The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Electricity Corporation’s (BEC) fuel charge increase was more than seven times’ that for fuel prices between 2010-2012, a leading environmental attorney suggesting this showed how the utility masked its “poor operating performance”.

Romauld Ferreira told Tribune Business that data contained in a 2012 report produced for the Inter-American Development Bank (IDB), entitled ‘Action Plan for transforming the electricity sector in the Bahamas’, showed why BEC “doesn’t have to be profitable and efficient”.

The report, by Washington-based consultants Castalia, has never been made public, but Mr Ferreira said his attention was particularly taken by information presented on page 20.

“The fuel charge rose by 170 per cent from February 2010 to October 2012, but the fuel price from February 2010 to August 2012 rose by only 23 per cent,” Mr Ferreira said, quoting from the report.

“That there is a startling and amazing figure,” he added of these findings. “This increase reflects more than a pure fuel pass through. It’s BEC’s poor operating performance.

“The increases are above what would have been required to cover the increase in the price of fuel. That is what suggests the increases are really to cover other things, like poor operating performance.”

The fuel charge component of a consumer’s bill is meant to be a cost recovery mechanism for BEC only. In other words, it is designed purely to cover the cost of the Corporation’s fuel purchases, and is non-profit.

Yet Mr Ferreira said the massive discrepancy between the rate of increase in BEC’s fuel charge, and rate of growth in fuel prices, suggested that the former was being used to cover costs other than the Corporation’s fuel purchases.

“They don’t have to be profitable and efficient,” he added of BEC. “That says it all. It explains a lot about management’s attitude right there.

“It’s basically building in inefficiency. When they don’t make a profit, it’s almost as if BEC has a slush fund built in.”

Mr Ferreira added that the Castalia report also showed that between 2009-2012, BEC’s average tariff rates for residential users increased by 44 per cent, while those for business consumers appreciated by 76 per cent.

Meanwhile, Save the Bays, the environmental group of which Mr Ferreira is part, has again urged the Government to begin mapping oil spills at the Clifton Pier power plant.

Their renewed call came in response to comments by Simon Townend, the KPMG (Bahamas) partner, about BEC’s potentially massive, but unknown, environmental liabilities stemming from a long history of pollution.

Mr Townend had told a recent Bahamas Institute of Chartered Accountants (BICA) conference: “It’s going to take a lot of work and money to figure out what the damage is. It could be $40 million, it could be $80 million, it could be over $100 million to sort out the environmental issues. But we don’t know what the figure is until the work is done.”

In response, Mr Ferreira, who is a Save the Bays’ director, urged BEC to see the “big picture” by mapping out the total amount of oil lurking in ground water beneath Clifton.

“By laying bare the facts, a true portrait of accountability and recovery should emerge,” Mr Ferreira said.

“This underground plume must be mapped in order to determine the best method of product recovery. The product recovery then ought to be led by a suitable qualified private contractor until the target amount of product is recovered.”

Another Save The Bays director, Sam Duncombe, accused the Government of displaying an “arrogant attitude” that “will not be tolerated” by failing to disclose details of the bidding process to part or quasi-privatise, and restructure, BEC and the wider energy industry.

She added: “The Bahamas is going to have to get a handle on the continued problem of oil spills at Clifton before we attempt to sell BEC, least we find ourselves in a place where the purchaser sues the government (the Bahamian People) for lack of disclosure.”

Calling on the Government’s failure to address alternative energy options, Ms Duncombe said: “There is no reason for our energy needs to continue to be at the expense of present and future generations, especially with the infinite and exciting potential of renewable energies in this country, such as solar, wind and tidal.

“Investing in renewables would require retooling, both in capital and human investment. The ball lays squarely at Government’s feet to vigorously pursue the renewable energy market. Our government must reduce fossil fuel dependency, maintain energy security and encourage the reduction of greenhouse gas emissions.

“It is essential to the long-term security of the Bahamas that we adopt alternative sources of energy. They must make LEDs and solar water heaters duty-free, laws must be changed that allow individuals to install alternative generating power for their homes and businesses, and they must vigorously pursue other initiatives that will secure our energy future with clean, reliable, available, renewable alternatives.”

Mr Ferreira, meanwhile, told Tribune Business that the Government “doesn’t appreciate, and have yet to get a handle on”, the fact that the main individuals in Save the Bays had been working in the environmental arena for decades.

All were now “bringing their own experiences to the table”, and he added: “Now we are finally in a position to start holding people to account. That’s what we’re going to do, and everybody brings different strengths to the table.”