Minister of Public Works Desmond Bannister.
By SYANN THOMPSON
Tribune Staff Reporter
BAHAMAS Power and Light customers will see a $20 to $30 increase in their monthly electricity bills for 10 months starting in 2020, according to Minister of Works Desmond Bannister.
While debating the Electricity Rate Reduction Bond Act in the House of Assembly yesterday, Mr Bannister said that the issuance of the bonds will be used to refinance BPL’s $321m debt to pay for phase two of the new Wartsila power plant and manage other liabilities.
“We expect that the issuance of the rate reduction bonds will lead to a temporary increase in the average household billing of an average of $20 to $30 monthly for about 10 months in 2020,” he told Parliament. “The good news is that this will be a short-term increase that will be wiped out in 2021 when the cost of generation will decrease drastically due to the completed installation of the second station consisting of even more new fuel efficient engines, better operation performance, and lower fuel costs brought on by the utilisation of Shell’s internationally respected hedging expertise.”
The Carmichael MP explained that the Rate Reduction Bond Act passed under the former Christie administration mandated officials to increase electricity bills at that time in order to properly finance BPL. Instead of doing that, Mr Bannister accused the Progressive Liberal Party of bypassing the increase and hiring 166 people at BPL which caused overstaffing.
Successive governments have failed at turning the former Bahamas Electricity Corporation, now BPL, into a self-sustaining corporation, now Mr Bannister is hoping with new legislation there will be a change. He said that the government will focus on replacing the 17 engines with an average life of 26 years, to updated machinery.
“In three weeks, seven of these powerful, efficient Wartsila engines will come online. It will be the first time since 1982 that we have invested in more than two engines, and it will begin the transformation to reliable, inexpensive power that this country needs,” said Mr Bannister.
As the government is seeking to raise $650 million dollars for BPL, Mr Bannister outlined what will happen as a result of the new legislation. “We will safeguard the stability of BPL by refinancing existing legacy debt owed by BEC and BPL to commercial banks of approximately $320 million dollars which falls due in December 2019. This permits the debt to be repaid on more flexible terms over a period of 20 to 30 years as opposed to the current short-term rolling debt,” he said.
“We will fund critical infrastructure investments of approximately $220 million which will stabilise the electricity system of The Bahamas, expand generation capacity, reduce the cost of fuel, help meet government solar objectives, and improve metering collections.”
The new Electricity Rate Reduction Bond Bill 2019, similar to the Rate Reduction Act 2015, requires every BPL customer by law to pay the rate reduction bond fee. The new legislation will repeal and replace the 2015 law.