By YOURI KEMP
Tribune Business Reporter
ykemp@tribunemedia.net
Bahamas Power and Light's (BPL) chairman yesterday revealed that the extra charge consumers must pay come March 2020 will likely be equivalent to 15 percent of their electricity bills.
Dr Donovan Moxey finally clarified that the National Utility Investment Bond fee, which will service BPL's new $650m debt, will be calculated as a percentage of every business and household's energy consumption.
He spoke after Tribune Business sought an explanation as to how much Bahamian companies will have to pay because BPL's statements to-date have only referred to a $27 per month increase for the "average household" once the debt servicing charge is implemented early next year.
"We're still in the midst of the bond, so I can't say much beyond what we posted out there. What we have posted out there was the rate for the average consumer," Dr Moxey said. "That rate itself is based on a calculated, or estimated, price per kilowatt hour (KWh).
"Just look at it this way. If you look at how that is calculated, the average Bahamian pays $180 per month, so that rate is a percentage of that $180 per month. So you can extrapolate that through to see what everybody else may pay given that estimated total."
The $27 figure quoted in BPL's recent advertisement therefore represents 15 percent of the $180 "average bill" referred to by Dr Moxey. "Everybody is going to pay the rate reduction bond rate," the BPL chairman asserted.
"The calculation you saw was a percentage based on the average bill that Bahamian households pay. The average bill is $180 a month. So, just based on what I just told you, you can extrapolate some calculations there.
"Everybody is paying the same percentage on their bill, and that percentage that we gave you is an estimate because I can't come out and tell you what it's going to be because we're still going through the rating agency process. That percentage will apply across the board to everybody's bill."
Many observers are likely to view BPL and the government as having been less than forthcoming on how much extra the private sector, especially, and many residential consumers will now have to pay to bail-out the state-owned utility monopoly from years of mismanagement, waste, inefficiency and corruption that brought it to near-collapse.
BPL's advertisements have focused on the $27 increase that the "average household" will pay, giving some the impression that the debt servicing cost is a flat fee rather than a percentage, while ignoring how much the private sector will have to pay. It is also unclear whether the debt servicing charge will be calculated just on the consumption, or if VAT is included in the base, too.
Those with the largest monthly bills, such as hotels, food stores and companies where electricity has to be on 24/7, could thus find themselves potentially saddled with a significant hike in their electricity bills come early 2020 as the price Bahamians must pay for paying the interest/principal due to foreign and local investors who buy into the $650m bond issue that will refinance BPL.
Desmond Bannister, minister of works, previously said the hike in electricity bills would only last for 10 months. BPL, and the Government, are betting that the new, more efficient Wartsila generation engines will reduce the utility's fuel and other costs enough to offset the bond servicing charge and, ultimately, lower net electricity bills although this remains to be seen.
Dr Moxey yesterday confirmed this was the plan, saying: "What everybody needs to recognise is we will offset that cost based on the fuel savings. That's how that cost will be offset. That savings is based on the average bill that consumers paid over the 2018-2019 year.
"So if you look at the average fuel bill, and this is very important that people understand this, the baseline that we are establishing is the average fuel bill over the last two years, 2018-2019. That's what is going to go down, and that's what the estimates are based on. And again, they are simply estimates because we are still in the middle of negotiating our rate reduction bond and I cant say anything else other than these are just estimates."
This means BPL's "15 percent" estimate is not set in stone, as the bonds have yet to be priced, and the interest rate investors will receive has not been determined. This, in turn, depends upon the strength of the credit rating that the $650m refinancing obtains from the international agencies such as Fitch and Standard & Poor's (S&P).
No rating has yet been assigned, which means the debt servicing charge on customer bills could be below or above the 15 percent given by Dr Moxey.
Comments
ohdrap4 4 years, 3 months ago
Well, we never heard them say percentage. The flat rate was a trial run.
Once the heard the cussing on talk shows, they calculated a percetange. Lol.
Reminds me of the Christmas tree debacle. Lol.
The_Oracle 4 years, 3 months ago
legalized extortion. Unfortunately we don't have the civil society to fight it. Thus, as in all else, we pay for our laziness, and timidity, With our ignorance being traded upon daily by those who would rule, and their minions. Merry Christmas everyone.
pileit 4 years, 3 months ago
Exactly, precisely.
Dawes 4 years, 3 months ago
Well at least this confirms Minnis will be the first one and completely done PM over here. Good.
Well_mudda_take_sic 4 years, 3 months ago
LMAO......it's gonna be a whole hell-of-a-lot more than 15% of your average monthly bill for the next 10 months....it's gonna be more like 33% or more for the next two decades!
It might make much more economic sense for many of us to simply pay the right person under the table for the privilege of being put on the infamous 'DO NOT DISCONNECT LIST'. Better still, give the right field technicians at BPL a cash gift to tap (trench) you into the power grid so you can secretly pirate electricity for free. ROWL
mandela 4 years, 3 months ago
So this means that the persons with a $2000. per month electricity bill will be paying $300. extra at 15% if so then i can deal with that and it would only be fair.
ThisIsOurs 4 years, 3 months ago
wait till they add in the surcharge in july
Well_mudda_take_sic 4 years, 3 months ago
12 x $300 = $3,600. You must be one of the politically-connected few in our society who's lucky enough to be riding on the corrupt Minnis-led FNM government's gravy train.
Porcupine 4 years, 3 months ago
This is not a 15% rate hike for BPL. Every business will ow have to raise their prices if they want to stay afloat. And, we know that 15% will likely end up being 20% or more. So, Bahamians can now count on an immediate double digit increase in their cost of living. How many Bahamians will now be thrown into poverty and how many will be bumped out of the middle class? All for the lack of brains and fortitude from our fellow Bahamians.
hnhanna 4 years, 3 months ago
My light bill is under 100 dollars
ThisIsOurs 4 years, 3 months ago
your other costs will go up, because there's no business in the Bahamas with a light bill less than 100. except maybe 10, if that,on solar power. The increase isn't as innocuous as made out to be. Power underpins everything in our society
BONEFISH 4 years, 3 months ago
I am confused.I thought it was about 20 to 30 dollars per month for this charge.Now it may be a percentage of around 15% of your electricity bill.Wow.I hope this works out.
ThisIsOurs 4 years, 3 months ago
I think they deliberately left out talk of a percentage it's a scary word in a land with 9 months of summer
OMG 4 years, 3 months ago
The state of electricity production has been deplorable for years but to blame the FNM is downright inaccurate. For the majority of years since independence this country has been ruled by the PLP and it is they without a shadow of a doubt who have spent spent spent on all sorts of hair brained schemes and with typical cultural attitude never considered the long term picture and putting aside reserves to pay for the inevitable replacements. Consider how long BEC employees were making an absolute fortune in overtime, consider all the wasted projects started like the hospital planned for Palmetto Point but never completed and the list goes on and on. Now the public is going to be faced with a double charge with household bills rising even higher than the exorbitant costs they now face and the increases in all services such as shops, and hotels due to higher operating costs. There should be a non partisan committee formed to name and shame the ministers and Permanent secretaries who over the years have contributed to these shameful wastes of public funds.
concerned799 4 years, 3 months ago
Given all this debacle, who supports privitization? Wold it not have been best if BEC was privitized years ago?
The_Oracle 4 years, 3 months ago
And will the "rate reduction" bill "increase" be subject to VAT also? Aka Compounded taxes, again.
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