The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Opposition’s leader yesterday accused the Government of “gutting URCA’s oversight” with planned energy regulation reforms that the Prime Minister said could lead to BPL’s break-up.

Michael Pintard told Tribune Business it was “very worrisome” that the Electricity Bill 2024, which is set to be debated in the House of Assembly next week Wednesday, “sidelines” the Utilities Regulation and Competition Authority (URCA) by preventing it from having any influence over the rates charged by Bahamas Power & Light (BPL) and other utility-scale energy providers for a three-year period.

Recalling the fall-out from last year’s “glide path” strategy, which saw BPL hike its fuel charge by 163 percent over an eight- month period to summer 2023, he added that this provision threatens to leave households and businesses exposed to further predatory price hikes with no ability for the regulator to intervene.

The new Electricity Bill’s “objects and reasons” section, meanwhile, reveals that the likes of BPL and all other entities designated as “public electricity suppliers” will enjoy a “transition period of three years” after the legislation becomes law when URCA cannot intervene with the tariff rates or prices that they charge Bahamian households and businesses.

They will, though, have to use that time to prepare a “comprehensive review” of their prices. And a similar provision was contained in the existing Electricity Act 2015, which stipulated that URCA could not alter or interfere with the electricity tariff rates set in the contract PowerSecure had to manage BPL for five years.

That contract was subsequently terminated by the Minnis administration, in which Mr Pintard was a Cabinet minister, but the clause was not changed. “URCA shall for a period of five years adopt and apply the tariff rate for electricity supply services by BPL contained in the initial management contract with the system operator,” the present Act states.

Nevertheless, Mr Pintard’s fears came as Prime Minister Philip Davis KC yesterday confirmed that the Electricity Bill 2024 “could” permit BPL to be split, or broken up, into three separate entities responsible for generation, transmission and distribution, and billings, collection and back office functions.

Asked by journalists yesterday whether the state-owned energy monopoly faces being broken up, Mr Davis replied: “It could be. The allows for that.” Tribune Business reported yesterday that the Electricity Bill effectively facilitates this by creating a foundation for private-public partnerships (PPPs) that the Government hopes will rescue the ailing state-owned energy monopoly by attracting private capital and expertise.

The Bill’s section nine, three (c) details new clauses on page 15 that allow BPL to “incorporate one or more” 100 percent-owned subsidiaries or joint venture companies, the latter part- owned by the Government, to which it is able to transfer “functions and assets”.

And these newly-formed entities are also permitted by the new Bill “to enter into a management contract with a system operator to perform any or all of the functions of BPL”. This appears to creating the legal basis for the potential break-up of BPL into separate functions, and the outsourcing of the management of those functions to private sector companies and investors.

Prompted earlier about the potential splitting of BPL’s various functions, Mr Davis replied: “It is designed to bring efficiencies that we could afford to bring to the country at this time. It is designed to ensure they can accommodate.. It is a legal construct to ensure it can accommodate and give the Government flexibility to do what it thinks is right for the Bahamian people.”

Mr Pintard, though, while acknowledging he had only made a “cursory” assessment of the Electricity Bill and accompanying Natural Gas Bill 2024, which is designed to create oversight regime for BPL’s planned switch to cleaner, more sustainable and potentially cheaper liquefied natural gas (LNG) fuel for generation, said the legislation appeared to confirm suspicions as to the Government’s energy reform plans.

Arguing that the Davis administration has failed “to apprise” BPL staff, the Opposition and wider Bahamian public of its plans, he added that it was seemingly seeking to outsource the energy utility’s functions to private sector partners who will provide management services via PPP agreements in a bid to enhance efficiencies, reduce energy costs to consumers, and attract fresh investment to upgrade its infrastructure.

Mr Pintard asserted that the Government is doing this “without the benefit of competitive bidding”, which would help ensure it secures the best possible partners and deals, and also failing to clarify its ultimate objectives for BPL and the energy sector.

And he argued that the Government cannot be trusted on energy reform given its alleged mishandling of the BPL fuel hedge it met in place upon taking office; the subsequent hikes in electricity bills to reclaim unrecovered fuel costs of between $90m-$110m; and questions over whether the monies raised were used to extinguish this debt as the Government’s loan to BPL still remained at around $180m at end-2023.

“What is very worrisome about this is that they are gutting the oversight of URCA. They [BPL] should not be empowered for a three-year period of time,” he told Tribune Business of the period during which URCA cannot intervene with BPL’s tariffs. “This side- lining of URCA is a major problem; to impose rates on folks that are already struggling beneath these rates for regular service.

“This is not an administration you want to empower to extract more funds from a consumer base already under pressure and a business community carrying an undue burden from policy-maker decisions.”

Mr Pintard also challenged how the Government plans to address BPL’s $500m in legacy debt and liabilities now that the previously-agreed financing mechanism, the Rate Reduction Bond Act, is to be repealed as no alternative has been put forward to replace it.

“The Davis administration, this is what they are doing in every sector,” Mr Pintard said of the planned energy reforms. “They are the poster child for bad governance. At a minimum, if there is a compelling reason, lay it out to the public. They have failed to do that.

“The suspicion is that the legislation was written for them by those they are going into business with. This is a clear case of the tail wagging the dog. It means the Government is not in charge of this entire process, which is why they are unable to lay out a vision and clear message, and explain why there will be one entity for generation, one entity for transmission and distribution, and one left with the Government.”