The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamas Power & Light (BPL) will invest $30m in rolling-out Advanced Metering Infrastructure (AMI) that it sees as critical to slashing delinquent private sector debts, its chairman revealed yesterday.

Dr Donovan Moxey told Tribune Business that the funding has already been budgeted, and contractor selected, for an initiative that will “put the power to manage” energy consumption in the hands of BPL’s household and business consumers.

The AMI initiative, which was on the drawing board under the previous Darnell Osborne-led Board, will introduce the concept of pre-paid metering to the Bahamian electricity industry for the first time. Much like pre-paid cell phones, consumers will be able to “top-up” their new meters as they go, with the technology-based platform also providing apps and mobile links.

Bahamians will thus be able to control their energy consumption as opposed to the present system where many Bahamians and households run-up huge bills they are unable to afford, but only become aware of this after the fact - much like a post-paid mobile phone customer.

BPL’s hope is that, besides preventing consumers from falling into a financial hole that ultimately ends in their disconnection from the electricity grid, its AMI plans will also prevent the build-up of more than $66m in delinquent debt owed by households and businesses that it is carrying as a receivable on its balance sheet.

And, although Dr Moxey did not directly say so, the AMI initiative will likely form a key element in BPL’s strategy to ensure it collects all the debt servicing fees that will be levied upon consumers to pay the interest owed to investors from its $650m bond refinancing.

Tribune Business reported earlier this week that the greatest weakness, or ‘Achilles heel’, of the National Utility Investment Bond is BPL’s legacy woes in collecting all sums due from customers. Failure to improve in this area could potentially result in insufficient income as the bond debt falls due, and lead to compliant consumers bearing an increasing burden on behalf of their bill-ducking counterparts.

“One of the things we’re looking at doing, and it’s something that we’ve talked about before, is implement AMI,” Dr Moxey told Tribune Business. “We’ve allocated $30m in the budget for AMI implementation. We’ve also approved the vendor for that. AMI is definitely one of the tools that is going to help us.”

The BPL chair described the AMI roll-out as “a very powerful platform” that will provide the state-owned utility monopoly and its consumers “with the infrastructure to improve customers having more flexibility in managing electricity and paying their bills”.

While unable to specify how much consumers will pay to service the National Utility Investment Bond, or the potential impact on total electricity bill amounts, Dr Moxey urged Bahamians to view this as “making a small investment that is going to secure the future of the country”.

He added that their contribution to BPL’s refinancing would ultimately pay significant dividends via lower electricity costs that will more than offset the bond servicing costs, with the utility able to provide a more stable, cheaper power supply via the Wartsila engines and partnership with Shell for the new multi-fuel power plant.

Disclosing that BPL was “hitting the reset button”, Dr Moxey said its transformation strategy will result in “the creation of a brand new company” as part of the Government’s mandate that it “fix the energy problems in this country once and for all”.

“People have to understand what BPL is going through now. We’re looking to hit the reset button,” he told Tribune Business. “We’re creating a brand new company. Folks need to understand that is the goal here. It’s not easy to turn the ship, but when we do it will be a game changer for the economy.

“Bahamians have to recognise that if we’re doing this kind of change it will help everybody. Everyone will have to contribute in some small way. What’s being asked of Bahamians is to make an investment in the future of the country.”

Dr Moxey said the bond issue’s price (interest rate) and consumer debt servicing charge had yet to be determined as the process of placing the $650m issue was “still in flux”. BPL, the special purpose vehicle (SPV) that will issue the bonds, and their advisers are now waiting for the issue to be given a credit rating - something that will signal to the capital markets the price investors should pay for the bonds based on the risk the borrower may be unable to repay.

He pledged, though, that BPL would seek to minimise the financial pain for consumers. “There will be a change in the structure of the bill with respect to the fee, but our goal is to make sure the overall cost is not a significant impact to the overall bill,” Dr Moxey said.

“We’re working to make the impact neutral, and when we bring in liquefied natural gas (LNG) and new generation we’ll be looking to reduce the cost of electricity. We want to do this with minimal impact to the Bahamian people, our customer.”

Describing the upcoming changes at BPL as “transformational”, Dr Moxey said he was “very confident” that the 132 Mega Watts of (MW) of new generation capacity being supplied by Wartsila will be online by the mid-December deadline.

With these engines set to produce around two-thirds of New Providence’s 200 MW-210 MW winter demand, he voiced optimism that the summer-long nightmare of three-to-four hour outages and blackouts will now be past history.

“Myself and the chief executive visited the plant on Monday gone, and everybody we spoke to - including the project managers - indicated they are well on schedule and have no issues they can foresee that will delay the December 15 date,” Dr Moxey added.

“The 132 MW is the largest single plant ever installed by BPL. It will definitely improve supply reliability, no question about it, and because of the higher efficiency engines there will be a lower cost of fuel to produce power, so customers will see those savings.”

The BPL chairman, though, confirmed that “no decision” had been made on the proposal for the utility to become Shell’s joint venture partner in the new 222 MW power plant it will construct in southwestern New Providence.

“We’ve put some ideas, thinking forward, but there’s nothing on paper, nothing signed as yet,” Dr Moxey told Tribune Business. Describing the negotiations on a final agreement with Shell as “progressing well”, he added that year-end 2021 was still the target date for completing the power plant and nothing had emerged to suggest there will be delays in that timeline.