Grand Bahama residents and businesses will see no increase in their electricity rates “for the next five years”, after the island’s utility agreed to absorb Hurricane Matthew’s $27.5 million restoration costs itself.
The Grand Bahama Port Authority (GBPA), in a statement issued yesterday, said Grand Bahama Power Company (GBPC) had agreed with its desire not to increase consumer bills to recover Matthew restoration costs.
The electricity monopoly instead submitted a five-year plan to absorb, then “offset”, Matthew restoration costs itself via “prudent cost management and fuel purchasing” - the latter likely a reference to its hedging strategies.
Sarah St George, the GBPA’s vice-chairman, said there would be no increase to Grand Bahama residents’ electricity bills between now and 2021, based on current rates.
She added that GB Power had also agreed to delay implementation of its Hurricane Self-Insurance Fund, which would have added an extra charge to customer bills, until all Matthew restoration costs had been recovered.
“As promised in our briefing of November 16, there will be no increase to customers’ rates for the next five years when compared with 2016,” Ms St George said.
“In addition, GBPC has also agreed to delay the previously approved Hurricane Self-Insurance Fund until Hurricane Matthew costs are fully recouped. We wanted to announce this as soon as possible to reassure everyone of rate stability as we move towards the eve of 2017”.
The plan revealed by the GBPA is the opposite of GB Power’s immediate post-Matthew intentions, which were to recover its costs from consumers - but in way that did not cause further financial and economic hardship.
Emera, the Canadian-headquartered utility that is GB Power’s 80.4 per cent majority shareholder, confirmed its intention to reclaim Hurricane Matthew restoration costs from Grand Bahama businesses and residents last month.
Emera’s financial filings for the 2016 third quarter said then that the rebuilding of GB Power’s transmission and distribution network was estimated to cost $25 million.
“The Q3 2016 results for Emera Caribbean do not include any of the approximate $25 million of restoration costs, which are expected to be capitalised and recovered from customers over time,” Emera said of GB Power.
However, following meetings between the GBPA, as regulator, and GB Power executives, major revisions were agreed. GB Power executives involved in the discussions were Sarah MacDonald, a director and Emera’s Caribbean head; Archie Collins, its president and chief executive; and Tony Lopez, GB Power’s chief financial officer.
They spent one week meeting with the GBPA’s external electricity regulation consultant, with the Port left “fully satisfied that the relevant costs were properly and prudently incurred”.
In return, the GBPA has approved the $27.5 million “prudent costs” incurred in restoring GB Power’s “uninsurable” transmission and distribution network, which will be recovered over a five-year period starting on New Year’s Day 2017.
The Port also praised the utility for its restoration effort, which would have lasted 15 months and caused “irremediable” harm to Grand Bahama’s economy, had it not brought in foreign crews and resources from Emera’s international network.
“We have verified power restoration costs quantified at $27.5 million, comprising extensive labour and materials, which were required during the island-wide hurricane restoration exercise,” the GBPA said.
“The GBPC recovery operation involved local and off-island crews, without which it is estimated the restoration would have taken 60 weeks (15 months) rather than six weeks.
“The adverse economic impact resulting from a slow restoration - with its extended hardship and inevitable loss of business, tourism, trade and jobs - would have implied costs many times higher for the Grand Bahama community as a whole, and possibly proved irremediable, according to studies undertaken.”
The GBPA added: “The Hurricane Damage Assessment Summary provided by GBPC included: 1,362 damaged transformers, 2,025 damaged poles, 1,150 damaged brackets, 6,000 damaged insulators, 3.09 million feet of downed conductor wire; and 1,000 damaged arrestors.
“Technical experts, 200 additional linemen plus local linemen, worked over 95,000 hours. Other workers and 130 additional pieces of mobile equipment were brought to bear on the natural disaster.”
Ms St George added: “The hurricane has been a traumatic event for us all, but the power company deserves great credit for its handling of the power restoration at every level.
“The physical restoration was phenomenal in scope and pace, and it is a win-win situation for the island to go forward with no increase in rates over the next five years, and with an even better storm-proofed transmission and distribution system.
“As regulator, we understand the cost issues faced by the power company and the price issues faced by consumers, without losing sight of the intrinsic value of a high-quality electricity service. We are extremely pleased with this outcome, which is to everyone’s benefit and affords us a brighter future.”