The Tribune

By NEIL HARTNELL

TRIBUNE Business Editor

nhartnell@tribunemedia.net

THE “AVERAGE” 30 percent water rate increases facing Grand Bahama businesses and households are designed to plug an estimated $1m revenue shortfall and help finance its supplier’s proposed $9.5m capital investment plan over five years.

Grand Bahama Utility Company, the monopoly water supplier that is 100 percent owned by the Grand Bahama Port Authority’s (GBPA’s) sister entity, Port Group Ltd, sought to justify the hikes for its 11,500-strong customer base by citing “a sharp increase in fuel costs of about 30 percent” as one of “three main drivers”.

A summary of its three-year tariff proposal, published on the website of the GBPA, its regulator and the body that must approve the rate increase package, said the $5m investment in its two million gallon-per-day reverse osmosis plant - a response to Hurricane Dorian’s saltwater contamination of its traditional wellfields - has increased energy costs which have been further exacerbated by the spike in global oil prices.

Grand Bahama Utility Company also cited the investment in its “multi-year meter change-out” initiative, with half of the devices set for installation said to be ‘smart meters’, as the third factor behind its application for rate increases.

Reiterating that the impact will depend on a customer’s monthly water consumption, the utility said: “For the average residential household, the estimated increase would be $9.83 per month….

“Grand Bahama Utility Company estimates that, under the proposed rates, approximately 75 percent of customers would continue to have monthly bills below $50 and would therefore remain exempt from VAT, compared with approximately 80 percent under the current rates.”

Comparing current tariffs with the projected water rates if its proposal is fully approved, Grand Bahama Utility Company is forecasting that the monthly billing increase will be $2.57 - from $12.83 to $15.40 - for customers using 2,000 gallons or less.

Those consuming between 2,001 and 10,000 gallons will, on average, see their monthly bill jump by $1.41 per 1,000 gallons, while those using between 10,001 to 20,000 gallons, and over 20,000 gallons, will see the per 1,000 gallon rate rise by $2.03 and $2.94, respectively.

In terms of percentages, the water supplier said the projected increases will be 20 percent for the first 2,000 gallons consumed; 25 percent between 2,001 and 10,000 gallons; 30 percent between 10,001 and 20,000 gallons; and 37 percent for consumption above 20,000 gallons.

Grand Bahama Utility Company said the rate increases, and extra income generated, are critical to plugging a $1m revenue shortfall that would take its top-line to $13.7m this year before raising it further to $14.2m come 2028.

“Measured against the revenues that current rates are forecast to generate, the proposed revenue requirement implies a shortfall of approximately $1m in 2026,” Grand Bahama Utility Company argued. “The proposed rate increase is designed to close this gap and to fund the investment programme..

“The application includes a capital budget of $3.9m for 2026, and a five-year investment plan totalling approximately $9.5m for 2026 to 2030. The largest single item is an ongoing programme of pipe replacement and rehabilitation at $700,000 per year, aimed at reducing non-revenue water, which is water produced but lost through leaks before it reaches a paying customer.

“Other significant projects include a wellfield upgrade, water tank repairs, the changeover of the water disinfection system away from gas chlorine, the replacement of reverse osmosis membranes, upgrades to sewage lines and the sewage plant clarifier system, and continued investment in remote monitoring and smart metering.”

The GBPA yesterday signalled it has taken steps to address real and perceived conflicts of interest, given that it is the regulator charged with approving a rate increase requested by a utility owned by an affiliate, by bringing in outside executives to head the committee charged with reviewing the proposal.

It said the committee has been “strengthened” and “restructured” in a bid to boost “transparency, accountability and public confidence in the regulatory process”.

The Committee will be chaired by international utility regulator, Dr Viren Ajodhia, with Grand Bahama community and business representatives Collin Cover and Carina Ferguson. They will be joined by Nakira Wilchcombe, the GBPA’s vice-president of building and development services, and Karla McIntosh, the GBPA’s vice-president of legal affairs.”

The GBPA said Dr Ajodhia has more than 25 years of international experience in utility regulation, and has advised governments, regulators and utilities in more than 50 countries. His work includes tariff methodology, cost of service and cost of capital determination, and performance standards for water and electricity utilities.

Mr Cover has more than four decades of utility and engineering experience, including senior leadership roles in both The Bahamas and regulated Caribbean utility environments. His work spans more than three decades in regulated utilities, and he has completed specialised regulatory training at the University of Florida.

Ms Ferguson is a Bahamian entrepreneur with more than 18 years of experience in management, operations and entrepreneurship. The founder of PURE h2o Bahamas and second vice-president of the Grand Bahama Chamber of Commerce, she brings practical insight shaped by building and operating a manufacturing business in Grand Bahama through Hurricane Dorian and the COVID-19 pandemic.

“The composition brings together expertise across utility regulation, engineering, regulated utility management, business and the Grand Bahama community, providing the Committee with a diverse foundation from which to assess Grand Bahama Utility Company’s application and its potential implications for customers and the wider Grand Bahama economy,” the GBPA said.

“Together, the Committee's composition is intended to ensure that the application receives rigorous consideration informed by independent regulatory expertise, direct regulated utility experience, technical knowledge, local business insight and an understanding of the Grand Bahama community.”

The GBPA said the Regulatory Committee will begin a public consultation process, providing residents, businesses and other stakeholders with an opportunity to examine the application and provide feedback for consideration as part of the regulatory review.

Dr Ajodhia, its chairman, said: "The review of a utility rate application requires careful consideration of technical, financial and operational information, but it must also consider the interests and perspectives of the community being served.

“By bringing together independent regulatory expertise, extensive utility experience, local business representation and GBPA's regulatory knowledge, we are strengthening the framework through which this application will be assessed."

Dr Ajodhia added: "No decision has been made on Grand Bahama Utility Company’s application. The Regulatory Committee will undertake its review, the public will have an opportunity to participate through consultation, and the information and feedback received will form part of the Committee's consideration before a determination is made."