The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian group says its solar proposal can reduce energy costs by 40 percent, and create up to 100 jobs, if permitted to take over power supply to Grand Bahama's East and West End.

Dr Carlton Bosfield, principal of Northern Bahamas Utilities (NBU), told Tribune Business that its planned $30m investment in two utility-scale solar plants would ultimately enable residents in both areas to "own a piece of their energy".

He disclosed that NBU, founded by ex-Grand Bahama Power Company (GB Power) executives, had been working for three years to realise an opportunity that depends entirely on the government ending their former employer's 25-year monopoly.

GB Power's agreements to supply East and West End expire within months, and Dr Bosfield urged the Minnis administration to introduce competition into Grand Bahama's energy sector through a cleaner, more environmentally friendly solution that is Bahamian driven and majority-owned.

Having initially received what he described as an encouraging reception, Dr Bosfield said NBU was "starting to get concerned" by the government's recent silence on the matter, which has persisted for more than three months.

He disclosed that Senator Kwasi Thompson, minister of state for Grand Bahama, had informed NBU in March that it would be allowed to present its proposal to a technical committee that the prime minister's office was forming to assess the power supply issue.

GB Power was to make its case for renewing the power supply agreements to the same committee, and Dr Bosfield said he was informed by Mr Thompson that the presentations would take place within three to four weeks. But NBU has heard nothing since.

Its bid is being backed by Pastor Eddie Victor, and his Coalition of Concerned Citizens (CCC) advocacy group, which has been a "thorn in the side" of GB Power since it launched its campaign for lower energy costs on Grand Bahama in September 2012.

The Coalition has helped to organise town meetings to build public support for NBU's proposals, with Pastor Victor describing Dr Bosfield and his fellow principals - Rodger Johnson, Alexander Brown and Leon Cooper - as "the best ones" to provide a utility-scale solution outside the Hawksbill Creek Agreement (HCA) area.

"What we have proposed to them [the government] in the first phase is that we'd build a six megawatt (MW) solar plant, backed up by ten MW of cleaning burning propane, and supply power to residents in West End," Dr Bosfield told Tribune Business.

"We're looking at dropping the per unit price of electricity from 35 cents per kilowatt hour (KWh), where it is presently, to 20 cents per KWh, which represents about a 40 percent drop."

Emphasising that NBU's solution was "scaleable" according to customer base and demand, Dr Bosfield said the group plans a smaller solution for the less populated East End. It plans a three MW solar plant, with six MW of propane back-up, which will generate power at the same all-in cost of 20 cents per KWh.

"The project we're looking at is $30m; $20m for the west, and $10m for the east," Dr Bosfield said. He added that Providence Advisors, the Bahamian investment house headed by Kenwood Kerr, had agreed to raise the necessary financing from local and international investors.

The NBU principal said the project's ownership will be split 80/20 in favour of Bahamians, and it had supplied 'Letters of Intent' from both Providence Advisors and the foreign investment component to the Government as proof it has the necessary financing.

"If we can get an approval from the Government, we can start generation from six to eight months from a transition plant," Dr Bosfield told Tribune Business. "All our financial models show we can reduce the cost of energy to residents in these areas to 20 cents per KWh. That's a 40 per cent per KWh reduction."

"Our alternative is the best.... It is a profitable venture with a measurable rate of return." However, Archibald Collins, GB Power's former chief executive, told Tribune Business last year that it was "hard to imagine the business case would work" for anyone else but the utility to continue supplying East and West End.

He argued that "economies of scale" made it extremely difficult for another energy provider to step in, given the relatively small customer base in both areas, which made it difficult to price competitively and achieve a sound investment return.

"We believe that, and we would have every intention to seek an extension of the East and West End agreements. We're confident that stakeholders will recognise that is in the best interest of those communities, but we've not had those discussions [with the Government] yet," said Mr Collins then.

Dr Bosfield, though, said NBU's projected price directly contradicted Mr Collins' argument as GB Power was not dropping its all-in energy costs to consumers. While there were between 2,600 to 3,000 potential customers outside the Port area in West End, and around 200-250 in the east, he argued this was enough to support NBU's proposal.

"If you look at the construction, operation and maintenance of the plant, there will be 40-60 permanent jobs in the West," Dr Bosfield said of the group's plans. "In the east we're talking 60-70 per cent of that. Even though its a smaller plant for MW output, the way it's laid out we'll carry a similar-sized manpower content."

