The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Grand Bahama Port Authority (GBPA) must guard against “URCA intrusion” into its regulatory powers via energy sector reform, an outspoken QC has warned.

Fred Smith QC, the Callenders & Co attorney and partner, told Tribune Business that the Electricity Bill appeared to be another attempt by the Government to “chip away” at Freeport’s founding agreement.

The Hawksbill Creek Agreement (HCA) stipulates that the GBPA is the regulator for all utilities within Freeport’s 230 square mile Port area, including electricity (the Grand Bahama Power Company).

However, the Electricity Bill 2015 specifically states that it applies to the whole of the Bahamas, including Freeport - thus bringing the Government’s energy reform centrepiece into conflict with the Hawksbill Creek Agreement.

The Bill’s section four, entitled ‘Application’, clearly states on Page 14: “This Act applies to the entirety of the Bahamas, inclusive of the Port area in the island of Grand Bahama.”

And Section 23 (4) confirms that within 90 days of the Bill becoming law, the Utilities Regulation and Competition Authority (URCA) must “grant to the Grand Bahama Power Company a public electricity supplier licence regulating the electricity generation, transmission, distribution and supply functions and activities of the company in the Port area”.

This was reiterated by Deputy Prime Minister Philip Davis when the Bill was introduced in the House of Assembly, and Mr Smith said he was “astounded” that the Government appeared not to realise the conflict with the Hawksbill Creek Agreement.

“I urge the Port Authority to continue to fully assume the role of regulator in the face of intrusion by URCA,” Mr Smith told Tribune Business.

“I am surprised that the Deputy Prime Minister is not fully aware that URCA does not have regulatory jurisdiction in Freeport. That is a matter reserved under the Hawksbill Creek Agreement for the GBPA; for all public utilities, including power.

“It continues to astound me that Government after Government continues to chip away at the Hawksbill Creek Agreement construct, and then they wonder why Freeport continues to limp along in the economic doldrums.”

The Electricity Bill’s contents create potential confusion as to who has primary responsibility for regulating Grand Bahama Power Company at a particularly sensitive time.

For the GBPA has just closed a nine-day consultation process on the company’s revised rate structure for the next three years, the contents of which have already aroused opposition from the likes of the Concerned Citizens Coalition (CCC).

The Electricity Act, though, while empowering URCA to set and approve the ‘new BEC’s’ tariff rates for a five-year period, makes no mention of doing similar with Grand Bahama Power Company.

It thus appears that a ‘compromise’ has been reached, whereby URCA will license and have jurisdiction over Grand Bahama’s monopoly power supplier, but the Port Authority will have primary responsibility for tariffs and such like.

Grand Bahama Power Company is also something of an anomaly. While its business and client base is largely located in Freeport, it also supplies power to East and West End - locations outside the Port area, and for which URCA is responsible.

Mr Smith himself acknowledged this, telling Tribune Business: “There is a jurisdictional issue that needs to be addressed, in that Grand Bahama Power provides power to all of Grand Bahama.

“Are the rates to be governed by URCA or the GBPA outside of Freeport and in the rest of Grand Bahama? These are important issues to be assessed.”

The outspoken QC, meanwhile, blamed Freeport’s economic woes on actions by successive governments that had “hacked, broken up, dismembered, attacked, challenged, undermined and subverted” the original Public-Private Partnership (PPP) model envisaged by the Hawksbill Creek Agreement.

Arguing that successive administrations had “breached the rights of the Port Authority and licensees”, Mr Smith told Tribune Business: “I continue to remind the Government that they should leave the maintenance of governance to the Port Authority in Freeport.

“But, at the same time, hold the Port Authority accountable for the big picture items. Get out of Freeport and just deal with the Port Authority. Let the Port Authority deal with internal issues related to Freeport.

“It’s the continual dabbling and interfering, where they [the Government] do not understand the construct, that keeps Freeport as dead as a doornail.”

The Hawksbill Creek Agreement’s provision that the GBPA is responsible for utilities regulation in Freeport has already created issues for URCA’s regulation of the communications industry.

The Supreme Court ruled in 2011 that it had no jurisdiction to levy fees on Cable Bahamas’ Internet earnings in Freeport, because the BISX-listed provider operated in the city via its wholly-owned subsidiary, Cable Freeport. The latter entity was licensed by the GBPA, not the Government.

Cable Bahamas (and Cable Freeport) won their 2011 case on the basis that the former Telecommunications Act permitted URCA’s predecessor, the Public Utilities Commission (PUC), to levy fees only on its licensees. Cable Freeport, of course, did not fall into that category because it was a GBPA licensee, and the PUC’s demand for $78,747 was thus quashed.

Then-Justice Longley, though, declined to rule on the wider issues - whether the PUC, and by extension URCA, had jurisdiction in Freeport, and whether Cable Freeport should be licensed by URCA.