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Gb Power: Consumers To Pay $25m Storm Cost

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K Peter Turnquest

Grand Bahama Power Company’s (GBPC) plan to recover its $25 million in Hurricane Matthew restoration costs from consumers was last night blasted as “highly irregular and unfair” by one of the island’s MPs.

K P Turnquest, the east Grand Bahama representative, told Tribune Business that the utility monopoly would be “taking advantage of a captive market” if it levied a ‘hurricane recovery charge’ on its 19,000 customers’ bills.

He was speaking after 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.

Emera’s financial filings for the 2016 third quarter confirmed that the rebuilding of GB Power’s transmission and distribution network is 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.

“The island of Grand Bahama took a direct hit from Hurricane Matthew in October 2016. Property damage on the island is extensive. GBPC’s generation and substation infrastructure generally weathered the storm well.

“However, over 1,500 transmission and distribution poles and related conduits were damaged or destroyed, as were many connections to customer homes,” it added.

“Restoration efforts are well underway, with GBPC’s team being supplemented by over 200 people and over 100 pieces of equipment from other Emera affiliates, including Tampa Electric, Emera Maine, Nova Scotia Power, and Emera Utility Services.”

Sarah McDonald, GB Power’s chief executive, had previously pledged to Tribune Business that the utility would avoid any “harmful rate shock” to customers still struggling to recover from Matthew’s devastation.

She added that the company would work with its regulator, the Grand Bahama Port Authority (GBPA), to determine the most appropriate method for recovering its “prudent” restoration costs once all work was completed.

“We’ll work with the GBPA to find a way to recover the prudent costs of restoration, but we don’t want a rate shock that will be harmful to people trying to get back on their feet,” Mrs McDonald emphasised.

However, Emera and GB Power’s confirmed intentions, and the scale of what they will be seeking to recover from hard-pressed consumers, will again raise questions over who should foot the bill for storm restoration - the latter’s shareholders, including the 19.6 per cent Bahamian minority in BISX-listed ICD Utilities, or consumers.

The situation is also likely to revive debate on who should be GB Power’s regulator - the Utilities Regulation and Competition Authority (URCA) in Nassau, which is supposed to oversee the energy sector nationwide, or the GBPA.

Mr Turnquest, the FNM’s deputy leader, was adamant that he would not support GB Power’s plans for charging storm restoration costs, or the previously proposed hurricane self-insurance fund, to consumers.

“I think it’s highly irregular and unfair for consumers to bear that cost,” Mr Turnquest told Tribune Business, suggesting that GB Power had done something similar under previous ownership when Frances and Jeanne struck in 2004.

“It’s part of their infrastructure costs. They’re selling us a service. For us to pay another cost for this recovery is highly unfair.”

While admitting he was unaware how other utilities in hurricane prone jurisdictions recovered their restoration costs, Mr Turnquest said he was also opposed to consumers financing any GB Power self-insurance fund.

“Why should we be paying for that? It’s an operating fee for the business,” he added. “If I want to operate a business, I can’t pass on my insurance costs to my customer every year. Don’t come to me talking about special insurance cover and recovery fees. That’s not my problem; that’s your problem.”

GB Power executives have previously told Tribune Business that it is impossible to obtain insurance coverage for its transmission and distribution network, given the risk of hurricanes.

And they have argued that it is standard practice in the energy utility industry to recover costs, such as hurricane restoration, from additional charges levied on consumer bills.

Yet the Bahamas Electricity Corporation (BEC), and its Bahamas Power & Light (BPL) subsidiary, have never traditionally imposed a hurricane restoration charge - and have given no indication of doing so this time.

However, Mr Turnquest told Tribune Business: “In short, I will not support it. It’s highly unfair to expect a set of consumers already taxed in the recovery to pay for the restoration of poles.

“I don’t know what to say about this. I think it’s unfair, and taking advantage of a captive market and doubling down on the back of people stressed and hurting from higher rates and recovery costs.”

Mr Turnquest agreed that GB Power’s recovery demands would reignite debate over whether URCA should take over regulatory responsibility for GB Power, an issue that has already ended up before the courts.

