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'How Could I Compete' Against 7 Cents Power?

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Robert Myers

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian businessman yesterday questioned "how am I supposed to compete" against foreign rivals whose all-in electricity costs are almost two-thirds lower than BPL's fuel charge.

Robert Myers, who also heads the Organisation for Responsible Governance (ORG), told Tribune Business that business counterparts in Canada and Florida had informed him this week they were paying just seven cents per kilowatt hour (KWh) for their electricity.

In contrast, Dr Donovan Moxey, Bahamas Power & Light's (BPL) chairman confirmed that the state-owned utility's fuel charge is currently 19.5 cents per KWh - a figure almost three times' the all-in tariff in many North American regions.

With Bahamian households and businesses paying an all-in tariff of around 40 cents per KWh, Mr Myers said this nation faces energy costs that are almost six times' higher than competitors in the US and Canada.

"How am I supposed to compete with a guy with a base of operations whose paying seven cents a KWh, and we're paying 40 cents per KWh," Mr Myers asked, echoing the thoughts of many in the private sector.

Meanwhile Paul Maynard, the Bahamas Electrical Worker Union's (BEWU) president, told Tribune Business that the Government needs to "get its head out of its backside" and move urgently to lower BPL's electricity prices otherwise the economy "will tank".

The warning from the union leader, who represents BPL's line staff, came as questions continued to be asked over the utility's decision to select Aggreko's automated diesel oil (ADO) temporary generation units to provide an extra 10 Mega Watts (MW) of power at its Clifton Pier power station.

Whitney Heastie, BPL's chief executive, previously told Tribune Business that Aggreko was selected - on the basis of advice from BPL's long-term generation partner, Shell - because it was the only supplier to offer the short-term rental the utility was seeking. He added that all rival proposals only offered the same ADO-fuelled units.

However, Tribune Business sources subsequently confirmed that at least one company offered both Heavy Fuel Oil (HFO) and propane/liquefied natural gas (LNG) fuelled temporary generation units to BPL that could have been on the ground within two months.

Both these fuels are much cheaper than ADO, with HFO currently said to be 20 percent less. Several energy industry contacts, speaking on condition of anonymity, suggested that BPL may have selected the deal that was best for its own cash-strapped position but was the worst for Bahamian consumers.

They explained that ADO-fuelled temporary generation units carry lower rental rates, in comparison to HFO and propane ones, yet are ultimately the most expensive because fuel accounts for 80 percent of the generation costs.

Yet while BPL will be paying the lower rental rates, the fuel - representing the bulk of the cost - will be passed on to Bahamian consumers through the utility's fuel charge. One source explained: "Diesel is the cheaper option when it comes to rental rates but is the most expensive since the fuel share is higher (80 percent of total generation cost).

"On the contrary, HFO has the higher rental rate since the equipment is more efficient, more reliable and more robust, but overall is the least expensive option for power generation since fuel is less expensive. In summary, BPL is taking the option that better suits their finances over what is best for the country and their customers."

Mr Heastie could not be reached for comment yesterday, but Mr Maynard agreed with this rationale, adding that he "didn't have a clue" why BPL chose ADO-fuelled units over potentially cheaper deals for Bahamian consumers.

"The Government needs to decide what they want to do," Mr Maynard told Tribune Business. "The problem with it is this economy, if they don't do something about it [high electricity prices] sooner rather than later, this economy is going to tank.

"They have to get their heads out of their backsides. My alternative is to talk to Shell. Shell has the rights to provide power and fuel to BPL for the next 25 years. Shell is the largest distributor of LNG and propane.

"We can say to Shell: 'We are in crisis mode, light bills are getting out of hand, and we need to do something about it.' Shell can, in a month or two, have propane rental units down here cheaper than what we have now," the union leader continued.

"We need to get with it. There's just too much money people are paying, and they can't afford it. This economy is in danger of tanking, and everywhere you go people are complaining about these damn bills. If I was the Prime Minister I would talk to Shell."

Research by Tribune Business shows that BPL's fuel charge has increased by 66.8 percent year-over-year, rising from 11.69 cents per KWh in October 2017 to the 19.5 cents cited by Dr Moxey.

Fuel costs account for just over half of customer bills, and the two-thirds increase in this component can be traced directly to the spike in global oil prices over the past year. This, though, has been exacerbated by events at Clifton Pier, where a maintenance backlog has been compounded by the fires that knocked out BPL's two most efficient turbines and their 60 MW of generation capacity.

This has forced BPL to rely heavily on the Blue Hills power plant, and its more expensive ADO fuel, for the bulk - around 70 percent - of New Providence's power needs, thereby creating a "perfect storm" for long-suffering businesses and households.

Comments

birdiestrachan 3 days, 9 hours ago

It seems to me that roc wit doc is going to throw the Bahamas into a recession The poor and middle class have to cut their spending and do their best to keep their heads above water,

Doc and Mr Turnquest will learn soon enough there is no blood in stone but they are determined to get their pound of flesh, Then what??

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Sickened 15 hours, 25 minutes ago

I don't know too many people who are still on Doc's run. It's very scary what limited political options we have. FNM is now a 50/50 option and PLP still a distant 5th place (out of 2) as long as Brave dem still involved.

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