The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Utilities Regulation and Competition Authority (URCA) has rejected Bahamas Power & Light’s (BPL) argument that fuel costs not be included in the calculation of its annual license fee.

The regulator, in unveiling the results of its consultation on electricity regulatory fees, did, though, give permission for BPL to pass the license fee on to consumers via their bills.

With BPL’s URCA license fee calculated at 0.4238 per cent of its annual turnover, the sum does not seem excessive. But, based on then-BEC’s $571.281 million in annual revenues for 2014, that still represents a $2.421 million additional cost for consumers.

“BPL suggested that URCA’s annual fee should be based on BPL’s revenue net of fuel, as BPL’s fuel revenues are offset in whole by its fuel costs,” URCA’s statement of results said.

“If URCA is unable to base the annual fee on our revenue net of fuel, we request that permission be granted for the annual fee and any non-penalty related to be recoverable through the fuel rates to the consumers.”

URCA said the Electricity Act prevented it from granting BPL’s request, as the law defined turnover as ‘gross receipts’ - which include fuel charges.

“URCA is unable to base the annual fee on BPL’s revenue net of fuel,” the regulator said. “This is because URCA’s annual fee is based on the licensee’s relevant turnover as is required by Section 54 (2), and defined by the Electricity Act.

“Relevant turnover is defined in the Electricity Act as ‘gross receipts in money or money’s worth of the licensee’, which includes fuel charges.”

URCA added that while BPL could pass on the cost of its annual license fee to consumers, it could not do so via the fuel charge on their bills. Instead, it has to be included in the base tariff.

“URCA allows for the annual fee to be included in BPL’s overall cost base, and therefore it can be passed on to customers as part of the electricity service tariff,” the regulator ruled.

“However, URCA’s decision is that this cost shall not be included in the fuel rate charge to customers, nor as a separate ‘pass-through’ line item.”

URCA’s consultation drew only two responses- from BPL and from the regulator’s former in-house attorney, Vincent Wallace-Whitfield. No response was received from Grand Bahama Power Company (GBPC), even though the document said URCA’s annual license fee applies to it, because that utility is challenging the regulator’s authority to license and regulate it under the Hawksbill Creek Agreement.

Elsewhere, URCA clarified that it could only impose “fee for services” on its electricity licensees to recover costs it had not budgeted for.

Mr Wallace-Whitfield questioned whether URCA had fulfilled its mandate to show how it had arrived at a proposed regulatory action, and whether it had done sufficient analysis.

Rejecting his concerns, URCA replied: “Regarding the licensees who are required to pay the fee, URCA uses an equation that takes into account all public electricity suppliers.

“Public electricity suppliers are authorised to generate, transmit, distribute, and supply electricity (GTDS functions). This means that all licensees who carry out these functions are required to pay the annual fee.

“For 2017, the fee is only based on BPL and GBPC because those are the only two authorised public electricity suppliers. The calculation of the annual fee will include other public electricity suppliers when these are authorized by URCA to carry out GTDS functions.”