“This again points back to the need for a qualified, independent regulator to make sure whatever recovery is needed is fair and explain why an adjustment is necessary,” he added.

GB Power previously filed a Judicial Review with the Supreme Court challenging URCA’s authority to regulate it.

Comments

observer2 2 years, 10 months ago

Over the weekend I had argued that having foreigners coming to the Bahamas and buying $1 million dollar homes in exchange for residency is of little economic value to the Country because Bahamian are subsidizing their cost of living. Especially by way of electrical costs.But our government is so busy dealing with the Chinese and paying Baha Mar's electricity bill (diesel) it doesn't have time to check for its citizens. Also, the government, after giving away Freeport over 50 years ago, is busy giving away Andros before the next election. All for a couple of dollars. Just follow the money.

This is another example of foreigners taking advantage of poor Bahamians and our no clue government. Here you have foreign utility provider (GB Power), a foreign regulator (GBPA) coupled with bunch of foreign industrial companies utilizing most of the energy in Freeport (Borco, Shiping Port, Plastics etc).

In this instance a unilateral decision was made by GB Power to bill the poor residents of Freeport for the electrical hurricane repairs. No discussion with government, no town meetings with residence and no local regulator. GB Power would never ever do that in a developed country. They would be run out of town.

Our government is asleep at the wheel and the Freeport industrial base is only to happy to stick locals with the repairs because they can. GBPA (the regulator) could careless as long as it gets a favorable discount.

Freeport residents have gone through enough trauma. All they need now is to directly bear the cost of the hurricane repairs for electricity.

In a normal developed country these costs would have been paid for from an existing sinking fund retained by the utility provider, insurance and borne by the company from future earnings.

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Economist 2 years, 10 months ago

No observer2, I think that you have miss read the article. GB Power is not singling out Bahamians, they are billing ALL their customers. Guess who will pay the largest share?

Those same companies that you are complaining about will pay the most because they are the largest consumers. So taking your reasoning, it is those foreigners, whom you seem to dislike, that will be paying for us Bahamians to benefit from..

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observer2 2 years, 10 months ago

Economist. Rationally you may be correct but we are dealing with an non transparent process. The process is opaque, poor Bahamians are left in the dark, accounting allocations can be done not based on usage but on the numeric number of houses or firms. We will have no clue how the allocations are done and you can bet your bottom dollar, as always, Freeporter will get the short end of the stick.

Economist did you ever wonder why after billions and billions of foreign dollars invested in the Bahamas we as Bahamian feel worse off? Crime is higher, our kids are less educated, less jobs, more people have their lights off, no one is registering to vote, BEC can't keep the lights on, our infrastructure is poor, illegal aliens abound and more and more of our land is being given away.

But all our government can talk about is the billions and billions of dollars they are bringing into the country like Baha Mar. With all this foreign money why I'm I worse off after it has been spent why do my kids feel they have no future? If the government would spend less time spending money flying to China and more time in Bain Town we would be better off.

The reason Freeporters will get jammed again is because allocation of hurricane cost is an illusion, its non-transparent, the process is opaque and if one really knew the facts non of the benefits are trickling down to the poor man.

So don't tell me that foreigners are paying their fare share of our economic mess.

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MonkeeDoo 2 years, 10 months ago

observer2: What you are claiming is what got Trump elected President. If the hurricane doesn't bring Christie and Co down it will be the Chinese Fishing and a little Agriculture that will. Not including of course Baha Mar which ain't sold yet nor work recommenced. ( As far as we know ) docs sealed.

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observer2 2 years, 10 months ago

MonkeeDoo. I almost had a heart attack when Trump was elected. But as time goes on I am happy he was elected. The stock market is going up, bank stocks are going up, biotech stocks are going up, Trump said if the 6 trillion spent on foreign wars had been spent on US infrastructure they could have rebuilt America infrastructure twice.

So Trump is an isolationist and want to help poor Americans, that's good for America. Our government should listen and stop travelling overseas and try to help poor Bahamians.

