• ‘Objectivity’ concern if top regulator named
• Heastie resignation takes effect immediately
• No URCA probe presently into fuel worries
By NEIL HARTNELL
Tribune Business Editor
The Opposition’s leader yesterday charged that there are “real questions” over the energy regulator’s “objectivity” amid suggestions that one of its senior executives is being eyed as Bahamas Power & Light’s (BPL) new chief executive.
Michael Pintard, branding yesterday’s resignation of incumbent BPL chief executive, Whitney Heastie, as “worrisome” also raised misgivings about growing suggestions that Shevonn Cambridge, the Utilities Regulation and Competition Authority’s (URCA) head of electricity supervision, was viewed as the leading candidate to replace him.
The Marco City MP said the URCA Act, the regulator’s governing legislation, stipulates that its executives must undergo a year-long ‘cooling-off’ period upon leaving the agency before they can take up a post with any private sector entity they once were responsible for supervising. However, this condition can be waived if approved by URCA’s Board, which is appointed by the Government.
Should such a waiver be exercised, and Mr Cambridge become BPL chief executive, Mr Pintard said it would raise “serious doubts” over URCA’s approach to dealing with allegations that the state-owned energy company may be breaching the law over its fuel charge.
Besides suggestions that BPL and/or the Government may be subsidising the former’s fuel charge, rather than passing it on 100 percent to households and businesses as required by law, Mr Pintard also queried whether the state-owned energy monopoly is violating accompanying regulations that require it to be within a 5 percent margin either side of a facility designed to smooth out its fuel hedging strategy.
This facility is known as an “over and under account”, and the Free National Movement (FNM) leader questioned why URCA had not moved to investigate the situation or issue a written warning to BPL if, in fact, it is in breach.
“The person cannot come from URCA, the energy regulator, given that there’s a clause that requires them to have a 12-month minimum before they can join a company they have been supervising,” Mr Pintard told Tribune Business. “In the event they go to the regulatory agency and get a waiver, that makes very suspect anything being said with regard to that ‘over and under account’.
“In the event the Government goes that route, and requests a waiver from URCA, it opens up real questions on URCA’s objectivity over what we likely believe to be the Government acting ultra vires of the law on the ‘over and under account’, and URCA not having written or sent any correspondence checking them on not following the law.”
Tribune Business previously reported that BPL received a “warning letter” from URCA in 2018 after it failed to pass on the equivalent of just 0.2 cents per kilowatt hour (KwH) to consumers via its fuel charge. The utility had sought to hold the fuel charge at 19 cents per KwH, but was ultimately made to pass the extra 0.2 cents on by URCA.
The way the “over and under account” operates is set out in the Bahamas Electricity Corporation (Amendment) Regulations 2020. These reforms established BPL’s fuel hedging strategy, which sets a target price that is based on the costs and quantities of the various fuels it expects to use. If it runs its more efficient engines for longer than anticipated, and burns lower volumes of cheaper fuel, then the utility enjoys savings that accumulate as reserves in this account.
The “over and under account” was created to monitor fuel price movements over the hedge’s year-long period. It is allowed to fluctuate by 5 percent either side of the fixed price at which BPL purchases fuel, and if it exceeds those limits then the fuel charge - presently standing at 10.5 cents per kilowatt hour (KwH) - has to be adjusted.
If BPL’s fuel costs are more than 5 percent below the price it pays for fuel, then the excess savings have to be passed on to the customer. But if fuel costs exceed that purchase price by more than 5 percent, then BPL has to also pass these extra costs on to consumers. There are concerns it may now be in non-compliance with this aspect of the regulations if it (or taxpayers via the Government) are absorbing millions of dollars in increased fuel costs.
Mr Cambridge, a former BEC/BPL generation head for New Providence, did not deny he had been approached over the now-vacant BPL chief executive post when contacted by this newspaper yesterday. “I can’t speak to that. I honestly can’t speak to that,” he replied.
