The Tribune

• Utility adds ‘storm recovery’ charge from January 1

• No warning; firm relying on October announcement

• Timing blasted; economy ‘in worst state it’s ever been’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Grand Bahama residents and businesses were yesterday stunned to learn that the island’s monopoly electricity provider has now moved to recover $15.6m in Dorian restoration costs from them.

Multiple contacts only became aware that Grand Bahama Power Company has started to impose its Storm Recovery and Stabilisation charge on their bills when informed by Tribune Business, with the timing sparking a backlash over concerns that it represents a further burden with the island’s economy “in the worst state it’s ever been”.

The additional charge, which took effect from New Year’s day, was disclosed in the 2020 annual financial results of GB Power’s 100 percent owner, the Canadian utility giant, Emera. They revealed: “On September 1, 2019, Hurricane Dorian struck Grand Bahama causing significant damage across the island.

“In January 2020, the Grand Bahama Port Authority (GBPA) approved the recovery of approximately $15m of restoration costs related to GB Power’s self-insured assets. These costs were recorded as a regulatory asset and recovery began January 1, 2021.”

A GB Power spokesperson, confirming that consumers will now see the extra charge on their bills, said its introduction had been delayed three times last year to enable the island’s businesses and residents to better recover from the twin blows inflicted by Hurricane Dorian and COVID-19.

While no recent announcement had been made, the spokesperson defended this by arguing that advance warning of the January 1 implementation date was given by both GB Power and its regulator, the GBPA, when they unveiled the third postponement in late September 2020.

“There was a formal announcement made by the regulator back in October [September], informing customers it had been delayed again,” the spokesperson said. “We realise the importance of working with customers, which is why we delayed the storm recovery charge three times over the course of the pandemic.

“It would have taken effect on January 1, and that information was shared with customers in October/November last year, as it is being reflected in their monthly bill.” GB Power had initially wanted to introduce the extra charge in April 2020, just after COVID-19 hit, but it first postponed the start date to August, then to October, and finally January 1, in response to pushback amid the pandemic fall-out.

GB Power and the 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 blow and any consumer push back/fall-out.

The utility has asserted that it represents the fairest and most transparent way to finance the rebuilding of transmission and distribution infrastructure that was devastated by Dorian, and for which it is unable to obtain insurance for. And GB Power’s customers will themselves be the ones who benefit from the restoration of electricity service and a more robust network.

That, though, is unlikely to soften then impact for Grand Bahama’s hard-pressed businesses and consumers who are already grappling with the devastating impact from COVID-19 - especially since no formal announcement of the new charge was made to coincide with its January 1 introduction.

A Freeport attorney, speaking on condition of anonymity, replied when informed by this newspaper: “Oh, they did? They quickly passed that on. That’s typical of them. I don’t expect anything better but I’m surprised they slipped that in and nobody picked up on it. It’s very unusual that they were able to sneak that charge in and nobody picked up on it. I wonder what the fall-out will be?”

Pastor Eddie Victor, president of the Coalition of Concerned Citizens (CCC) and a long-time GB Power critic, told Tribune Business that its opposition to the extra charge has “not changed one bit” after revealing that he, too, had not picked up its inclusion in his own electricity bill.

Arguing that Emera and its shareholders, rather than GB Power’s customers, should take responsibility for financing network restoration, Pastor Victor said: “The Coalition does not believe this cost should be put at all on any customer on Grand Bahama. Frankly, the economy cannot bear it.

“We’re still not seeing the full fall-out from the COVID-19 pandemic in Grand Bahama. On the ground, I estimate unemployment at 50 percent. Can you now imagine trying to extract more revenue from a destitute population. It doesn’t make any financial sense. All we’re seeing from the company is that it is determined to recover their costs from a destitute population despite the straits it’s in.”

He continued: “It’s going to implement a charge when the economy is in the worst state it’s ever been in, and we don’t know what the recovery process looks like. We don’t know when some hotels will open. We totally do not support it and we will be fighting against it. The people cannot take any more. We cannot take any more increase.

“The population is seeing increases from every sector, which means there’s less money in the economy and you are extracting off a destitute economy. How are we going to recover? It’s clear that the persons involved in this decision are not concerned about the businesses and citizens of this island.

“I’m struggling with paying my electricity bills, lawyers are struggling with their electricity bill, every sector on this island is struggling to pay its electricity bill, and this should not be the case.”

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

The utility also said the monthly amount paid by customers will depend on consumption, adding that the Storm Recovery and Stabilisation charge was standard global electricity practice for recovering costs associated with post-hurricane restoration.

Pointing out that no insurer will cover transmission and distribution (T&D) infrastructure in a hurricane belt, it added that a separate line item on bills was the fairest way to achieve this as it would prevent the utility from earning a profit on the recovery fee in non-storm years.

The GBPA, in its September 2020 statement, said the regulatory framework agreed with the Power Company allows the latter to recover its non-insured storm restoration costs via a levy spread over a five-year period.

“The Storm Recovery and Stabilisation charge, which allows the utility to recoup costs associated with storm restoration deemed reasonable by the GBPA, was initially approved for implementation on April 1, 2020,” said Karla McIntosh, the GBPA’s general legal counsel.

“However, with the onset of COVID-19 and two subsequent country-wide lockdowns, the charge was initially delayed to August 1, and then further to October 1, to help support residents during this challenging period.”

She added: “We understand that GB Power is allowed to recover reasonable restoration costs associated with significant weather events. Since the onset of COVID-19, we have been in consultation with the utility over the proposed timing for implementation of the storm charge, resulting in successive deferrals.

“Given the present state of the economy and the unexpected second wave and restrictive lockdowns, it is our regulatory obligation to consider the best interests of customers. We have worked with GB Power to further delay recovery of the $15.6m costs for Hurricane Dorian until January 1, 2021.”