The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Energy regulators yesterday said renewable providers had "misunderstood and misinterpreted" proposed reforms designed to ensure "equitable treatment for all stakeholders".

Shevonn Cambridge, the Utilities Regulation and Competition Authority's (URCA) director of utilities and energy, told Tribune Business that the "buy all, sell all" mechanism for compensating grid-tied renewable energy providers will not apply to systems that are part of the Small Scale Residential Generation (SSRG) programme.

Instead, it will only be used for those in the Renewable Energy Self-Generation (RESG) initiative, which is targeted at systems with greater capacity than those in the SSRG. Mr Cambridge explained that while the latter was aimed at homeowners and small businesses with renewable systems, RESG is instead targeted at larger companies and government facilities.

He argued that URCA's proposed "buy all, sell" compensation approach was key to "ensure everyone bears the burden of basic (energy) infrastructure", as any method that allowed large businesses with high-capacity systems to self-consume before selling excess power to Bahamas Power & Light's (BPL) grid could enable them to escape much of these costs.

Mr Cambridge said the proposal that RESG grid-tied systems be paid the equivalent of BPL's existing monthly fuel charge for the energy they supply to the grid meant such suppliers would receive back between 50-60 percent of their typical utility bill.

He added that this would still be "profitable" for those with solar and other systems up to one megawatt (MW), even though he acknowledged that this might not be the desired "rate of return". And URCA, once it obtains more data, will seek to determine a better reimbursement method rather than one simply based on BPL's prevailing fuel charge.

As to complaints that the process for approving grid-tied systems is still bound up in excessive "red tape" and bureaucracy, Mr Cambridge replied that existing laws and regulations meant it was impossible to avoid the involvement of Ministry of Works electrical inspectors and other agencies.

He also defended URCA's proposed 15-year, long-term contracts between BPL and businesses with RESG systems on the basis that this would give the latter certainty and confidence that their installation costs would be covered without the utility suddenly tearing up the deal or changing its terms and conditions.

"There appears to be some misunderstanding and misinterpretation of the document," Mr Cambridge told Tribune Business. "There's no intent to change the compensation method in the SSRG scheme. The RESG forms a different class of customers with a different capacity range."

While the SSRG initiative was focused on homeowners and small businesses with a capacity of up to 100 kilowatts (KW), Mr Cambridge said the RESG programme - the guidelines for which were unveiled for a month-long consultation by URCA on Friday - was aimed and medium-sized and large businesses, and government facilities with renewable systems ranging from 100 KW to 1,000 KW - even up to one MW - in capacity.

The present SSRG initiative, launched in 2017, rewards renewable producers through a "net billing" arrangement. This enables persons with grid-tied systems to "net off" the difference between what they supply to, and consume from, BPL.

However, SSRG participants yesterday suggested the reference to "net billing" was incorrect. Speaking on condition of anonymity, some said BPL merely installed a "two-way meter" and compensated them for energy sent to the grid via a payment again equivalent to the fuel surcharge.

Mr Cambridge, meanwhile, confirmed that URCA is proposing a "buy all, sell all" approach for all renewable energy self-generation (RESG) systems.

This means, according to URCA, that government facilities and businesses will not be able to consume any electricity generated by their renewable systems. They will instead have to export all energy they generate to BPL, and consume all the electricity they need from the state-owned monopoly at the standard retail tariff levied on all its customers.

URCA is proposing that those who "sell all" to BPL under this arrangement are compensated by the equivalent of BPL's monthly fuel charge, which normally accounts for 50-60 percent of customer bills. This will be paid via either credits to the utility bill or via cash.

Mr Cambridge, a former Bahamas Electricity Corporation (BEC) executive, acknowledged that basing "buy all, sell all" compensation on BPL's fuel charge was a "very conservative position to start", but pledged that URCA would seek to achieve a mechanism more favourable to renewable system owners once it possessed more data on how the initiative was performing.

"We have to ensure everyone bears the burden of basic infrastructure," he told Tribune Business. "It's not unwarranted or inequitable in any way. These [RESG] customers are in a different rate class and consume different quantities of electricity.

"When you look at the infrastructure to support this class, BPL requires more transformers and more switch overs to support them. and BPL has to have sufficient stand-by power when their systems do not produce. That's a bigger challenge and bigger responsibility."

Mr Cambridge said any drop in consumption from BPL by larger businesses with renewable systems meant their "avoided costs" would have to "be apportioned at a higher rate" to other customers without such RESG technology - a situation URCA is keen to avoid.

"You have the avoidance cost, because with what you are able to produce you are able to avoid the full cost of the [BPL] retail rate and fuel charge," he told Tribune Business. "You cannot allow that for larger consumers.

"The economic analysis of it is you have to ensure there is some stability as well for the utility and basic infrastructure..... It just isn't feasible for larger customers to be allowed to avoid the full tariff for whatever they say they produce and then, when they feel like it, switch over to the utility which has to maintain its system and infrastructure to support them.

"That cost is borne by consumers remaining on the system who don't have access to renewable energy. It's about equitable treatment of all stakeholders. It's in no way going to incentivise individuals from subscribing to renewable energy. They do so for any number of reasons."

Pointing out that RESG suppliers with grid-tied systems would still see a 50 percent reduction in their energy costs under URCA's "buy all, sell all" plan, Mr Cambridge added: "It's not that it's not profitable, I guess it's the rate of return.

"I think that what a lot of solar installers and providers miss is that the utility is responsible for providing electricity across all the islands with a uniform tariff, so a lot of cross-subsidisation takes place. There's a lot of burden for BPL. We can't allow consumers assisting with that subsidisation to drop-off the grid completely.

"Right now BPL is not happy about it, installers are not happy about it, but our task is to make everyone carry their fair share."