The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A group pushing for lower Grand Bahama Power Company electricity rates said yesterday Tribune Business’s revelations that the utility monopoly had exceeded its regulator-approved rate of return had given it “excellent grounds” to intensify its campaign.

Reverend Eddie Victor, head of the Coalition for Concerned Citizens (CCC), told Tribune Business that the high cost of electricity was negatively impacting the livelihood of residents on the island, hampering business growth and impeding potential investment opportunities.

“You have thousands of people living on this island without power. We can’t even determine what the true number is. The high cost of electricity is hampering business growth, where persons are not expanding or hiring. I know for a fact through direct communication with persons looking to invest that it the cost of electricity on the island is a deterrent,” said Reverend Victor.

Tribune Business reported on Wednesday that Grand Bahama Power Company’s earnings exceeded its regulator-approved rate of return by $5.26 million for the 18 months to end-December 2013, with its bottom line undergoing an almost-$29 million year-over-year reversal.

The details are contained in the annual report for ICD Utilities, the BISX-listed holding company for a 50 per cent equity interest in the company.

Under the mid-2013 agreement with the Grand Bahama Port Authority (GBPA), its regulator, the Grand Bahama Power Company is allowed to treat 50 per cent of its earnings above, or below, the 10 per cent return rate as either a deferred “regulatory asset or liability”.

The ICD Utilities annual report notes that the Grand Bahama Power Company has recorded some $2.631 million in earnings for the period July 1, 2012, to December 31, 2013, as a regulatory asset, implying that its earnings for that period were some $5.26 million above the Port Authority-approved rate.

The ICD Utilities report said: “As a component of its regulatory agreement with the GBPA, Grand Bahama Power Company has an Earnings Share Mechanism to allow for earnings above or below its approved 10 per cent return on rate base to be deferred to a regulatory asset or liability, at the rate of 50 per cent of amounts below a 9 per cent return on rate base, and 50 per cent of amounts above 11 per cent return on rate base, respectively.”

Commenting on these revelations, Reverend Victor said: “I believe that they have a business philosophy that is not good for Grand Bahama. The challenge we have with the company is that they are not heeding to anything we are saying. They said they are not going to change their rates.

“The fact that they are generating that type of return gives us some excellent grounds to argue on.”

Reverend Victor said the Coalition, which has already led two boycotts of Grand Bahama’s monopoly power provider, would only intensify its efforts going forward. “We are going to intensify our efforts moving forward. If they’re making excess profits, that’s a problem. You’re going to see more stuff happening. We are going to continue pressing forward,” said Reverend Victor.

The CCC began its campaign against the Power Company last year. They are calling for an immediate revision of the tariff structure to reduce electricity rates and fuel surcharge costs; for consumers to be allowed to install solar energy systems; and for a 10 megawatt solar plant to be connected to the island’s power grid.

“One of the things we had asked the regulator and the Power Company before they had put in the tariff structure in 2012 was whether there was an economic impact assessment done. There was none,” said Reverend Victor.