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Urca: 'All Must Carry Their Fair Energy Share'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Energy regulators yesterday said renewable providers had "misunderstood and misinterpreted" proposed reforms designed to ensure "equitable treatment for all stakeholders".

Shevonn Cambridge, the Utilities Regulation and Competition Authority's (URCA) director of utilities and energy, told Tribune Business that the "buy all, sell all" mechanism for compensating grid-tied renewable energy providers will not apply to systems that are part of the Small Scale Residential Generation (SSRG) programme.

Instead, it will only be used for those in the Renewable Energy Self-Generation (RESG) initiative, which is targeted at systems with greater capacity than those in the SSRG. Mr Cambridge explained that while the latter was aimed at homeowners and small businesses with renewable systems, RESG is instead targeted at larger companies and government facilities.

He argued that URCA's proposed "buy all, sell" compensation approach was key to "ensure everyone bears the burden of basic (energy) infrastructure", as any method that allowed large businesses with high-capacity systems to self-consume before selling excess power to Bahamas Power & Light's (BPL) grid could enable them to escape much of these costs.

Mr Cambridge said the proposal that RESG grid-tied systems be paid the equivalent of BPL's existing monthly fuel charge for the energy they supply to the grid meant such suppliers would receive back between 50-60 percent of their typical utility bill.

He added that this would still be "profitable" for those with solar and other systems up to one megawatt (MW), even though he acknowledged that this might not be the desired "rate of return". And URCA, once it obtains more data, will seek to determine a better reimbursement method rather than one simply based on BPL's prevailing fuel charge.

As to complaints that the process for approving grid-tied systems is still bound up in excessive "red tape" and bureaucracy, Mr Cambridge replied that existing laws and regulations meant it was impossible to avoid the involvement of Ministry of Works electrical inspectors and other agencies.

He also defended URCA's proposed 15-year, long-term contracts between BPL and businesses with RESG systems on the basis that this would give the latter certainty and confidence that their installation costs would be covered without the utility suddenly tearing up the deal or changing its terms and conditions.

"There appears to be some misunderstanding and misinterpretation of the document," Mr Cambridge told Tribune Business. "There's no intent to change the compensation method in the SSRG scheme. The RESG forms a different class of customers with a different capacity range."

While the SSRG initiative was focused on homeowners and small businesses with a capacity of up to 100 kilowatts (KW), Mr Cambridge said the RESG programme - the guidelines for which were unveiled for a month-long consultation by URCA on Friday - was aimed and medium-sized and large businesses, and government facilities with renewable systems ranging from 100 KW to 1,000 KW - even up to one MW - in capacity.

The present SSRG initiative, launched in 2017, rewards renewable producers through a "net billing" arrangement. This enables persons with grid-tied systems to "net off" the difference between what they supply to, and consume from, BPL.

However, SSRG participants yesterday suggested the reference to "net billing" was incorrect. Speaking on condition of anonymity, some said BPL merely installed a "two-way meter" and compensated them for energy sent to the grid via a payment again equivalent to the fuel surcharge.

Mr Cambridge, meanwhile, confirmed that URCA is proposing a "buy all, sell all" approach for all renewable energy self-generation (RESG) systems.

This means, according to URCA, that government facilities and businesses will not be able to consume any electricity generated by their renewable systems. They will instead have to export all energy they generate to BPL, and consume all the electricity they need from the state-owned monopoly at the standard retail tariff levied on all its customers.

URCA is proposing that those who "sell all" to BPL under this arrangement are compensated by the equivalent of BPL's monthly fuel charge, which normally accounts for 50-60 percent of customer bills. This will be paid via either credits to the utility bill or via cash.

Mr Cambridge, a former Bahamas Electricity Corporation (BEC) executive, acknowledged that basing "buy all, sell all" compensation on BPL's fuel charge was a "very conservative position to start", but pledged that URCA would seek to achieve a mechanism more favourable to renewable system owners once it possessed more data on how the initiative was performing.

"We have to ensure everyone bears the burden of basic infrastructure," he told Tribune Business. "It's not unwarranted or inequitable in any way. These [RESG] customers are in a different rate class and consume different quantities of electricity.

"When you look at the infrastructure to support this class, BPL requires more transformers and more switch overs to support them. and BPL has to have sufficient stand-by power when their systems do not produce. That's a bigger challenge and bigger responsibility."

Mr Cambridge said any drop in consumption from BPL by larger businesses with renewable systems meant their "avoided costs" would have to "be apportioned at a higher rate" to other customers without such RESG technology - a situation URCA is keen to avoid.

