The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Grand Bahama Power Company’s (GBPC) three-year rate proposal is an attempt “to get ahead” of energy industry reform and URCA oversight of its activities, a Freeport MP charged yesterday.

Gregory Moss, leader of the newly-formed United Democratic Party (UDP), told Tribune Business he believed GBPC was attempting to effectively ‘lock in’ base rate increases for numerous customer categories prior to the Utilities Regulation and Competition Authority (URCA) becoming the energy sector’s independent regulator.

Branding the Power Company’s proposal as “offensive”, Mr Moss suggested URCA would find it difficult to ‘walk back’ the increases should the 2016-2018 package be approved by the Grand Bahama Port Authority (GBPA).

The GBPA yesterday extended the public consultation process on GB Power’s application from an initial nine days, which ended last Friday, to January 15, next year. The move follows public pressure by Tribune Business and others.

Still, Mr Moss criticised GBPC’s proposal on two other aspects, one being the “egregious” base rate reduction granted to Freeport’s major industrial companies who, he argued, were already enjoying a discounted rate.

The MP added that few residential customers consumed less than 350 kilowatt hours per month, the only other customer category to enjoy a base rate reduction between 2016-2018.

GB Power has responded by saying critics are becoming too caught-up on the ‘base rate’ increases, and are ignoring the fact that a 25 per cent reduction in fuel costs will result in 90 per cent of customers seeing a reduction in their total electricity bills.

However, Mr Moss also argued that the Electricity Bill and related energy reform legislation passed recently by the House of Assembly represent “the first concession” to the notion that the Government - and not the GBPA - is the regulator for Freeport, including its utilities.

The MP said this had been the case since the 1968 Benguet Agreement and amendments to the Hawksbill Creek Agreement, and the Bills represented the first public recognition of this.

As a result, Mr Moss argued that the GBPA “has no authority” to grant GB Power its proposed 2016-2018 tariff rates, as it is currently purporting to do.

“The Power Company’s approach, to me, is unfortunate and offensive in terms of what the people of Freeport and Grand Bahama are experiencing from it,” Mr Moss told Tribune Business.

“When you look at the application, it’s very clear that the motivation for this is to give a rate reduction to the industrial sector. It’s very clear when you look at the proposed tariff structure.

“That is egregious given that the industrial sector already pays a discounted rate.” He added that few GB Power residential customers would fall into the other ‘base rate’ decline category, users who consumed 350 Kwh per month.

GBPC’s application disputes that last assertion, stating: “Sixty per cent of residential customers will see no increase to the base tariff, and 85 per cent of residential customers will see a decrease to the ‘all-in’ price of electricity (which includes fuel and base rate) when compared to the average ‘all-in’ price for electricity in 2015.”

To protect low income consumers and minimal energy users, the GBPC proposal recommends a 4.5 per cent ‘base rate’ reduction for the first 350 kWh, while the major industrial firms will see an 8.5 per cent reduction ‘across the board’.

While the Electricity Bill clearly states that it has jurisdiction over Freeport, and that URCA must license GB Power within 90 days of it becoming law, the responsibility for regulating utilities within the Port area remains a contentious issue.

Fred Smith QC, the Callenders & co attorney and partner, earlier this week urged the GBPA to resist the Government’s efforts to ‘chip away’ at the Hawksbill Creek Agreement by making URCA the utility regulator for Freeport - powers he says are reserved for the Port Authority.

While Messrs Moss and Smith disagree on this point, the latter agreed: “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.”

Approaching the issue from a different angle, Mr Moss argued that GB Power’s rate application was an attempt to ‘beat’ the energy sector reforms and transfer of regulatory responsibility to URCA.

“It’s clearly an attempt to obtain a rate increase before the URCA oversight kicks in,” Mr Moss told Tribune Business.

“This is an attempt to get ahead of the legislation we just passed by creating benchmarks above the present rate structure where URCA will have to start its regulatory oversight.

“They’re saying: Let’s get a rate increase before URCA comes around. If that rate increase goes through, URCA will be required to regulate from that benchmark, and will have difficulty getting back to the old rates,” he added.

“That’s the game they are playing. They are moving out ahead, kicking the can further down the road into the future.”

Mr Moss then argued that the Electricity Act, and its application to the whole Bahamas including the Port area, represented “the first concession” by both the Government and the GBPA that the former “at this moment in time has the power to regulate the GBPC.”

He added: “This is the first nod by the Government and Port Authority, and implicitly and indirectly by the Power Company, that the power to regulate vested in the Government, otherwise it would not have delegated to URCA powers it did not have.”

Mr Moss said the situation was “unseemly”, and “begs the question” as to why successive Governments had permitted GB Power rate increases in the past.

“There is power in there [the Bill] for URCA to regulate GBPC,” he added. “It does not tie URCA’s hands with respect to the GBPC.”