By NEIL HARTNELL
Tribune Business Editor
Regulators fear Bahamas Power & Light (BPL) may have “compromised the introduction of sustainable renewable energy in the shortest possible time” by breaching the Electricity Act 2015.
The Utilities Regulation and Competition Authority (URCA), in its draft order and initial findings, said the utility monopoly had failed to meet its legal obligation to produce a Renewable Energy Plan (REP), featuring timetables and performance benchmarks, within six months of the Act taking effect.
Noting that “more than 27 months have elapsed” since this occurred, URCA expressed concern that BPL’s continued delay was jeopardising the National Energy Policy (NEP) goal of generating 30 per cent of this country’s energy needs from renewable sources by 2030.
It added that BPL’s failure to produce an acceptable REP was also delaying plans “by several commercial entities” to introduce renewable self-generation projects that will generate between 1 Mega Watt (MW) to 2.5 MW of energy, with any excess sold to the utility’s grid.
With only Small Scale Residential Generation (SSRG) of up to 100 kilowatts currently permitted, such projects - as well as utility-scale renewable generation - fall into a ‘hole’ outside the existing legal and regulatory regime.
While BPL did submit an REP on April 28, 2016, URCA said this failed to meet the Electricity Act’s requirements. It is alleging that the state-owned monopoly has subsequently failed to remedy these deficiencies, which has also left it in breach of its licence obligations as well as the Act.
URCA’s ‘bite’, though, appears less than its bark. To rectify these violations, its draft ‘Order’ requires BPL merely to submit a revised REP that complies with its previous recommendations - and includes provision for utility-scale renewable generation - by July 21, 2018.
Fines will only be considered if BPL fails to meet this demand. And, should they become necessary, they will likely be equivalent to 1 per cent of turnover - increasing by “one hundredth of one per cent”, or 0.01 per cent of BPL’s daily turnover, until such time as the penalty is paid.
Still, the timing of URCA’s findings is especially awkward for BPL, as it coincides with rising oil costs that last week pushed per barrel prices beyond the $80 mark. Given that the Bahamas - and BPL - are 100 per cent reliant on fossil fuel for all energy needs, rising oil prices automatically translate into increased energy costs for Bahamian households and businesses.
The introduction of renewables into the Bahamas’ energy mix has been a ‘hot topic’ for at least a decade, given the widely-held perception that this nation could become a leader in this industry, amid the need to counter rising energy prices and the environmental impact of oil-based fossil fuels.
However, the absence of an enabling legislative/regulatory regime has often been cited as a key reason for why renewable energy penetration has been slow, with access to financing also considered a major obstacle. URCA’s findings at least represent an effort to tackle some of these hurdles.
Darnell Osborne, BPL’s chairman, declined to comment on URCA’s findings on the basis that neither she nor the utility’s attorneys had yet studied them. She added that she also needed to speak to BPL’s chief executive, Whitney Heastie, who is presently travelling
“I have no comment at this time,” she said. “I have to look at it in detail. Mr Heastie is travelling, and I need to speak to him. I have no comment until we have our attorneys look at it.”
URCA, however, said it was concerned by both the inadequacies of BPL’s initial REP as well as the utility’s failure to meet its timeline for making changes.
“URCA is concerned that BPL’s failure to formulate and submit an RFP in accordance with the requirements of the Electricity Act compromises the achievement of the policy objectives regarding introduction of sustainable renewable energy in the Bahamas in the shortest possible timeframe,” the regulator warned.
“The current National Energy Policy established in September 2014 for the period from 2013 to 2033 has as its core objective the increasing inclusion of sustainable renewable energy sources into the generation mix in the Bahamas.
“The National Energy Policy focuses on the development of indigenous energy resources with the goal of increasing the percentage of renewables in the energy mix to about 30 per cent by 2033.”
URCA said it had called upon BPL to revise its initial REP in an August 28, 2017, letter. It sought a plan for incorporating utility-scale renewables into the Bahamas’ energy mix; a three-year timetable of initiatives that can be introduced and measured against performance; and specific utility-scale projects that can be developed.
While finding that the first REP “would not promote the goal of the National Energy Policy”, URCA acknowledged that BPL’s approach of splitting ‘small-scale’ and ‘utility scale’ generation had merit. That gave rise to the current SSRG scheme, implemented in April 2017, which allows commercial and residential customers self-generating up to 100 kW to sell any excess back to the grid.
The regulator, though, deemed other aspects of BPL’s REP as “vague”, and failing to meet the key objective of timelines and actions for introducing renewable energies to meet the National Energy Policy’s ‘30 per cent’ goal.
It also called for specifics on how BPL would finance and develop utility-scale renewable energy projects, adding that the initial REP made no room for independent power producers (IPPs) - other renewable energy suppliers - to be integrated into the mix.
BPL sought an extension to meet these demands, creating concerns at URCA that its “approach appears to lend itself to a lack of action in the short to medium term”.
“URCA advised BPL that it considered that delaying even the discussion of renewable energy initiatives for a further six months would have been unsatisfactory,” URCA said. It replied that an extension would only be granted if BPL took “immediate steps to accommodate the introduction of a reasonable quantity of renewable energy capacity from renewable energy self-generation customers to BPL’s grid during the period required by BPL” to address its own renewable planning.
Warning that the delays were already having consequences, URCA said “the most disturbing aspect of BPL’s contravention... is the delay to the introduction of large-scale renewable energy projects in the Bahamas”.
It added: “URCA was aware of inquiries by several commercial entities which were seeking to pursue renewable energy self-generation projects of capacity between 1MW and 2.5MW, confirming to BPL that there was already significant interest from existing commercial entities in the Bahamas who were desirous of generating energy for their own use using renewable energy sources and selling excess energy to BPL for use in its system.”
URCA said such proposals fell into the ‘gap’ between the SSRG programme and utility-scale projects, and called on BPL to “take steps to implement interconnection arrangements for this class of commercial customers forthwith”.
The regulator said BPL’s alleged breaches of the Electricity Act had also placed the utility in violation of its 25-year licence, which requires it to comply with its governing law and URCA regulations plus develop procurement procedures for utility-scale renewables.
To remedy the situation, URCA is calling on BPL to submit a revised RFP that details the “appropriate mix” of renewable energy sources, and timelines for when and how they will be introduced; grid improvements; the financing plans for such projects; the impact on consumer tariffs; system reliability; and the progress made.
“URCA is of the view that BPL’s REP should seek to ensure the implementation of at least one utility scale renewable energy project (a project of at least 2.5MW generation capacity) operational within 18 months of its implementation,” the regulator added.
It is also proposing that, within six months of any adverse findings, that BPL initiate a programme for “no less than 20MW of renewable energy generation capacity” on New Providence and capacities that are “feasible” for other Family Islands./
URCA now awaits BPL’s response to its findings.