The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Opposition’s current leadership has backed the Utilities Regulation and Competition Authority (URCA) taking responsibility for supervising the Grand Bahama Power Company, despite acknowledging that this would “pierce” Freeport’s founding law.

K P Turnquest told Tribune Business he agreed that allowing URCA to take over utilities regulation in Freeport was a potentially dangerous precedent, given that it represented an “intrusion” into the Hawksbill Creek Agreement.

He argued, though, that such concerns paled against the need for Freeport businesses and residents to have an “independent” regulator who would ensure that Freeport-based utility companies did not “take advantage” of them.

The east Grand Bahama MP suggested that despite its ownership families selling their equity interests, the perception remained that the relationship between GB Power and its regulator, the Grand Bahama Port Authority (GBPA), was not an independent one.

The same, Mr Turnquest said, applied to Freeport’s water provider, the Grand Bahama Utility Company, hence the need for URCA to take over regulatory responsibility for the city’s utility companies from the GBPA.

Such a move, which is also desired by the Government, would seemingly conflict with the Hawksbill Creek Agreement, which mandates that the Port Authority - not the Government or an independent regulator such as URCA - be responsible for utilities regulation in Freeport.

This was again highlighted last week when Tribune Business exclusively revealed that Grand Bahama Power is using the issue to challenge URCA’s ability to license and regulate it through the Supreme Court.

Mr Turnquest, though, backed the notion of URCA taking regulatory responsibility for GB Power and Grand Bahama Utility Company, provided this was achieved via a “negotiated position” agreed with the GBPA.

“I’ve been a supporter of having URCA as an independent regulator to oversee all utilities in the country, including the Power Company here and the water company [GB Utility Company,” Mr Turnquest told Tribune Business.

“These are basic necessities that everyone uses, and we ought to ensure they do not get out of control or out of reach of the average citizen or resident.

“The only way to make sure there is fairness to customers and a fair return for shareholders is to have an independent arbitrator [URCA] look out for the interests of both parties.”

Dr Hubert Minnis, the current FNM leader, also backed URCA as the independent utilities regulator for Freeport in his ‘Roc wit Doc’ rally in Grand Bahama at the weekend.

However, GB Power is seeking a Supreme Court injunction to prevent URCA “from regulating, or seeking to exercise licensing and regulatory authority”, over it.

Its amended statement of claim, filed on July 7, 2016, also wants the Supreme Court to declare that GB Power can carry on its business without requiring a public electricity supplier licence from URCA.

GB Power’s action is founded on the basis that, as a GBPA licensee, it is licensed and regulated by the latter via the Hawksbill Creek Agreement - and not by URCA and the Electricity Act 2015.

It is arguing that the Electricity Act’s sections 44-46, which give URCA the legal right to licence and oversee energy providers, “are inconsistent, and conflict with, the rights and privileges vested in [GB Power] and the Port Authority” by the Hawksbill Creek Agreement.

Mr Turnquest, though, argued that the need to properly protect consumers outweighed concerns surrounding the Hawksbill Creek Agreement’s possible breach.

“I know there is some concern with respect to intrusion into the Hawksbill Creek Agreement and the licensees,” the FNM deputy leader told Tribune Business, “and I certainly respect that as someone who supports the Hawksbill Creek Agreement.

“However, I believe we ought to achieve a negotiated position between the Port Authority, the Power Company and the Water Company for URCA to be the mandated regulator.”

Mr Turnquest said the GBPA lacked the capacity, expertise and resources to regulate GB Power Company by itself, and had to rely on external consultants and advisers.

While acknowledging that URCA also needed to “beef up” its ability to regulate the Bahamian energy sector, the east Grand Bahama MP said its independence from the GBPA would likely be supported by many Freeport and Grand Bahama residents.

“Most would support an independent review as opposed to a paid review by the Port Authority, which has a vested interest in the outcome,” Mr Turnquest added.

“For full transparency, fairness and objectivity, it is the right thing to have URCA be the regulatory body.

“At the end of the day, as a government, you have the obligation to the citizens of the Bahamas, including the residents of Freeport, that they are not being taken advantage of, and that they are getting the service they pay for at a fair price.”

Mr Turnquest continued: “On the face of it, and in principle, I don’t see why the GBPA and the Power Company have a problem. The only caveats are that URCA is qualified to do this work, and it is an independent body that has the necessary legal standing.

“It would inure to the benefit of the Power Company, Port Authority and the residents, quite frankly. I fully respect the risk of piercing the Hawksbill Creek Agreement and creating a precedent, and that’s why it’s important a negotiated position be taken such that the Port Authority agrees to delegate its rights and responsibilities to URCA.”

GB Power’s decision to initiate legal action represents an immediate obstacle to URCA’s fledgling efforts to regulate the entire Bahamian energy sector, which have yet to get past first base.

It coincides with URCA’s initiation of consultation on the very ‘public electricity supplier licence’ that is the subject of GB Power’s action.

This is URCA’s first regulatory action in the energy sector since the Electricity Act, and amendments to its own founding law, transferred such obligations to it earlier this year.

Meanwhile, the GB Power action is also the first challenge to the Memorandum of Understanding (MoU) agreed between the Government and GBPA in early May 2016.

That committed the GBPA to working with the Government to create “a mechanism to ensure the exercise of the regulatory powers and functions vested in the GBPA are consistent with the national policy, regulations and laws of the Bahamas”.

This commits the GBPA to far-reaching governance reforms, and the potential devolution of some of its quasi-governmental powers/regulatory authority, via their ‘harmonisation’ with national laws and government policies/regulations.

The MoU’s clause 1.18 suggests this ‘harmonisation’ will be achieved through “existing independent regulators” such as URCA - a development that is now being directly resisted by the GB Power action.