However, he confirmed that the URCA Act does allow the 12-month ‘cooling-off’ period, which is designed to prevent conflicts of interest involving former regulators moving to entities they previously supervised, to be waived. “The Act does provide for waivers, that’s correct,” Mr Cambridge said. “I don’t have any information I can pass on on that at this point. If that was a consideration, that would have to be something that they consider.”
Mr Cambridge also confirmed that URCA is not presently investigating whether BPL/the Government are subsidising the fuel charge, or if the “over and under account” margins are being breached. “URCA is not probing into it,” he said. “If you look at the overall generated fuel charge it allows them to accrue for a period of time to create a dampening effect.
“They’ve set a certain threshold between which they’re allowed to accrue, a certain percentage, plus or minus 5 percent. After that it becomes tricky if they don’t recover it. URCA does not have any active investigation into that. If there is a complaint made, that may prompt that action.”
Mr Cambridge also denied that URCA receives monthly updates and reports on the status of BPL’s “over and under account”, although several sources - speaking on condition of anonymity - said the utility has to supply it with its monthly fuel billings from Shell so that it can determine the accuracy of the fuel pass-through.
Alfred Sears, minister of works and utilities with responsibility for BPL, could not be reached for comment via phone or message yesterday. Pedro Rolle, BPL’s chairman, last night declined to comment on Mr Heastie’s departure, the search for his replacement and who that might be. He added that any successor would have to go through the regular selection process and be approved by BPL’s Board, saying: “When we’re ready we’ll discuss it and make the necessary release.”
The BPL chair also declined to comment on the utility’s fuel hedging strategy and the status of the “over and under account”, describing this as “internal” information not to be discussed outside the company. “We’ll make the decisions as we go along that we deem to be in the best interests of BPL,” Mr Rolle said. “We need to take a look at what’s in our best interests today and not what was done last year.”
Mr Heastie’s resignation, which was announced yesterday to both BPL staff and the wider public, took effect on the same day. Also departing via a resignation letter the same day was Evis Missick, BPL’s director of human resources, with the move also taking effect from yesterday.
The abrupt nature of these resignations is likely to raise questions about the manner of the duo’s departure, as well as the Government and Board strategic plan for BPL, which remains in a perilous financial position and cash-strapped state as it moves into the peak summer demand months.
Mr Heastie’s departure is likely to come as little surprise to insiders. The now-former BPL chief had come under sustained attack from pro-PLP social media activists and blogs prior to last September’s general election, and the offensive resumed again this week in the wake of recent New Providence power outages with calls for Mr Sears to fire him, indicating there was a significant faction within the governing party that wanted Mr Heastie gone.
“At some point in time I expected it; I didn’t figure it would come so soon,” one source said. “I have no idea who else is actually qualified to take over Whitney’s job and how it is to be run from a chief executive’s perspective. BPL is extremely complex, there are a lot of moving parts and, on top of all that, it is in financial stress. You need somebody who understands how this works.”
Another BPL insider, also speaking on condition of anonymity, said Mr Heastie’s departure had been “in the works” for some time. “It’s just the way he ran it. The staff are totally demoralised,” they said. “Morale is through the damn floor.”
Confirming that Mr Cambridge was being viewed as Mr Heastie’s replacement, the source added: “The Prime Minister’s thing is to bring Shevonn in to deal with it. I think that’s his plan and what I believe is going to happen. He’s the only one who can come in and start from day one. He’s really up to the task of doing what he needs to do. It’s a bad situation here.”
Mr Pintard, meanwhile, said the timing of Mr Heastie’s departure was “worrisome” as he asserted that many vendors are only conducting business with BPL on “a cash basis” due to fears about its financial position. He also voiced fears that the top management post is vacant at a time when the utility is struggling to finance capital upgrades and maintenance ahead of peak summer demand, and the $535m Rate Reduction Bond (RRB) financing having been placed on hold.
“We need confidence that the expertise is in place to get the job done,” Mr Pintard said.