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Urca Mandates 15-Year Renewable Payback Clarity

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Regulators have mandated that Bahamas Power & Light (BPL) alter its renewable energy interconnection agreement to give homeowners certainty of a 15-year payback, and make it clear that ‘fuel charge’ compensation is only temporary.

The Utilities Regulation and Competition Authority (URCA), in assessment of the energy monopoly’s small scale residential offering (SSRG), said the “variable” length of interconnection agreements was unsatisfactory for Bahamians seeking a return on their renewable energy investments.

The SSRG programme is designed to kick-start BPL grid tie-ins for residential solar and wind systems that are up to standard, and URCA said: “URCA notes that BPL’s proposed draft suggests that the term of the interconnection agreement would be variable, depending either on the length of BPL’s ‘pilot programme’ or other factors, which are not clearly set out.

“URCA considers that in order to properly secure customer-generator investments in renewable generation systems, the agreement must be of fixed length, which must be of sufficient duration to ensure recovery of the customer-generator’s investment. URCA has therefore inserted an amendment to fix the term of the agreement at 15 years.”

BPL will pay renewable energy suppliers using a ‘net billing’ method as opposed to ‘net metering’, using meters capable of monitoring energy flows in both directions.

It will credit homeowners for energy supplied to the grid in excess of their own use based on “based on BPL’s applicable fuel charge prevailing during the month the energy is supplied”.

URCA, though, is requiring BPL to amend its interconnection agreement such that it acknowledges the method for calculating consumer compensation may be changed “from time to time”.

“URCA’s current position is that it should be set at the fuel charge for the time being, but will be revised by URCA during 2017 based on a cost assessment to be conducted, and will be revised from time to time thereafter,” URCA added of BPL’s compensation method.

“URCA’s decision on the feed-in tariff is that the fuel charge will be used as an interim rate only until URCA has completed its net billing tariff study this year, at which time URCA will approve - and BPL will be required to implement - a new net billing rate based on the results of that study.”

BPL had also proposed that if the homeowner supplies more energy than they consume, a credit will be applied to their account and carried forward into the next month. Credits will roll forward until October of each year, when they will be reset to zero.

URCA, though, rejected this as “unfair”. It added: “BPL has advanced no justification for the proposal that customer-generators would not be fully compensated for the electricity which they generate and supply to BPL.

“URCA has amended the language to provide for payment by BPL to the customer-generator on an annual basis, where the customer’s account holds a credit balance after offset of payment for power taken from BPL.”

URCA added that it had also modified the capacity limits on the amount of energy homeowners could supply to the grid, finding that BPL had not complied with the limits set in the regulator’s initial findings.

It also introduced a requirement that residential suppliers of renewable energy to the grid obtain general liability insurance, in the event BPL personnel or others suffer harm.

And URCA also found that BPL’s renewable energy policy statement “does not fully comply” with the Electricity Act 2015’s requirements.

“Section 25(3)(b) of the Act requires BPL’s renewable energy plan to have a policy statement giving preference to renewable energy resources in all procurement processes if there are no compelling reliability or cost considerations,” URCA said.

“This means the Act requires BPL to add renewable capacity if a renewable source is economically viable. That is, if the renewable energy source will reduce the overall cost of electricity, compared to existing generation sources and other alternatives.

“BPL’s policy statement does not clearly reflect the Act’s requirement to give preference to energy sources because the statement only mentions BPL ‘will give consideration to renewable energy sources’, which does not mean giving preference to renewable energy sources.”

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