"You have the avoidance cost, because with what you are able to produce you are able to avoid the full cost of the [BPL] retail rate and fuel charge," he told Tribune Business. "You cannot allow that for larger consumers.

"The economic analysis of it is you have to ensure there is some stability as well for the utility and basic infrastructure..... It just isn't feasible for larger customers to be allowed to avoid the full tariff for whatever they say they produce and then, when they feel like it, switch over to the utility which has to maintain its system and infrastructure to support them.

"That cost is borne by consumers remaining on the system who don't have access to renewable energy. It's about equitable treatment of all stakeholders. It's in no way going to incentivise individuals from subscribing to renewable energy. They do so for any number of reasons."

Pointing out that RESG suppliers with grid-tied systems would still see a 50 percent reduction in their energy costs under URCA's "buy all, sell all" plan, Mr Cambridge added: "It's not that it's not profitable, I guess it's the rate of return.

"I think that what a lot of solar installers and providers miss is that the utility is responsible for providing electricity across all the islands with a uniform tariff, so a lot of cross-subsidisation takes place. There's a lot of burden for BPL. We can't allow consumers assisting with that subsidisation to drop-off the grid completely.

"Right now BPL is not happy about it, installers are not happy about it, but our task is to make everyone carry their fair share."

Comments

DonAnthony 1 month, 2 weeks ago

URCA is a disgrace. It is independent in name only, but it is beholden to carrying out the wishes of the government and by extension government corporations like BPL. In doing so it severely restricts the ability of Bahamians to be energy independent and wants to have us enslaved to expensive, dirty energy from BPL forever. It’s policies put lie to the government’s stated goal to foster renewable energy and reduce our dependence on fossil fuels. It is a sham.

For example I want to put in a solar system to cover my entire energy use for my home in Long Island but I am so severely restricted in the size of my system that I can at best cover 40% with the maximum allowable system. Why is this? You would think they would welcome persons producing clean energy, cutting down on the barrels of polluting oil imported to our island. The reason is they want to protect BPL and its revenues and the good of the country and the environment be damned. URCA is a perversion of what they were created to be.

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Dawes 1 month, 2 weeks ago

Why do we keep having people who have no idea how to run a business make decisions which will negatively affect the business . There are no doubt plenty of business who would like to go solar, but when making their decision they will look at the cost benefit analysis of it. Based on this many will say its not worth it. Has URCA been given a mandate to ensure as little solar power is used over here as possible?. As this appears to be their sole intent, and it they aren't doing this on purpose then government should also look at the skills needed to be in these decision making roles. As those skills are sorely lacking. Also someone tell Government that by doing this we should stop going around the world saying they must do something about Climate change, as its obvious we don't care.

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totherisingsun 1 month, 2 weeks ago

The Renewable Energy Providers neither misunderstood nor misinterpreted the URCA document. They were specifically responding to the RESG. URCAs response sounds like a press release from BPL

BECs debt is owned by the public and that same public has no desire to prop it up any longer. It is a failed institution and should be deregulated. The debt should be taken out of the pensions of those who drove it into the ground. The public did not manage it they just keep getting taxed for it

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totherisingsun 1 month, 2 weeks ago

The word "profitable" being mentioned must be based on BPLs definition of profitability?

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The_Oracle 1 month, 2 weeks ago

"Fair Energy Share"? What the hell is my power bill? Gratuity? There are so many bad premises in this "consultation" Document it aught to be called an Insultation Document. URCA is not designed to prop up an aged Flawed and inefficient Monolithic Power block at the expense of the General Public. Someone is feeding this moron with bad Physics, philosophy and basic contract law. If everyone must bear their "fair share" then why don't people who consume no power not get a bill anyway? The more switches and more transformers argument is garbage. Avoidance Cost? What the hell is that? People with power cut off have avoided cost. YOu gonna bill them for avoiding? Perhaps if Solar is allowed on a self service level BEC BPL will no longer be responsible for providing power across the Islands at any damn cost. Have no fear, your document will be shredded line by line in short order. You cannot force me to sell anything I produce from limes to Power, to the Government in its entirety, and force me to buy it back and grossly inflated prices. Seriously, I smell an injunction coming on.

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Porcupine 1 month, 2 weeks ago

The idea that URCA has done the Bahamian people any justice is in evidence of BPL today. URCA exists to run interference for those ripping off the Bahamian people. Another layer to prevent fair and just practices from being carried out. URCA has failed in its mission. It serves no purpose except to further enslave the people. We need new and redical solutions to our current energy woes. Yes, woes. We pay some of the highest energy prices in the world and the entire nation is being impoverished on this basis alone. People need to speak up on this matter, as it is crippling this country. Useless URCA be gone.

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