The Tribune

By Fay Simmons

Tribune Business Reporter

jsimmons@tribunemedia.net

A Cabinet minister yesterday urged the Opposition to stop “beating a dead horse” over Bahamas Power & Light’s (BPL) fuel hedging strategy and summer’s sky-high light bills.

Jobeth Coleby-Davis, minister of transport and energy, hit out in the House of Assembly after Michael Pintard, the Opposition’s leader, again accused the Davis administration of causing Bahamian households and businesses of being burdened with soaring electricity costs as a result of its decision not to execute the trades that would have secured more cut-price fuel for BPL.

While giving his contribution on the Consumer Protection Bill debate, Mr Pintard said the high light bills were never “inevitable”. He added: “Every one of us who’s using BPL…the cost of electricity in the Commonwealth of the Bahamas for consumers is entirely too high. And, of course, those that are serviced by BPL, it is unnecessarily high.

“There is a narrative that this administration has been seeking to sear into the public’s mind that it would be a dereliction of duty, as the Opposition, to stand idly by and permit them to do so.

“Their simple narrative is that the dramatic increase in electricity costs was inevitable, given all that was happening on the international market and, of course, they use the Russia/Ukraine war and other contributing factors as an explanation but it is simply untrue. It was not inevitable.”

Mr Pintard accused both the Minnis and Davis administrations of making “fundamental errors relative to the management of BPL”, but maintained that it was the decision to not support the fuel hedge that led to the increase in electricity costs.

He said: “This administration has made some fundamental errors relative to the management of BPL and they’re not alone. The Free National Movement has made mistakes in the past.

“But today, the 27.6 cents per kilowatt hour [fuel charge] is a result of the Davis/Sears decision in large measure to reject good advice that they got to claim not to have seen, eventually accepted that they have seen, but rejected. They refused to keep in place a hedge programme.”

Mrs Coleby Davis countered that the report by Shevonn Cambridge, BPL’s current chief executive, on the utility’s ‘Station A’ power plant at Clifton Pier showed the Minnis administration made a “bad decision” and that fuel hedging would not have prevented a “domino effect” resulting from these poor choices.

She said: “We are basing our information off the facts as they are presented in the report that comes specifically from BPL. So we are not creating a narrative for the Bahamian people. We have disclosed to the Bahamian people with supporting documents and, at the end of the day, the report makes clear what is the end result of a bad decision that was made by the previous administration.

“No hedging that they keep beating a dead horse about could fix when you have already made a bad decision. There is a domino effect that comes as a result of that decision.”

Mrs Coleby-Davis added that hedging is based on the numbers presented in a budget, and its benefits are reduced or eliminated if these targets are not met. “Let’s start the narrative and a story from what transpired, and I will correct every time you make that comment, because you cannot depend on hedging,” she said.

“If I start hedging, I give them a budget. I based my budget on the numbers that I’m seeing. So I expect my returns would be based on the numbers I present them. That’s what you hedge with. You had what you expect, and [if] your estimate is right..... you are saying I’m in the money based on these numbers. If your budget after the fact doesn’t align with what you presented, your numbers are off and you do not benefit.”

Mr Pintard replied that the cost of electricity “skyrocketed” under the Davis administration. He said: “When this administration came to power, it was expected that the cost of electricity per kilowatt hour was around 10.5 cents and could oscillate up to 11.5 cents maximum. This administration, after they ended the hedge, predicted themselves that they were heading to 27.6 cents.

“So all of the talk that has been run on by this particular administration, the reality is the cost of electricity skyrocketed under them as predicted by them....The hedge programme, a proven programme in a number of jurisdictions, inclusive of Grand Bahama, we find interesting and disingenuous. Here’s an administration criticising a programme saying: ‘Oh, it could never work…but the very programme…”

Mrs Coleby-Davis interjected and said hedging can be risky. She argued that it was not “workable” because of the fuel mix, and maintained that the returns were not seen due to “poor mismanagement” by the Minnis administration. The minister also chastised Mr Pintard, saying: “You don’t understand hedging.

“I’m not going to allow a misrepresentation of this administration,” she added. “I know what hedging does. Hedging also comes with a risk. Nobody is saying hedging is not workable. I am saying given the circumstances of what was presented in the report, and the fact that they had to deal with a fuel mix that they did not calculate for in their budget, it at the time was not workable.

“The returns was not appreciated in their budget after the fact because of what they had to spend because of poor mismanagement on [the Minnis] administration’s part. So please stop saying this government do not understand hedging. You don’t understand hedging at the time that they thought it would work. The previous administration don’t understand it.”