The Tribune

By DENISE MAYCOCK

Tribune Freeport Reporter

dmaycock@tribunemedia.net

A FINAL decision on the electricity rate increase application proposed by the Grand Bahama Power Company will be made when the Grand Bahama Port Authority wraps up its 45-day public consultative process on December 31 – a week from now.

General counsel at GBPA Carla McIntosh said that the entity began the process on November 16, publishing a summary of the application on its website. The company has also engaged key stakeholders and the public by outlining a summary of the application.

“At the end of the process, GBPA will advise GBPC of its final decision,” she said. “A final decision will be made based on the process that is outlined in the regulatory framework and all the relevant information obtained during the consultative process, having regard to the totality of the process.”

Based on GBPC’s filing, the base rate is projected to increase by $4.8m per annum. According to the proposed filing, it puts total revenue requirement at $66.5m, compared to the requirement of $61.7m in 2018.

The Coalition of Concerned Citizens is opposed to the proposed rate increase in the base cost of electricity, claiming that the company has made large profits over the past several years. They believe that an increase should not be approved at this time because residents and businesses are still struggling to recover from the devastation of Hurricane Dorian and the COVID pandemic.

Ms McIntosh explained that GBPA realised it needed to strengthen the regulatory regime in 2013 after receiving complaints on the cost of power, unreliable power and lack of transparency.

In accordance with international best practises, Ms McIntosh said the framework not only provides an objective and transparent process for a fixed three-year rate setting, but it also establishes a regime of efficiency and customer service standards designed to secure greater levels of customer protection.

In the framework, GBPA outlines its expectations as regulators.

The attorney said GBPC is required to report quarterly to GBPA on customer service standards. She explained that in cases where the utility provider fails to satisfactorily meet established customer service metrics, customers must receive written communication and a subsequent credit on their account.

The power company is guided by established Customer Service Metrics.

When restoring power after a fault for a single customer, GBPC has 12 hours in which to resolve this issue after being reported.

In responding to customers complaints and billing and payment queries, Ms McIntosh said GBPC has 21 days in which to resolve these issues. And when connecting or transferring services, the power company has three working days. Reconnecting services after disconnection at the meter, must be resolved in one working day after payment of the bill.

Ms McIntosh said the framework is based on a cost analysis model whereby GBPC is required to set forth a rate application every three years for review and consideration.

In the rate application, GBPC must provide a five-year capital investment budget forecast, plans for their major operations, a detailed report of operating and maintenance expenses, amortisation and depreciation, a report on their financial cost of capital, and the cost of fuel.

Before a determination is made, Ms McIntosh said GBPA is required to perform certain obligations, including conducting a comprehensive review of the rate case application.

“Our initial review has been done. We are now engaging stakeholders to get their feedback, and once we get feedback, we will go back and have our second review,” she explained.

She noted that they will look at base rate revenue requirements. The rate includes the base rate and fuel charge cost.

Ms McIntosh explained that the base rate, which is set for a three-year period as part of the rate application, is the rate charged to customers that reflect all elements of the cost of GBPC to provide utility service with the exception of the cost of fuel. It involves operation and maintenance expenses, insurance expenses, depreciation expenses, amortisation of regulatory assets and return on capital.

The fuel cost, she said, is the cost associated with the resources employed to generate electricity by GBPA at its generating plant. This includes fuel oil, diesel fuel, energy lubricant, and any applicable expense, as well as cost associated with risk management and hedging activities.

“When we look at 2018, the total revenue requirement was $61.7m, and when we look at the proposed filing we see a total requirement of $66.5m. The main factor contributing to the $4.8m increase is the insurance expense and amortisation of regulatory assets,” Ms McIntosh explained.

In 2018, she noted that GBPC spent $2m on insurance premiums. “According to their filings, the premiums have increased to $4.3m, which is a $2.3m increase,” she added.

“Based on filings, this is as a result of the significant premium increase for electricity industry in the region for marked increases, and tropical storm and hurricane activity, and GBPC from claims paid to them from both hurricanes Matthew and Dorian.”

Ms McIntosh said it is important to note that not all assets of GBPC are insurable.