The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Grand Bahama Port Authority (GBPA) is set to intervene in Freeport’s utilities regulation battle, with a top QC yesterday accusing the government of “eating like a cancer” at the city’s governance.

Fred Smith QC, the Callenders & Co attorney and partner, confirmed to Tribune Business that the GBPA has hired him to defend the Hawksbill Creek Agreement - and the powers that it grants to regulate all utilities in the Port area - from the Utilities Regulation and Competition Authority’s (URCA) challenge to its jurisdiction.

The national regulator is arguing in legal papers that itself - not the GBPA - has the legal authority to supervise Freeport’s energy sector through the Electricity Act 2015, which “implicitly repealed” key parts of the Hawksbill Creek Agreement.

URCA’s case, filed with the Supreme Court at end-March 2019, is that Parliament was “constitutionally entitled” to override Freeport’s founding treaty when it passed the legislation into statute law.

That is a response to the position taken three years ago by the Grand Bahama Power Company. Sensing the danger immediately that the Electricity Act was passed, the utility headed to the Supreme Court to challenge URCA’s ability to license and regulate it on the basis that this “conflicts” with the provisions of the Hawksbill Creek Agreement as Freeport’s founding treaty.

The GBPA’s hiring of Mr Smith, though, indicates it feels URCA’s stance is sufficiently threatening to its own interests and the Hawksbill Creek Agreement’s integrity that it must intervene on GB Power’s side through being joined as a party to the action.

And Tribune Business understands that Cable Bahamas’ separate legal challenge to URCA’s authority, and whether it has the jurisdiction to regulate its Internet and telephony businesses in the Port area, is likely to be heard jointly with GB Power’s case because both raise the same issues.

Mr Smith yesterday accused “small-minded bureaucrats” within the Government and its agencies of undermining both Freeport’s economy and the wider Bahamas through constantly “gnawing away” at the Hawksbill Creek Agreement.

Urging the Minnis administration to “recognise the value” in Freeport’s founding treaty, he questioned why itself and URCA were seemingly ignoring multiple rulings from the Supreme Court that had upheld the GBPA’s exclusive regulatory jurisdiction in the Port area.

Asking if the Government was determined “to make everyone’s life an economic misery until 2054”, when the Hawksbill Creek Agreement expires, Mr Smith instead urged it to “grow up” and respect the GBPA’s regulatory status so that Freeport’s private sector “can grow instead of continue to collapse”.

“I can confirm that the Grand Bahama Port Authority has retained me to act for them in regard to the URCA matter,” he told Tribune Business. “It is regrettable that government after government eats away at the Hawksbill Creek’s jurisdiction for the GBPA like a cancer.

“If only the Government in The Bahamas would recognise the value of the Hawksbill Creek’s jurisdiction, and support its development and growth. It would help to create a resurrection of the Freeport economy which, in turn, would be a magnificent boon to the Public Treasury.

“But the small-minded bureaucrats that continue to gnaw away at the Hawksbill Creek’s jurisdiction don’t seem to understand they are hurting not only Freeport but the rest of The Bahamas.”

Pointing out that the resulting regulatory uncertainty undermined business confidence and investment, Mr Smith yesterday sought to dissuade URCA from pursuing the matter further by highlighting the numerous Supreme Court rulings he has won against the Government that uphold the GBPA’s authority within Freeport.

“We have successfully litigated over a dozen cases that have set judicial precedent for the GBPA’s exclusive regulatory authority in Freeport,” he said. “It is regrettable that the attorney general in successive administrations chooses not to abide by the many precedent-setting judicial pronouncements that the GBPA has the exclusive regulatory jurisdiction.

“Are they going to continue to fight this to 2054, and make everyone’s life an economic misery? It’s why I urge the Government to grow up and accept the GBPA as the regulator in Freeport, while ensuring the Port Authority lives up to its statutory responsibilities.

“Stop this internecine, unnecessary judicial warfare. It inures to everyone’s detriment. Businesses in Freeport continue to collapse instead of grow.”

Tribune Business understands that the GBPA was alarmed by this newspaper’s report last week on URCA’s legal filings, together with the regulator’s decision to hold a series of Town Meetings across Grand Bahama and Freeport at the same time.

It yesterday issued a robust defence of its GB Power regulation, arguing that it had created a supervisory framework that incentivised a 70 percent improvement in supply reliability; a 50 percent reduction in fuel costs; and the integration of renewable energy into the supply mix.

However, URCA’s position has the support of many Freeport and Grand Bahama residents who argue that the GBPA is too close to GB Power. They cite the GBPA owners’ former shareholdings in the utility, as well as the significant fee income generated for the Port Authority by GB Power.

Residents are also complaining that the GBPA, in its regulatory role, does too little to redress consumer complaints about burnt-out equipment and such like, and that they can never get compensation from GB Power.

Who has responsibility for utilities regulation in Freeport has been a thorny, unresolved issue for years, with both the Government and GBPA remaining relatively silent on the matter until it flares up.

Several observers view the whole idea of an enclave such as the Port area, with its own separate regulatory regime, as outdated and ill-matched with modern governance and the concept of having a national regulator.

Some, too, believe that GB Power may be using its legal action as leverage or a bargaining chip in its negotiations with the Government over renewal of its East and West End supply agreements, which expired last year.

The GBPA is understood to fear that relinquishing regulatory authority will open the door to further Hawksbill Creek Agreement changes that will ultimately undermine its power and significance.

However, several observers, speaking on condition of anonymity, have told Tribune Business that the GBPA has only itself to blame for bringing such pressures on itself. They point to Freeport’s 15-year decline, and the seeming inability of both management and ownership to reverse this by attracting new investment and reviving the economy.

As an example, both the $100m Carnival cruise port talks and efforts to find a buyer for the Grand Lucayan have been led by the Government rather than the GBPA, which some have interpreted as a sign that the Port Authority is no longer a “major player” in such developments.