By NEIL HARTNELL
Tribune Business Editor
GRAND Bahama’s electricity demand has declined by 13 percent post-Dorian, it was revealed yesterday, with the island’s sole utility provider suffering a $13m Canadian dollar earnings hit.
Emera, the Canadian utility giant that owns 100 percent of Grand Bahama Power Company (GBPC), said its Bahamian asset is forecasting that electricity demand will only recover to pre-storm levels by the end of 2021.
Giving an insight into the extent of the Category Five storm’s devastation, and the likely length of Grand Bahama’s recovery, Emera’s financial statements and accompanying management commentary said GB Power had restored supply to 92 percent of its customer base by end-December 2019.
It also revealed that the Grand Bahama Port Authority (GBPA), the utility company’s regulator, had last month given the utility monopoly permission to recover the US$15m it will have to invest in rebuilding its uninsured transmission and distribution (T&D) infrastructure. The US$18m hit to GB Power’s flooded Peel Street generation plant will ultimately be fully recovered via insurance.
Emera, too, was not spared Dorian’s wrath as it suffered a CAD$62m hit to its own earnings as a result of the storm’s impact. Most of that relates to a CAD$34m impairment charge on GB Power, with the Canadian electricity giant writing down CAD$30m of goodwill “due to a decrease in expected future cash flow resulting from the impacts of Hurricane Dorian storm recovery”.
“GB Power has restored power to all customers who have requested power and are able to receive it and, as of December 31, 2019, power was restored to approximately 92 per cent of its customers,” Emera said yesterday.
“Post-hurricane load is down approximately 13 per cent. Management anticipates that demand will recover to pre-storm levels by the end of 2021. All 19,300 of GBPC’s customers lost power following the storm. As of December 31, 2019, power was restored to all customers who were able to receive power, or approximately 17,800 customers.”
“In addition, GB Power’s earnings for the full year decreased by CAD $13m ($0.05 per common share) due to reduced load as a result of the storm.” Its parent also revealed that its full-year revenues declined by 7.4 percent, from CAD$121m in 2018 to CAD$112 for the 2019 full-year, while the value of GB Power’s property, plant and equipment dropped from CAD$315 to CAD$282m.
The latter represented a 10.5 percent decline, and Emera added: “As a result of the damage caused by Hurricane Dorian, the company completed an asset impairment analysis in the 2019 fourth quarter. Property, plant and equipment, and inventory with a book value of approximately US$18m was determined to be impaired and was reclassified as a regulatory asset.
“GB Power recorded an offsetting insurance receivable of US$15m against this regulatory asset. It is anticipated that the regulatory asset balance of US$3m remaining at December 31, 2019 will be recovered through insurance.”
Emera said the “regulatory asset” represented post-Dorian restoration costs incurred by GB Power. It added that while the Grand Bahama-based utility’s generation assets were insured, its transmission and distribution infrastructure was not, but these will be recovered through electricity rates charged over the five-year period to 2024.
A similar permission was given after Hurricane Matthew struck Grand Bahama in 2016, and Emera said: “It is currently estimated that restoration costs for GB Power’s self-insured assets will be approximately US$15m.
“In January 2020, the GBPA approved the recovery of these costs through rates over a five-year period. Approximately US$12m of these estimated costs were incurred in 2019, and recorded as a regulatory asset.
“Restoration costs associated with Hurricane Matthew in 2016 are being amortised over five years and included in the base rate as approved by the GBPA for full recovery. The balance as at December 31, 2019 is $23 million.
Emera’s results also revealed that the GBPA has allowed its Bahamian subsidiary to recover a further $21m in stranded costs, resulting from the decommissioning of a steam turbine in 2012, via electricity rates. This was included in the rate base for 2019 and 2018, and will continue to be in future years.