The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

GB Power Company will invest $15 million in upgrading its transmission and distribution (T&D) system over the next five years, as it aims “to set the Caribbean bar for energy reliability”.

Archibald Collins, its chief executive, told Tribune Business that the planned investment would ensure the utility’s infrastructure was “strong enough to withstand another Matthew and whatever climate change throws at us”. He said that while GB Power’s earnings were down 10-15 per cent year-over-year, due mainly to the Grand Lucayan’s closure and a sluggish economy post- Hurricane Matthew, the company had enjoyed its best-ever year for generation reliability. Disclosing that customers had enjoyed 55 per cent improvement in reliability over the past five years, Mr Collins said GB Power intended to “build on that success” through investments in renewable energy and training its Bahamian workforce.

He added that GB Power had also taken the “bold” and rare move of providing electricity rate stability through 2022, the move having enabled Freeport’s major industrial concerns to better plan their own investments.

While the T&D network is stronger than pre-Matthew as a result of its near-$28 million rebuild, Mr Collins said the increased strength and frequency of hurricanes meant further strengthening was required.

“We have a plan to invest an incremental $15 million in our T&D infrastructure over the next five years,” he told Tribune Business. “Coming out of Matthew, the system is stronger than before the storm, but is still not where we want to be.

“We’re targeting an extra $15 million to get the system to a state where it can withstand another Matthew. We hope there are no more, but our job is to make the system resilient enough to withstand what climate change is throwing our way.”

Mr Collins said the Grand Bahama economy’s resilience, in the face of Matthew’s devastation, had given the utility and its 80.4 per cent majority shareholder, Emera, the confidence to make further investments and offer the $35 million buy-out deal to GB Power’s minority shareholders.

Those investors are due to vote on whether to accept Emera’s offer tomorrow evening, and Mr Collins said the Canadian utility believed its actions and behaviour - especially in the post-Matthew rebuild - had shown customers nothing will change if GB Power becomes a 100 per cent privately-owned company.

“Our financial results are down maybe 15 per cent year-over-year,” he revealed of GB Power’s 2017 performance. “Sales are down 7-10 per cent, earnings are down 10-15 per cent.

“But we have confidence the Grand Lucayan will be rebuilt and reopened; we have confidence the Freeport Container Port will re-erect the cranes lost and return to where they were. We believe that in 2018 we’ll continue to see that revenue loss shrink.

“Financially, 2017’s not been the best year, but it’s better than we thought it would be,” Mr Collins continued. “That goes back to the elasticity of the market, and from a reliability perspective GB Power has had the best year in its history for reliability.

“Generation reliability has been at 98.2 per cent, and it’s harder to get better than that. All things considered it’s been a good year, and we have confidence in the rebound of the economy, otherwise we would never have made the $8.85 per share offer [to Bahamian shareholders].”

Mr Collins conceded that Emera and GB Power had been “extremely worried” in Matthew’s aftermath, given the extent of the damage to both the latter’s infrastructure and the wider Grand Bahama economy.

However, the speed with which the island’s industrial base rebounded, together with its US proximity and Hawksbill Creek Agreement (HCA) tax advantages, had given GB Power and its majority shareholder encouragement about the island’s long-term growth prospects.

“In the aftermath of Matthew we were really worried initially,” Mr Collins said. “If you were an ICD Utilities shareholder you should have been really worried, as you would have had all your eggs in one basket, and if this economy had languished it would have impacted their shares.

“But we saw an economy that was very resilient, unlike in other areas where we do business. Grand Bahama, because it has an industrial-based economy, not a tourism or agriculture base, had a lot of elasticity.

“Very quickly on the heels of Matthew, normalcy returned to the economy. This gives us confidence that the way the economy is structured has a lot of resilience, and the ability to withstand natural disasters like Matthew.”

Mr Collins argued that GB Power’s improved reliability, rate stability and reduced costs should foster confidence among business and residential customers that nothing will change if the ICD Utilities’ minority buy-out is approved.

“Emera takes its job very seriously. In the aftermath of Matthew it pulled out all the stops,” he told Tribune Business. “Whether in Tampa, Nova Scotia or Grand Bahama, customers are all equal, and we had to get every resource to the island that we could.

“Emera has tried hard to behave in a way that generates customer confidence. Reliability is significantly better than it was five years ago. Rates are stable to 2022. Not many companies are in a position to make that claim. We’re saying rates are stable as far as we can see into the future.

“Reliability has improved, rates are stable and we’re soon going to be investing in renewables. We just don’t believe that we’ve behaved in a way that Grand Bahama should be worried things are suddenly going to go to hell.”

Mr Collins said Freeport’s industrial enterprises were “particularly supportive” of GB Power’s rate stability “as it helps them with investment decisions in their own companies”.

“Reliability has been significantly improved, but we want to go even further,” he told Tribune Business. “That’s what the $15 million investment in T&D is intended to improve, so while a 55 per cent improvement is nice, we think we can set the bar for electricity reliability in the Caribbean.

“We’re very focused on that, focused on renewable investments and focused on investing in local employees. Those are the near-term priorities.”