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GrassRoot 2 years, 10 months ago

Trump is the CEO of United States of Tump Inc. He is even so gracious to forego his salary as the POTUS. Sounds like all these CEOs. Who wants to pay income tax if they can get all the dividends for almost no tax.... mark your words. Once the USD gets devalued, Bahamas Dollar either goes with it or the Bahamas becomes so expensive for Americans, that its cheaper for them to vacation in a 5 star hotel in Miami than our shacks over here.

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TalRussell 2 years, 10 months ago

Comrades! Imagine what Freeporters and all of we natives could have accomplished if only had prime ministers Perry and the other former law partner Papa Hubert, not jointly borrowed $10 BILLION, we taxpayers would not only now financially as a nation be in the position to buy-back Freeport and pay the two families a sizable cash return on their families investments, but we could use those all capital letters BILLIONS to re-buy Nassau, Abaco and the balance of Freeport - back from the Chinese government. Resulting in no more need for Freeporters homes owners and renters and businesses to be held hostage to Freeport's foreigner Light Company.
Imagine our Bahamaland, had we the people been given the chance to have properly invested PM's Perry's and Papa Hubert's, borrowed in the good name taxpayers - BILLIONS and BILLIONS Dollars?

John Lennon - Imagine HD.

......https://www.youtube.com/watch?v=DVg2E...">https://www.youtube.com/watch?v=DVg2E...

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observer2 2 years, 10 months ago

Well said Tal. I'm more and more impressed with your current views.

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alfalfa 2 years, 10 months ago

At least the Freeport Power Company is attributing their increases to the Hurricane. BPL, on the other hand, will say that New Providence consumers have to bear an increase in "Fuel Surcharge", and then say we had to pay nothing for Restoration after Matthew. And the PM will be bragging come election time that he insured that our electricity bill did not go up because of Matthew, but we will be paying out of our butts to cover the expenditure. Stevie Wonder- Heaven Help Us All.

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OMG 2 years, 10 months ago

Transparency is a lost concept in this country where secrecy starts with school accounts,thru fund raising events to the government. What I don't understand is this continual blame heaped on foreign investors big and small where it seems their cash is welcome but they are not. If you don't like foreigners then don't accept all the cash donations and stand on your own two feet.

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TalRussell 2 years, 10 months ago

Comrade OMG, it's been written in a text form ever since the landing of Christopher Columbus, that da fish rots from the head down. When an organization such as The Bank of Bahamaland has a reoccurring history of falling behind many months in its blatant refusal to publish its Shareholders Mandated Financial Filings - something internal and the Board of Directors decision making process over at the state owned Bank, does give off one extremely ungodly foul odor. Had this occurred even once at any other Bank, the government would have quickly acted by forcing the shutting of the Banks Main Office and Branches doors.
Good Sweet Jesus, The Bodie Bank once operated unregulated for years on Wulff Road, could have passed better Central Bank scrutiny, than today's BOB.

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BMW 2 years, 10 months ago

Peter wait until you get your cable bill! Still getting charged full for no service.

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watcher 2 years, 10 months ago

Don't anyone worry - residents of Nassau will be paying for their damage repairs......BEC's financial results for this year will not be tabled in the House until, say, 2021 and will be accompanied by a footnote saying

"Increased borrowing in 2016 occurred as a result of Hurricane Matthew - these loans are guaranteed by the Government (i.e. the taxpayer). Interest associated with these loans is at commercial rates, and are offset by way of increased consumer fuel charges since the loans were first drawn down"

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The_Oracle 2 years, 10 months ago

And so who should pay for it K.Peter? I should not have to remind you that ALL operating costs including repairs and renewals come from operating income in ALL Private sector businesses. The restricting factor would be competition, as one "store" could not increase its prices if its competitors do not.
Only the Government can operate at a continuous and ever increasing loss! You know better, stop pandering, and enact legislation to make them "compete" with Solar.

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Publius 2 years, 10 months ago

You know better, stop pandering

Precisely

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The_Oracle 2 years, 10 months ago

The real question is, will they recoup their Investment via normal profits? Or are they probing for a surcharge on Kwh? Again, over what period of time? Being that the poles that fell this time were the last of the 50+ year olds not replaced post Frances, Jean and Wilma, it really should be on the books as capital improvement.

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