He explained that NBU, if successful, would seek to acquire GB Power's transmission and distribution infrastructure - wires and poles - outside the Port area, and link these directly to its solar plants. NBU is also offering to sell any surplus solar energy to GB Power at a price of 15 cents per KWh.

Dr Bosfield said NBU was eyeing a 51-acre parcel of land, known as Pelican Lake and close to West End, for its western plant. As for the east, it was looking at 25 acres of land adjacent to Statoil's South Riding Point or large tracts in the same area that are owned by private citizens.

GB Power, then Freeport Power, agreed to expand beyond the Port area in 1993 to meet the then-Ingraham administration's desire for the electrification of East and West End. Tribune Business has obtained copies of the two 25-year agreements, one dated June 23, 1993, and the other August 31, 1993, that effectively gave it a 25-year monopoly on Grand Bahama's energy market.

Using virtually identical language, the agreements gave GB Power "the sole right" to supply electricity outside the Port area. And it was granted similar tax breaks as those enjoyed within Freeport, including exemptions from Customs duty, Stamp Duty and Business Licence fees, along with the use of so-called 'bonded' goods without penalty.

Both agreements give GB Power an option to renew for a further 25 years, "upon the same terms and conditions", provided it gives notice of its intention to do so some 60 days before the existing deals expire.

The existence of this 'option' creates a potential obstacle for NBU and any other challengers, with the West and East End supply agreements due to expire on September 1, 2018, and New Year's Day 2019, respectively.

GB Power is thus unlikely to give up its existing supply agreements, and monopoly, without a fight. West End, in particular, holds out the potential of being an extremely lucrative supply market as a result of the Ginn sur mer project's seemingly imminent revival under the new ownership of Toronto-based Skyline Investments.

The Carnival cruise port proposed for eastern Grand Bahama, together with the much-maligned Oban Energies project, also present profitable energy supply opportunities if they ever come to fruition.

However, Dr Bosfield and Pastor Victor cited numerous benefits to breaking up GB Power's energy monopoly and allowing independent power producers (IPPs) such as NBU to compete with it.

Pointing out that GB Power was now 100 per cent owned by Emera, the Canadian utility that last year bought out the Bahamian minority in BISX-listed ICD Utilities, the duo said granting approval to NBU would also align with the Government's policy of having one, national regulator for the energy sector.

GB Power, supported by its current regulator, the Grand Bahama Port Authority (GBPA), is resisting the Utilities Regulation and Competition Authority's (URCA) efforts to take on this role via the Supreme Court. Handing NBU the power supply deal would weaken its fight by bringing East and West End under URCA's remit.

"I think it's important to note that here, now, we're dealing with a company that is 100 per cent foreign-owned, and a Bahamian company that has the experience and financial backing to do the project," Dr Bosfield told Tribune Business.

"We have to take note of what this means. We would come under the regulation of URCA. Presently, GB Power and the Port Authority has URCA in the Supreme Court challenging their ability to regulate in Freeport.

"We're also talking about circulating the money in the local economy as opposed to exporting it to a foreign parent not located in the Bahamas."

Licensed Bahamian engineering companies were "on board" to assist with NBU's plant infrastructure build-out and maintenance, and Dr Bosfield revealed there were "longer term" plans to offer shares in the project to East and West End residents.

"The ultimate goal is to reduce energy costs, reduce emissions, lower the carbon footprint, and have citizens in that area own a piece of their energy," he told Tribune Business.

"We've had a couple of Town Meetings and been received very favourably by folks in the west, who recognise that if we get the all-in cost of energy down it will open up that area economically where people will not spend so much money on energy costs."

Dr Bosfield said NBU had been working on its plans since 2015, although the former Christie administration had urged it "not to go public" with its efforts. The group, together with Pastor Victor, then approached the Minnis administration following the May 2017 general election, and several correspondences and meetings followed.

NBU submitted its formal application in October 2017, but has heard little from the Government since. "We got an update from the minister of state for Grand Bahama [Senator Thompson] in March," Dr Bosfield recalled.

"He said the Prime Minister's Office had decided to put together a committee of technical folks to evaluate the proposal for the Government, and we would be allowed to make a presentation to them. They also told us they were going to allow GB Power to make a presentation to the same committee as to why they should get a renewal rather than give it to someone else."

He added: "He said that should happen in three to four weeks. That was in March this year, and we've not heard from them since.... We started to get concerned by the silence of the Government in the last few weeks."