The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Opposition’s deputy leader has urged the Government and PowerSecure to update the Bahamian people on the Bahamas Electricity Corporation (BEC) takeover process, and expressed fears that negotiations had “bogged down”.

K P Turnquest described the progress of BEC reforms as “the $900,000 question”, referring to the value assigned to the Transition Services Agreement (TSA) signed between the Government and PowerSecure on July 22 last year.

That agreement was intended to pave the way for the Carolinas-based company to take over management of BEC’s new subsidiary, Bahamas Power & Light (BPL), but Mr Turnquest said that now - almost six months later - the final steps appeared no closer to happening.

He warned that “every day” the takeover, and implementation of PowerSecure’s business plan for BEC, is delayed “costs the Bahamian people money” via high electricity prices and unreliable power.

Mr Turnquest told Tribune Business he had heard “not a peep” from the Government on when PowerSecure’s business plan, and take over of operational control at BEC, would be completed.

Arnold Forbes, minister of state in the Ministry of Works and Urban Development, said last week that the Government was expecting to finalise the business plan with PowerSecure within weeks, but provided no details or timetable for completion.

“The $900,000 question is: What is happening at BEC?” Mr Turnquest said. “Here we are, at the middle to end of January, and no completed plan appears to have been put forward.

“That is unacceptable, particularly in light of the fact $900,00 of the Bahamian people’s money has been spent. I can’t understand why they’re taking so long, when they’ve [PowerSecure] been in BEC prior to the legislation and reforms being passed, and must have had access to all information required.

“It doesn’t give the Bahamian public confidence that PowerSecure is paying the requisite attention to this matter as a priority, seek to take over the management of BEC.”

Mr Turnquest said nothing had been heard from Deputy Prime Minister, Philip Davis, on the issue since the Government passed the three-strong energy sector reform Bill package through Parliament late last year.

“Nothing more has been heard, and a Government working on behalf of the people would be updating the public on exactly where we are in the transition process, and the current outlook for BEC under PowerSecure’s management and how it’s going to affect BEC employees and electricity consumers in the Family Islands,” the FNM’s deputy leader told Tribune Business.

“I’m very concerned, and to the uninformed of mind it certainly indicates there may be an issue that PowerSecure and the Government did not consider when they entered into discussions, and that has bogged down the reform programme.

“We hope that is not the case, but it does not give us confidence they’re able to complete the requisite business plan and see the way forward,” Mr Turnquest continued.

“Right now, it seems the status quo is the order of the day, and that is certainly unacceptable to the Bahamian public. We’re due an update from either the Government or PowerSecure.”

Apart from the new BEC/BPL business plan being approved by the Government and Corporation’s Board, PowerSecure also has to conclude a management agreement with the Christie administration.

Tribune Business understands that PowerSecure and the Government’s representatives, including the KPMG accounting firm and BPL Board, are still locked in negotiations over the former’s management contract.

While several versions of the 280-page business plan have been presented to the Board and Cabinet, the management contract is understood to be taking longer to pin down.

Tribune Business sources recently suggested one outstanding issue is PowerSecure’s desire to invest in renewable energy-related projects in the Bahamas, potentially making it an independent power producer (IPP) suppling electricity to BPL - the entity it is also managing.

This newspaper understands that PowerSecure sees such IPP projects as a significant business opportunity for it in the Bahamas.

But the Government is thought to not be keen on such arrangements, while another potential obstacle is how BPL (and PowerSecure) treat politically-related delinquent accounts, including those of government agencies.

Tribune Business also revealed in early December how the Government and PowerSecure were divided on how they should address BEC’s legacy environmental liabilities in their relationship.

Sources with knowledge of the talks between the Government and the prospective BPL management partner, speaking on condition of anonymity, said then that the Christie administration wants PowerSecure to complete environmental studies of all BEC sites within six months of assuming managerial responsibility.

They added that this was an aggressive timeline, based on the number of sites - and amount of data - that had to be collected.

PowerSecure will also receive a maximum $5 million annual fee for managing operations at the ‘new BEC’.

Some $2 million of this sum is guaranteed, with the remaining $3 million contingent on the US energy services provider hitting a series of performance-related goals - such as reliability, efficiency and profitability.

Mr Turnquest, arguing that there is no time to waste, said the Bahamas will continue to lose until the agreement with PowerSecure is completed.

“Every day that this plan is delayed is costing the Bahamian people money in terms of already high electricity bills but, in addition to that, lost opportunities,” he said.

“The cost of electricity continues to be a concern for not only residential customers, but commercial ones and potential investors.

“The Government promised they were going to drastically reduce the cost of electricity, but we’ve seen very little movement on base rates, and have not seen any improvement in the reliability or consistency of electricity this summer.”

Mr Turnquest added that consumers were also losing money due to the frequent ‘brown outs’ and ‘blackouts’, which were destroying electrical equipment.

The Christie administration has made energy reform one of its main priorities, and is hoping PowerSecure can ultimately lower the tariffs faced by BPL consumers by between 30-40 per cent.

However, it has yet to bring the energy reform process to a close almost two-and-a-half years after embarking upon the initiative in August 2013.