The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Activists yesterday urged Grand Bahama Power Company to prevent further controversy over efforts to recover hurricane restoration costs from its customers by seizing on a new regional initiative.

Pastor Eddie Victor, president of the Coalition of Concerned Citizens (CCC), a long-time GB Power critic, told Tribune Business that a just-unveiled product from the Caribbean Catastrophe Risk Insurance Facility (CCRIF) sounded “absolutely fantastic” for both consumer and utility.

CCRIF, from which the government obtained a nearly-$11m insurance payout over Hurricane Dorian, announced that it had launched an insurance product targeted specifically at limiting the financial burden imposed on Caribbean electricity utilities by storm-related damages to their transmission and distribution networks.

The parametric product, which will see payments triggered by a hurricane or other natural disaster, is designed to provide utilities throughout the region with financial liquidity to cover the restoration process.

Acknowledging that the region’s hurricane exposure, and vulnerability of hundreds of miles of overhead lines and poles, makes it virtually impossible for Caribbean electrical providers to secure reasonably-priced insurance for their transmission and distribution networks, CCRIF said its new product will be focused on this area only.

“Economic losses of utility sectors, particularly transmission and distribution systems, after these events also are high, with citizens often-times bearing the brunt of the costs through their electricity bills,” CCRIF said.

Its product is thus focused on the very issue that prompted GB Power to seek to recover $15.6m in Dorian restoration costs, related primarily to its transmission and distribution network, via the addition of an extra charge to customer bills.

Public protests against the new charge subsequently pushed the Storm Recovery and Stabilisation charge’s start back from October 1 to New Year’s Day 2021. Dave McGregor, GB Power’s chief executive, could not be reached for comment on the CCRIF product yesterday, and its introduction comes to late to address the Dorian-related situation.

But Pastor Victor said “anything that would not cause more expense to the customers and consumers of GB Power” in relation to future storms will be “absolutely fantastic”. Adding that his message to GB Power is “go ahead and get the coverage”, he added that it could “eliminate the whole idea and concept” of any Storm Recovery and Stabilisation charge or hurricane fund that was financed by consumers.

Grand Bahama Power and the the Grand Bahama Port Authority (GBPA) have consistently argued that the new charge, which will be a separate line item in customer bills, will 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.

The charge for the 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

CCRIF’s product could equally benefit Bahamas Power & Light (BPL), which initially estimated that Dorian-related restoration costs on Abaco would cost itself and taxpayers some $90m. Desmond Bannister, minister of works who has responsibility for BPL, yesterday said he was unaware of its offering, and that it would first need to be evaluated by the utility’s Board.

CCRIF’s statement said the insurance product was developed “in close collaboration with CARILEC, an association of electric utilities, suppliers, manufacturers and other stakeholder operations in the electricity industry in the Caribbean, where 35 of its members are electric utilities”. BPL and GB Power are both members.

Isaac Anthony, CCRIF’s chief executive, said: “The close relationship between wind speed and overhead transmission and distribution system damage created the opportunity for CCRIF to develop a new and innovative parametric insurance product, which could be priced much more competitively in the marketplace than traditional indemnity insurance and would present lower basis risk to the insured utilities”.

The product has already been purchased by the Anguilla Electricity Company Limited (ANGLEC), and CCRIF said more utilities are set to follow.

Peter Lamontagne, ANGLEC’s acting chief executive, said: “ANGLEC was severely impacted by Hurricane Irma in 2017, and almost all of its transmission and distribution network was destroyed, costing the company in excess of XCD40 million to restore.

“At the time the company had XCD16 million in its reserves (a self-insurance fund) and, needless to say, all the reserves were used up. There was an urgent need to find an alternative mechanism because of the active hurricane seasons that we are experiencing.”