The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Grand Bahama Power Company's top executive has warned the utility "cannot keep kicking the can down the road" on implementing the extra charge to recover $15m in Dorian restoration costs.

Dave McGregor, its president and chief executive, told Tribune Business that October 1, 2020, remains the date for implementing an additional levy to all consumer billings as it seeks to regain funds spent on restoring uninsured transmission and distribution (T&D) infrastructure.

Arguing that it was imperative to recover this outlay to keep GB Power on "a solid footing" financially, Mr McGregor said the Grand Bahama-based energy provider had no intention of following Bahamas Power & Light's (BPL) lead in amassing unsustainable debts that came back to bite in later years.

He added that adding the extra charge to customer bills remained "the fairest and most transparent way" for GB Power to recover these costs, the only alternative was to build the cost into its existing rate structure - something that would provide the utility with additional profits in years when Grand Bahama was not hit by hurricanes.

"Obviously we're living in uncertain times, but October 1 is still the implementation date as far as we're concerned," Mr McGregor told this newspaper. "What we cannot do is keep kicking the can down the road like our friends at BPL tend to do and stack up lots of debt for later.

"We've deferred it for six months or so, but we still plan to implement it on October 1. Yet who knows what happens next day or the day after." He spoke out after Emera, GB Power's 100 percent Canadian owner, revealed the date in its 2020 half-year and second quarter results statement.

"GB Power's [2020] earnings are expected to be consistent with 2019 earnings, which were lower than normal as a result of Hurricane Dorian. The impact of COVID-19 on GB Power is expected to be partially offset by recovery of load following Hurricane Dorian," Emera said.

"On September 1, 2019, Hurricane Dorian struck Grand Bahama causing significant damage across the island. In January 2020, the Grand Bahama Port Authority approved the recovery of approximately $15m of restoration costs related to GB Power's self-insured assets.

"As of June 30, 2020, $14m of these costs were incurred, and recorded as a regulatory asset. Recovery of the regulatory asset, due to start on April 1, 2020, has been temporarily suspended as a result of the economic impacts of COVID-19 on Grand Bahama. This recovery is now expected to start on October 1, 2020."

Mr McGregor's comments also contrast somewhat with the expectations of Grand Bahama's Chamber of Commerce president, Greg Laroda, who previously told this newspaper that conversations with the GB Power chief had indicated the utility would push the implementation date back further given COVID-19's impact on the island's economy and its customer base.

However, Mr McGregor told Tribune Business: "We need to recover the revenue. The only alternative is to build it into the rates and that's not somewhere we want to go. That would be a bad day." He explained that, with storms presently striking Grand Bahama at a rate of one every three years, building such a charge into the existing rate structure would boost GB Power profits in storm-free years.

"It's the most transparent and fair way for customers," he argued. "I know it doesn't feel like it, but at the end of the day it's important the utility is on a solid footing. We're one of the bedrocks of Grand Bahama, and are critical to its recovery. If we do not pull in what we spend we're in a tough position like all businesses. It's not unique to us."

However, Pastor Eddie Victor, president of the Coalition of Concerned Citizens (CCC), a long-time GB Power critic, told Tribune Business that Grand Bahama's long-suffering economy, still reeling from the combined impact of Hurricane Dorian and COVID-19, simply "cannot handle" even a small increase in energy rates for years.

Arguing that GB Power should instead tap its shareholders and own capital reserves, rather than its customers, to recover Dorian-related costs, as the T&D infrastructure is not publicly owned, Pastor Victor said: "There is no economic reasoning by which the Power Company should be able to lay any additional charge on the population for quite some time. We cannot take it.

"We're totally against any type of fees or cost recovery being levied against any customer, commercial or residential. We're totally against it, fundamentally against the Power Company charging the citizens to replace their own infrastructure. Whoever owns the infrastructure should pay for it, and that's the philosophy we're guided by."

GB Power's Storm Recovery and Stabilisation Charge was due to be added to all light bills from April 1, 2020, as "the fairest way for customers to pay" for the damage inflicted on its transmission and distribution network by Hurricane Dorian's category five winds.

Acknowledging that many GB Power customers were still facing "tough times" rebuilding businesses and lives shattered by Dorian, and that an increase in electricity costs will be the last thing they want, Mr McGregor said at the time it was introduced that the extra charge was "unfortunate" but necessary to rebuild essential energy infrastructure.

Pointing out that GB Power had delivered predictable energy costs through its fuel hedging initiative, and that tariffs had not increased for eight years, he added that such reliability "needs to be paid for" after the utility incurred almost $45m worth of uninsured restoration costs in four years when Hurricane Matthew's 2016 damage is factored in.

The Grand Bahama Port Authority (GBPA), the utility's regulator and Freeport's quasi-governmental authority, revealed the imminent addition of the extra charge to all GB Power bills.

The charge for its three customer categories was initially set at:

• Residential - $0.013 cents per kilowatt hour (kWh) or 1.3 cents

• Commercial - $0.008 per kWh or 0.8 cents

• GSL (industrials) - $0.010 per kWh or one cent

The GBPA added that the Storm Recovery and Stabilisation Charge would represent an increase of less than $7 per month for the "average" residential customer, and $24 for the "average" business customer, in a bid to soften the upcoming blow and any consumer push back/fall-out.