The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

Bahamas Power and Light (BPL) today reveals the "average" family will see a $27 per month increase in their bills from March 2020 onwards to help service its $650m debt refinancing.

The utility, in an advertisement in today's newspaper, says a "new line item and fee" called the National Utility Investment Bond will be included on all bills from March this year. This represents the debt servicing charge required to repay investors who will acquire the bonds to refinance BPL's $321m legacy debt and provide $222m in available funding for critical infrastructure upgrades.

Dr Donovan Moxey, BPL's chairman, yesterday conceded he was unsure where the $27 figure had come from - especially given that the $650m BPL bond issue has yet to be priced in terms of the interest investors will receive since it has yet to obtain a credit rating.

"Here is the thing that everyone is getting confused about that," Dr Moxey said. "I think the minister [Desmond Bannister] was asked a question in Parliament, and he was asked: 'What's going to be the average cost to the Bahamian consumer?, and I think his response was between $20 to $30. That's his response to it.

"This $27, I'm not sure where it came from, but maybe it's based on the fact that the average bill in The Bahamas is $180. So we are not giving out a number, we have not communicated a number. As far as I know the minister indicated a $20 to $30 possible impact to the average consumer. That's it; the average, and that's a wide range.

"The reason why we can't do that is that we still haven't completed the rating for the bond, so we can't say anything about prices because we don't know what the interest rate is going to be. So the only thing we can give is what we believe the range is, but the one thing that is definitive is that this will be an additional line item on the bill."

However, Paul Maynard, the Bahamas Electrical Workers Union president, reiterated his belief that BPL customers will pay more than the predicted increase of $20 to $30 per month on their bills next year.

"They have to pay the rate reduction bond," he said. "So they have no other choice but to change the billing structure. They will have to do something, because they have $120m that is owed [to BPL] in receivables. You have to collect that and you have to get people paying their bills."

The BPL advertisement also failed to specify how much of an increase the "average business" will see as a result of the new charge's introduction, even though it promised that the bond debt servicing fee's costs will be "more than offset" by lower generation costs from the utility's new engines, meaning consumers should see a net overall reduction.

BPL, in the ad, again warned Bahamian households and businesses that they are being called upon to make a short-term sacrifice for long-term gain by assisting a refinancing designed to address "past failures and neglect that have plagued BPL for many years".

"If we continue to follow past practices and simply ignore the growing debt problem, it would adversely impact our ability to fix BPL for the long-term," it said. "In order to invest in the future and deliver more reliable energy that is less costly over time, BPL must service this debt now to make investments for the future.

"The summer load shedding was a prime example of what happens when a company fails to maintain existing equipment or invest in new, more efficient generators. Doing nothing will only make things far worse, as we have already seen...

"We understand that no one wants to pay more for a service they need to rely on. Our hope is that you understand that these steps are critical for BPL to turn the page on past practices that have been disastrous for our customers... Righting the ship starts with getting our fiscal house in order, and this bond is necessary to do that."