FREEPORT - The Grand Bahama Power Company has introduced a new tariff structure, which is expected to bring more transparency to the rate regulation process.
In a statement issued by the company on Friday, the new structure is the result of the implementation of a new regulatory rate structure by its regulator, the Grand Bahama Port Authority.
"The new regulatory framework for GBPC documents how electricity rates will be set for Grand Bahama," the company said.
"Created with residents in mind, this new framework brings improved transparency to the rate regulation process. Additional performance evaluation metrics will be implemented in January 2014 that will hold GBPC accountable to customers."
GBPC Chief Financial Officer Tony Lopez stated that the power company and the
GBPA saw the need to put in more structure and transparency to the tariff mechanism for customers.
"We have been working with the GBPA for months to develop a rate structure that would provide increased transparency for, and accountability to, our customers," said Lopez.
"The structure also gives the utility the opportunity to provide an appropriate rate of return on capital investments."
The new regulatory process directs the GBPC to submit an application to the GBPA every three years for base rates.
The rate plan application would comprise a business plan for the utility; a three-year financial projection detailing forecasted operating costs, depreciation and capital investments; and GBPC's five-year capital budget forecast.
"Under this new rate structure, electricity rates include a base rate and fuel charge mechanism (FCM). The base rate reflects GBPC's operating expenses, depreciation of capital assets, and a return on capital investment. The FCM, which is the actual cost of fuel used to generate electricity, is a full pass-through mechanism which generates no profit to the utility," the company explained.
According to GBPC, the new rate structure will not result in an increase to customers' all-in electricity rates.
Mr Lopez explained that the base rates will be increased by approximately three cents in large part to cover the $80 million investment in the new West Sunrise plant.
However, he noted that customers should know that the "all-in-rates" would not increase because of the improved efficiency of the new West Sunrise Plant.
"The new tariff enables the company to make investments to improve reliability without impacting customer rates.
"Although customers will see a slight increase in their base rates in the new rate calculation, the efficiency of the new West Sunrise Plant has lowered the fuel charge portion, resulting in no increase to the all-in rate," he said.
Mr Lopez further explained that if fuel remained constant, on average, customers should see a reduction in their electricity rates of approximately 1.5 cents per kWh.
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