The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Electricity Corporation’s (BEC) generation turbines at Clifton Pier have just “65 per cent availability”, meaning that out of every 10 attempts to start they fail three-four times.

Judson Wilmott, a Bahamian engineer employed by oil services company, Haliburton, made this disclosure as part of his case that it is BEC’s aged, inefficient generation equipment that is the primary factor behind the Corporation’s existing woes.

In his presentation to the recent Bahamas Energy Security Forum, a copy of which has been obtained by Tribune Business, Mr Wilmott said New Providence required a new $700 million power plant that burnt multiple fuel types to be constructed at Clifton Pier.

Pinpointing the various ‘moving parts’ responsible for BEC’s financial and operational crises, and the burden imposed on all Bahamians, Mr Wilmott said it was possible to simultaneously replace the Corporation’s generation plant and lower its base tariff by around 33 per cents.

The Bahamian engineer suggested BEC’s base tariff (the part of the customer bill that generates its cash flow/profits) could be reduced from the current $0.15/$0.16 per kilowatt hour (KWh) to $0.10 per KWh via comprehensive reform that dramatically slashed a wide range of costs.

Summarising BEC’s problems succinctly, Mr Wilmott said: “There’s unreliable equipment, excessive maintenance, massive damage to the marine environment and the water table, degrading and poor quality air in the Clifton area and western New Providence, and heat rates as high as 18,000 BTUs. These are some of the most basic technical problems that exist.

“Some of the economic repercussions of what goes on at BEC are that we haven’t been able to eliminate the government subsidy; the accounts receivables are high; consumers are unable to pay their bills; and the fuel charge is high.”

To cure these woes, Mr Wilmott is proposing a multi-faceted solution that includes the elimination of “nasty” Bunker C as the primary fuel source at Clifton Pier.

“We need to build a new plant at Clifton Pier, change the fuel type, and the equipment to one that burns multiple types of fuel.”

He added that BEC’s weak balance sheet, featuring $320 million of bank debt; a fuel receivables bill of around $128 million; and employee pension fund deficit totalling some $82 million also needed attention.

“We need to eliminate the legacy debt. That’s an albatross around the necks of Bahamians,” Mr Wilmott said.

“There’s a way to get fuel into BEC without third-party mark-ups. You can buy fuel directly from the supplier without a mark-up [by a middleman]; that’s easily done.”

Mr Wilmott said BEC’s generation plant needed to be converted to aeroderivative gas turbines, citing those manufactured by General Electric (GE) as an example.

These turbines, apart from burning multiple fuel types, also required just five days for major maintenance and overhauls.

This compared to the average 30-90 overhauls required by BEC’s current Clifton Pier engines, something that resulted in dramatically increased maintenance and labour (overtime) costs, plus generation capacity shortages that often resulted in New Providence blackouts.

Mr Wilmott called for all BEC’s generation equipment to be replaced, so that its ‘burn rate’ was automatically slashed. This will also cut the fuel volumes required by BEC to generate electricity, thus slashing its $380 million annual fuel bill and costs to Bahamian consumers.

“It’s not wise to delay changing equipment,” Mr Wilmott told the Forum, suggesting that this be done “one time” to achieve economies of scale.

Delay, he added, risked increased labour and raw materials costs; more and increased equipment breakdowns; the continued use of Bunker C and diesel fuels; tariffs remaining high; and delayed technology transfer.

Mr Wilmott suggested that electricity costs for Bahamian consumers could be lowered from the current $0.40 per KWh to an “all-in” tariff of $0.22 per KWh, a savings of close to 50 per cent on BEC’s current charges.

Apart from the $0.10 capacity or base tariff, he said fuel costs could be lowered to $0.0425 per KWh compared to BEC’s current $0.26 per KWh fuel charge.

Costs to service BEC’s legacy debt would be some $0.0248 KWh, with Family Island charges some $0.012 per KWh. Finally, transmission and distribution costs would amount to $0.04 per KWh.