The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Energy regulators are prioritsing the creation of a formula for determining how Bahamas Power & Light (BPL) calculates the fuel charge component of customers’ bills to ensure it “accurately reflects” true costs.

The Utilities Regulation and Competition Authority (URCA), unveiling its annual plan for this year, said there were “trends” relating to BPL’s fuel charge that had caused it concern especially during the blackouts and load shedding that plagued summer 2019.

Besides ensuring that the fuel charge correctly reflects fuel costs incurred by BPL in providing electricity to consumers, URCA added that it also wants the levy to “only reflect the fair and efficient costs of fuel used, and not pass on costs resulting from failures by BPL to properly manage its electricity system”.

“Over the course of 2019 URCA has reviewed the gazetted rules pertaining to the calculation and application of the fuel charge, and tracked the posted fuel charge for the period, noting trends which are of concern to URCA, particularly in relation to costs experienced during BPL’s period of supply challenges in New Providence during 2019,” the regulator said.

“URCA was unable to initiate a regulatory intervention in this regard due to lack of available resources during 2019. In reviewing the need to address any possible harm and/or mischief that may have been caused to consumers through the fuel charge during the period, URCA is currently seeking to address BPL’s power quality deficiencies during 2019 through a comprehensive investigation.

“URCA considers that any fuel charge impact that may have been experienced during 2019 can be addressed in the context of that investigation. Moving forward, and noting that the fuel charge mechanism can result in inefficiencies causing significant cost to consumers, URCA considers it necessary to ensure that there is clear regulatory oversight of the fuel charge approach wherever it is employed in The Bahamas,” it continued.

“URCA, therefore, proposes during 2020 to develop a comprehensive methodology for the derivation and application of Fuel Charges within the sector.” The fuel charge component can account for between 50-60 percent of a BPL customer’s bill.

The “fuel charge” portion of BPL bills is designed as a pass-through, meaning that the utility passes on to consumers the full costs associated with purchasing the fuel used to generate electricity. It is supposed to be a ‘cost recovery’ mechanism, meaning that BPL earns no profits from the fuel charge.

However, there have long been suspicions that BPL uses the “fuel charge” to disguise inefficiencies elsewhere in its operations, and wraps other items into this levy that further burden Bahamian businesses and households besides the pure costs of fuel.