterday told the Bahamas Institute of Chartered Accountants (BICA) annual accountants’ weeks seminar that it has received regulatory go-ahead to implement the levy given that more than four out of every five customers pay their monthly bills after the due date.
With the cash-strapped state-owned utility’s accounts receivables, representing monies owed by residential and business customers, standing at $100m at August 2023, he added that BPL depends on timely payments from consumers to manage its cash flow, pay expenses and fund capital projects to improve operational efficiency.
Mr Cambridge said: “BPL’s receivables.. they exceed $100m from residential and commercial customers as of August 2023. And while we understand that this may be cyclical based on the current increase in consumption and the glide path fuel recovery strategy, we must reinforce the importance of timely payments to improve collections.
“While we continue to encourage on time and consistent payments from our customers, we struggle in this area as more than 80 percent of our customers pay their bills late and BPL depends on consistent and timely payments to better manage cash flow and adequately fund projects.”
Mr Cambridge said BPL has already received regulatory approval to charge a late fee on overdue bills as a deterrent, and to offset the penalties imposed on BPL when it pays its creditors late due to cash flow issues.
He added: “You can appreciate that there is a time value of money carrying costs associated with late payments. And if we don’t have the money we, too, are subject to additional fees and penalties from our creditors.
“BPL has considered, and already has regulatory approval to implement, a universally-accepted strategy to implement a nominal late fee. A $5 monthly late fee is already in use by many other utilities in The Bahamas. It can be a deterrent to late payments and, at the same time, based on our numbers, it could generate funds to offset the carrying costs associated with those late payments.”
Mr Cambridge added that BPL loses thousands of dollars monthly through electricity theft. “Collection is just one part of the equation in controlling costs. We are improving the recovery of unbilled units that is through operational losses and what we call loss through theft,” he said.
“While difficult to quantify only until cases are discovered, on average our revenue protection unearths several thousand dollars in cases of electricity theft every month.” Mr Cambridge said BPL has not had an increase to its base tariff since 2010, although it has seen a 100 percent increase in costs and up to 8 percent annual increase in demand over the past 13 years.
He said: “BPL has not had a tariff increase since 2010. In those 13 years, inputs have gone up exponentially. The costs of transformers, engines, wiring etc. All have seen nearly a 100 percent increase in costs. At the same time, output has also grown substantially as I’ve told you. We’ve seen about a 2 percent on average growth over that period, with last year seeing a six to 8 percent growth.
“So we’ve seen an increase in the cost of our inputs and an increase in demand on our output. At some point something has to give. Unfortunately, what tends to give in the absence of proper funding is the quality of service. We’re seeking not to have the quality of our service diminish, so we’re going to have to address that.”
Mr Cambridge explained that BPL’s current base tariff leaves the utility “vastly underfunded”, and confirmed that a study is being conducted to obtain recommendations on how to adjust the levy in a way that is a “win-win” for BPL and its stakeholders.
He said: “BPL’s tariff is the money we collect to fund our operation including capital development, maintenance and salaries. To be clear, the fuel and its associated costs, like transshipment to the Family Islands, is a direct pass through to our suppliers. BPL does not keep any of that money and there’s no profit or anything in it for BPL.
“The reality of it is that BPL’s current tariff leaves BPL vastly underfunded, and we’re looking to address that. Hopefully as the tariff study that’s currently being conducted comes to a completion, we will get some recommendations that we can do that in a way that is a win- win for all.”
Mr Cambridge added that an increase in BPL’s base tariff rate will allow the utility to improve its efficiency and will not increase electricity bills significantly.
He said: “Basically, that type of study is taking a holistic look at BPL’s rates and its impact on all stakeholders, whether that be the Government, as a utility or you as a consumer.
“An increase in rates does not necessarily mean the customer bills would go up significantly. That increase will also allow us to fund many of the efficiency enhancement measures that we wish to undertake. And those efficiency enhancement measures we foresee allowing us to operate more efficiently.”
Mr Cambridge explained that although consumers will see an increase in the base rate, the funds will be used to improve efficiency and eventually lower the fuel costs.
He said: “From our modelling, basically what it’s showing us is that when we do that it will positively impact the fuel charge, which when added together will eventually lead to even a reduction in your overall bill.
“So you may see an increase in the base rate, but that increase in the base rate will fund the efficiency enhancement that will drive down your fuel charge and your overall bills. The potential is there for the overall bills to be lower provided the fuel market behaves itself.”
Comments
bcitizen 5 months, 3 weeks ago
Can we charge BPL a fee for when we have to maintain our own generator to have reliable power, That is the cost of the generator, fuel, servicing costs etc.?
sheeprunner12 5 months, 3 weeks ago
BPL does not account for the losses of its customers (fried electrical equipment) from its POOR service through transmission surges and intermittent cuts in power.
But, the struggling masses must now pay late fees, despite the many hours of NO power during the average monthly cycle.
