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Gb Power’S Supply Deals Under Review

Carl Bethel QC, Attorney General. Photo: Terrel W Carey/Tribune Staff

Carl Bethel QC, Attorney General. Photo: Terrel W Carey/Tribune Staff

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Grand Bahama Power Company’s now-expired East and West End electricity supply agreements are under review by the Attorney General’s Office, Tribune Business can reveal.

Carl Bethel QC, the attorney general, confirmed that he had passed the matter on to his officials for their assessment “several months ago” but had yet to hear back on the outcome.

“That came across my desk several months ago, and I referred it up to my technical people for review,” Mr Bethel told this newspaper. “I haven’t heard anything back as yet.”

Suggesting that the analysis will be completed in early 2019, the attorney general added that he “really cannot speculate” on what is being reviewed or why. Once the assessment is completed, he said a Cabinet paper would need to be prepared before the matter went to the Government’s highest decision-making body to be debated.

Tribune Business had been referred to Mr Bethel by Kwasi Thompson, minister of state for Grand Bahama in the Prime Minister’s Office, who had confirmed: “The Attorney General’s Office is doing an assessment on that matter, and so I cannot speak to it until the Attorney General’s Office has given their view on it.”

GB Power’s original 25-year east and west Grand Bahama energy supply deals both expired in summer 2018 with the Government yet to decide whether to renew them.

Northern Bahamas Utilities (NBU), a 100 percent Bahamian-owned group featuring former GB Power executives, have already gone public with their $30m bid to take over power supply in both areas with two utility-scale solar plants billed as able to reduce electricity costs by up to 40 percent.

However, the expired East and West End supply agreements contain a potential obstacle for rival electricity suppliers seeking to break-up GB Power’s island-wide monopoly as they contain language that could be interpreted as giving it a “right of first refusal” on any renewal.

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 terms, 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.

And 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 review by the Attorney General’s Office is likely to be focusing on whether both agreements give GB Power a legally watertight “right of first refusal” that excludes the possibility of any rival operator, Bahamian or foreign, from taking over the contract.

Meanwhile, Pastor Eddie Victor, president of the Coalition of Concerned Citizens (CCC) advocacy group, which has been backing Northern Bahamas Utilities’ proposal as a means to end GB Power’s monopoly and reduce electricity costs, branded the latter’s recent focus on renewable energy as a “public relations show”.

GB Power, which is now 100 percent controlled by Canadian utility, Emera, and has no direct Bahamian ownership, recently pledged to invest more than $18m in renewable energy and smart technology over the next two years as part of a “bold statement” to improve reliability and lower energy costs.

David McGregor, GB Power’s president and chief operating officer, told Tribune Business that its 3.5 megawatt (MW) solar plant kickstarts the third and final stage in the turnaround plan initiated when its owner assumed control in early 2011.

Besides the $5m investment in the solar plant, which will be operational by summer 2019, Mr McGregor revealed that GB Power is making a further $8m outlay in a battery facility designed to address the frequency and voltage fluctuations that often strike Grand Bahama’s electricity grid.

The “frequency control” battery will be online by February/March 2019, ahead of the 3.5 MW solar plant, with Mr McGregor also unveiling a $5.2m outlay on Advanced Metering Infrastructure (AMI) that will see GB Power replace meters for all 19,000 customers.

Pastor Victor, though, alleged that GB Power had only moved on renewable energy when it became aware of Northern Bahamas Utilities’ proposal and decided it needed to counter it.

“GB Power has cleared this property around their plant, but you need much more land to generate significant power from solar to make the dent you need,” Pastor Victor told Tribune Business.

“What we’re seeing is a show. You clear some land, put up some solar panels, but it’s not enough for the amount of customers you have and the power you need to generate from solar. You’re seeing the PR machine in high gear once they got wind of what [Northern Bahamas Utilities] was proposing to the Government.”

Pastor Victor also rejected assertions by Mr McGregor’s predecessor, Archibald Collins, that GB Power was the best option to keep West and East End power costs lowest because of the economies of scale generated by its island-wide supply.

“There may have been, some time ago, when economies of scale applied,” he told this newspaper, “but with the advances in technology in the last 10-20 years what you’re seeing now is that the supply of power to small communities can be done in a more affordable way.

“You can bring down the cost of energy and it has nothing to do with getting more people on the grid. It’s primarily based on the model you’re using. Micro grids are being built for small pockets of communities to bring down the cost of electricity.

“The principal being applied by what Northern Bahamas Utilities are proposing is the customer base is much smaller but they can bring down the cost of power by 33-40 percent, make money, repay their their obligations.”

Pastor Victor said Grand Bahama’s electricity cost woes stemmed from a business model that was weighted too heavily in favour of GB Power’s shareholders, as opposed to customers, although he conceded the utility’s investors have a right to earn profits.

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