GB Power rate hike approval sparks ‘new regulator’ charge

Grand Bahama Power Company headquarters.

Grand Bahama Power Company headquarters.


Tribune Business Editor


Renewed calls were made last night for an independent regulator to take over supervision of all Freeport utilities after Grand Bahama Power Company’s base tariff hike was partially approved.

The Grand Bahama Port Authority’s (GBPA) decision to grant the island’s sole energy provider an average base rate increase of 3.3 percent, as opposed to the 6.3 percent rise originally sought, united both the private sector and community activists in opposition on the basis that any jump now is “too much” for battered economy struggling to revive from COVID and Hurricane Dorian.

Unveiling a decision where it appeared to be trying to find a middle ground, and be all things to all men, the GBPA statement said the final approval had slashed the rate increase by 47 percent compared to the original proposal. And, trying to further appease GB Power’s customers, it said the revised electricity rate structure’s implementation has been pushed back until April 1, 2022.

“GBPA worked diligently with its utility expert consultant and GB Power, which resulted in a revision of the original application. We are pleased to say the final filing has resulted in notably decreased numbers, with a reduction to 53 percent of the original filing,” the Port Authority said in a statement.

“On January 14, GBPA communicated its approval to GB Power of the revised application and reduced base rate increase to 3.3 percent. Furthermore, the implementation of any increase has been deferred to April 1, 2022, to ease the roll-out impact for customers.

“GB Power, in their projected five-year plan has committed to [getting] 15 percent of its generation from renewable sources by 2026, and proposes to invest over $80m in capital improvements, which include a 5MW (Mega Watt) solar plant and battery storage, as well as other improvements in generation and transmission and distribution.”

The GBPA’s final decision seems designed to try and appease GB Power’s customers while also giving the utility, 100 percent owned by Canadian energy giant, Emera, enough of what it was seeking. However, no mention was made as to how the different residential and business segments that make up GB Power’s base will be impacted by the revised approval.

Under the original tariff adjustment application, all segments were to be treated differently and see separate impacts on their monthly electricity bills. And business community and activist reaction last night suggested the revised structure, and its lower base rate increase, has failed to placate much of GB Power’s customer base.

Pastor Eddie Victor, president of the Coalition of Concerned Citizens (CCC), and a long-time GB Power critic, pledged to Tribune Business that the group “will do everything in our ability to this rate increase doesn’t happen”.

Arguing that the GBPA and GB Power were “defying” both the wishes of the Government, which had opposed any rate increase, as well as the whole of Grand Bahama society, Pastor Victor said it was untenable for any regulator of public utilities to take such a position.

As a result, the Coalition will also lobby to remove utilities regulation in the Port area from the GBPA hand this responsibility over to the Utilities Regulation and Competition Authority (URCA). In this he was backed by Greg Laroda, the Grand Bahama Chamber of Commerce president, who said discussions over passing such duties to URCA will “come to the forefront again”.

However, GB Power has already initiated Supreme Court litigation challenging URCA’s authority to regulate itself and other utilities in the Port Area under the Hawksbill Creek Agreement. Thus the move demanded by Messrs Laroda and Victor may require amendments to Freeport’s founding treaty before their ambitions can be fulfilled.

“I guess I’m a prophet. I was expecting an announcement,” Pastor Victor said of the GBPA statement. “Our position has not changed one bit. There is no justifiable reason to give a rate increase at this time or any time soon. We anticipated the request would go through, and would not change despite the popular position that there be no increase.”

GB Power had initially been seeking a near-$5m increase in its annual base revenue to $66.5m on the basis due to increased insurance premiums and the need to recover costs associated with restoring its transmission and distribution network following Hurricane Matthew in 2016.

By partially approving this application, the GBPA has gone against the stated position taken by the Davis administration, which said back in November 2021 that it “will not support a rate increase on any portion of the customer base at this time”.

Pastor Victor yesterday argued that the approval, which came despite widespread opposition from the Government, private sector, hotel industry and Grand Bahama residents, suggested that the GBPA’s motives were “profit driven” as well as those of GB Power.

“This decision has nothing to do with the best interests of the country or people of the country,” he told Tribune Business. “It is clear there needs to be an independent regulator for Freeport, and east and west Grand Bahama.

“The other thing that is clear, too, is if you have a regulator in the Commonwealth of The Bahamas that defies the Government’s position when it comes to increasing electricity rates, that regulator should not be regulating power here or any other utility in The Bahamas. If an entity does not fall into line with national policy, they should not be regulating any utility in The Bahamas.

“They’re defying the Government and they’re defying the people, because they are the Government, and that entity [the GBPA] should no longer regulate on Grand Bahama. They can do all the other stuff. Our position going forward is we’re going to seek to change who is the regulator on Grand Bahama. We need independent regulation for the whole island.”

That would likely require changes to the Hawksbill Creek Agreement, and Pastor Victor responded: “The problem with the Hawksbill Creek Agreement is that it’s decades old. There are some things that should have been done decades ago but there are things we can do in the interim with respect to the agreement and law.” He did not elaborate on what these were.

Mr Laroda, meanwhile, said of the rate increase’s approval: “I still feel that any increase right now before the economy has a chance to recover is probably too much. I think the gesture of them approving a lower percentage increase, and extending the start to April, is an OK gesture, but maybe they shouldn’t have approved a rate increase at this time.

“A lot of businesses are struggling now as it is to recover. We’re still paying a hurricane recovery fee [to GB Power]. I just feel that overall the timing is not the best... April is not that far down the road. It’s going to add to some of the struggles of the business community, especially the micro and small businesses. It’s going to add to the cost of doing business in an already-struggling economy.”

The GB Chamber chief said he knew of no one in Grand Bahama’s business community who approved of an increase in GB Power’s base rates. “I guess we’ll just have to see what the Government now will do in light of them approving it,” Mr Laroda added. “I guess this will now bring to the forefront again this whole discussion around who should regulate GB Power.

“The community is in opposition to it, the businesses are in opposition to it. I haven’t spoken to anyone who feels good about an increase at this time.” Pastor Victor, meanwhile, warned that the GB Power rate increase will offset any benefits created for Grand Bahama by the VAT rate’s reduction to 10 percent.

“It’s a domino effect,” he argued. “When you think you have a win for the country, a notable economic burden on the people being reduced, you have an entity putting a further burden on that. With all the millions of dollars put in here by non-governmental organisations and government, here it is: You have a regulator making a decision that works against the economic recovery. It doesn’t make any sense.”

GB Power did not reply to a series of written questions submitted by this newspaper before press time. However, in its original application, it asserted that 42 percent of residential customers will see either a decrease or no change in their base rates.

It added that the other 58 percent faced with an increase would see their monthly bills rise by an average of between $7 and $20 depending on consumption. “Customers who consume 600 kWh (kilowatt hours) per month can expect an increase of about $7 per month under the proposed rate structure,” it said.

“Those who consume 800 kWh on average will see an increase of about $12 per month. Those who consume 1000 kWh on average will see an increase of about $20 per month.”


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