It is like WSC and Cable, poor service but still having the ability to TAX the bills of its customers. URCA has no heart and no moral authority to speak to the hardships of SOE customers.
pileit 5 months, 2 weeks ago
Came home this evening to find my TV fried... could tell power was off during the day due appliance clocks. Thanks BPL!
Sickened 5 months, 3 weeks ago
Sadly they must know that they will make a TON of money by doing this. Enough to pay for the software changes and to make a significant dent in the $100 million debt, otherwise why do it. This is very sad for the struggling Bahamian masses.
Dawes 5 months, 3 weeks ago
The companies that charge late fees have set charges. BPL can be $100 this month and then $1,500 next with no explanation. In addition those companies that charge late fees have competition. BPL does not. They are not the same and as such this should not have been allowed, and if allowed it should only kick in after 3 plus months, not 1.
propane66 5 months, 2 weeks ago
80% of the people pay their bill late, I would say a big proportion of that do not know the payment cut off date, unless you sign up for the online account. If you rely on getting the bill in the mail, it's already too late.
Tarzan 5 months, 2 weeks ago
Here is a simple solution to all of New Providence Island's power supply problems. Find a realiable, non Bahamian, experienced firm that currently functions as a major power supplier elsewhere (there are hundreds available) and hand over all N.P. BEC operations pursuant to a contract that delivers the entire operation, lock stock and barrell, including debt assumption, for $1, in exchange for a contractual commitment to supply electric power at no higher than 75% of the rate BEC now charges, permitting maximum annual adjustments in that rate cap equal only to the rate of inflation. No "fuel charge" no nonsense. Only a rate per Kilowat hour, at 75% of current BEC charge. As part of the contract, agree to a constitutional amendment divorcing the Bahamian government from any and all regulatory control at any level over the new provider, including respecting hiring and firing decisions. Problem solved and such a deal could be done.
Economist 5 months, 2 weeks ago
Excellent idea.
bahamianson 5 months, 2 weeks ago
Sounds logical, but will never happen, never. The majority of Bahamians do not think it is their responsibility to pay back what they borrowed. They will pay for a few months ,then that's it. You have to run after them because their dog died. The private company will go crazy and leave.
trueBahamian 5 months, 2 weeks ago
Journalists need to start asking questions that get to the heart of the situation. A family in the inner city paying $50 to $100 for electricity and they are Kate will pay $5. A company with $20,000 in electricity bill that's late, also pays $5. Is this guy on crack? That makes no sense. If you're managing cash flow, the bigger ticket items are the ones you need to focus on. It should not be the same penalty across the board. Another thing, like someone commented before, make sure everyone knows when their fue dates are. This helps the process tremendously. As a CEO, he should have an idea why the bills are late. From this article er can deduce he's assuming they naturally just pay late. He talks about fuel costs benefits. It wasn't clear for me how he derived this benefit. Them to make things even more nonsensical, he talks you can get the benefit provided there are no surprises in fuel prices in the global market. This guy is a joke. Can someone please find someone to run BPL who understands basic fundamentals of finance? This guy should not be the CEO. If he was an engineer, send him back to engineering or maybe that's worse given his logic skills seems impaired.
ExposedU2C 5 months, 2 weeks ago
Government departments and agencies are among BPL's biggest delinquent customers....in other words, government itself, owes BPL mega millions of dollars. And government departments and agencies, not to mention governemt corporations, do not give a flying hoot about how much they owe BPL because they know BPL will never turn off their lights!!!
trueBahamian 5 months, 2 weeks ago
Another thing, BPL should first provide a good service and evaluate if they need to do some downsizing to reduce costs. Any CEO should understand this basic concept.
stillwaters 5 months, 2 weeks ago
'Not at this time', but probably right after the bye-election
bahamianson 5 months, 2 weeks ago
Bahamians generally do not pay their bills. They want the government to feed, clothe, and nurture them. The government generally fosters this mentality. So, the government will not let the government impose a tax. Ok.
AnObserver 5 months, 2 weeks ago
How is this even remotely controversial? Pay your bills, or get your service disconnected and late fees applied to your balance. This standard operating procedure for any business anywhere in the world.
propane66 5 months, 2 weeks ago
It's controversial because the BPL bill has doubled or tripled in some instances.....how the hell do they still have a 100 m receivable?......Has to be commercial entities not paying. How is it fair the people have to pay extra?
sheeprunner12 5 months, 2 weeks ago
I agree with the comment above. It is difficult to believe that the majority of BPL revenue comes from Bahamian homes. While homes may make up the majority of the accounts, hotels & businesses use far more power than homes.
Secondly, is BPL being transparent about WHO actually are the main offenders of the bulk of the outstanding bills? Are politically connected people and others who knows how to defraud the system getting away with not paying electricity bills?
The GM is not telling the full story about these BPL bills and who is responsible for the massive amounts that remain unpaid.
propane66 5 months, 2 weeks ago
They should tie in BPL bills to your business license and TCC certificates , if not up to date then not renewed......will add to at least half a dozen other items that need to be up to date anyway......that will get the commercial entities up to date or out of business.
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