The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Opposition’s deputy leader yesterday urged the Government to clarify whether its proposed energy sector reforms intended that URCA take over regulatory responsibility for the Grand Bahama Power Company (GBPC) - a move that conflicts with Freeport’s founding agreement.

K P Turnquest told Tribune Business he found it “strange” that Deputy Prime Minister Philip Davis, in unveiling the Government’s energy reform package, revealed that the Utilities regulation and Competition Authority (URCA) was “mandated to licence” GBPC within 30 days of the legislation coming into effect.

For such a move seemingly brings the Government once again into conflict with the Hawksbill Creek Agreement (HCA), which stipulates that the Grand Bahama Port Authority (GBPA) is the regulator for all utilities within Freeport’s 230 square mile Port area.

And it also threatens to create confusion at an especially delicate moment for both the Grand Bahama Power Company, given that the GBPA is expected to decide on its revised rate structure - and proposal for a base rate rise - by December 1.

The GBPA is currently in the midst of deliberating on Grand Bahama Power Company’s proposal, amid strong opposition from many Freeport residents and businesses, led by organisations such as the Coalition of Concerned Citizens.

Mr Davis, in describing the key features of the Bill that will amend the existing URCA Act, empowering it to become the independent energy sector regulator, implied that will also have oversight for Grand Bahama Power Company.

He said the Freeport-based utility, and Bahamas Power & Light (BPL), the operating entity that will replace BEC, will be the first two companies to receive public electricity supplier licenses from URCA.

“The Bill further anticipates that BPL and the Grand Bahama Power Company (GBPC) will be the initial licensees, with GBPC serving the Port Area as defined under the Hawksbill Creek Agreement, and BPL serving BEC’s current area of supply across the Bahamas,” Mr Davis said.

“URCA is mandated to issue public electricity supplier licenses to BPL and GBPC within 30 days of the Bill coming into operation.”

A senior official involved in the BEC restructuring, and wider energy reform process, told Tribune Business yesterday that the URCA amendment Bill was intended to “encompass the whole Bahamas” - implying that it does involve oversight, in some form, of Grand Bahama Power Company.

Pointing out that Grand Bahama Power Company serves both East and West End, areas outside Freeport and the Hawksbill Creek Agreement, the official confirmed: “The Bill was drafted in such a way that it encompasses the whole Bahamas.

“One thing about Grand Bahama Power Company is that not only does it provide services to Freeport, but it also provides services to East and West Grand Bahama.”

Speaking on condition of anonymity because they were not allowed to speak to the media, the official added: “The Bill was drafted to encompass everything. The company [GBPC] still needs to be licensed in Freeport, but when it comes to regulation that’s the way it’s going to be set up.”

This Hawksbill Creek Agreement’s provision that the GBPA is responsible for utilities regulation in Freeport has already created issues for URCA’s regulation of the communications industry.

The Supreme Court ruled in 2011 that it had no jurisdiction to levy fees on Cable Bahamas’ Internet earnings in Freeport, because the BISX-listed provider operated in the city via its wholly-owned subsidiary, Cable Freeport. The latter entity was licensed by the GBPA, not the Government.

Describing Mr Davis’s comments on the GBPC ‘licensing’ as “interesting”, Mr Turnquest told Tribune Business: “We’ve been down this road before over the conflict with the Hawksbill Creek Agreement and the GBPA’s role as regulator. There’s some clarification needed.”

Mr Turnquest conceded that he had previously supported URCA taking over from the GBPA as the Grand Bahama Power Company’s main regulator.

He explained that this was not because the Port Authority had “done a poor job”, but because many Grand Bahamians perceived “a conflict” due to previous common ownership in the GBPA and GBPA.

That ended when the late Sir Jack Hayward and Edward St George sold their equity interests in the Grand Bahama Power Company, partly via the creation of the BISX-listed ICD Utilities investment holding vehicle.

However, due to the misconception of shared ownership, Mr Turnquest said his position had been that URCA would “ensure transparent oversight and be a better arbiter of these matters”.

It was then that he discovered the potential conflict with the Hawksbill Creek Agreement’s provisions should URCA assume that role.

Mr Turnquest added of Mr Davis’s comments: “For that to work, the GBPA will have to agree to give up its regulatory oversight. And there seems to be some reluctance to do that.”

Cable Bahamas (and Cable Freeport) won their 2011 case on the basis that the former Telecommunications Act permitted URCA’s predecessor, the Public Utilities Commission (PUC), to levy fees only on its licensees. Cable Freeport, of course, did not fall into that category because it was a GBPA licensee, and the PUC’s demand for $78,747 was thus quashed.

Then-Justice Longley, though, declined to rule on the wider issues - whether the PUC, and by extension URCA, had jurisdiction in Freeport, and whether Cable Freeport should be licensed by URCA.

These questions go to the heart of the issue over who should regulate utilities in the 230 square mile Port area - the GBPA or a nationwide regulator such as URCA.

The issue also strikes at the Hawksbill Creek Agreement, the Port and its supporters likely fearing that giving up regulatory responsibility in Freeport would undermine the Act/agreement that is the very basis for the city’s existence.

The former Telecommunications Act has since been repealed by the Communications Act 2009, and in his ruling Justice Longley suggested this opened the door to further legal challenges by URCA.