The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

Consultants are being sought to conduct an “independent” study on whether Bahamas Power & Light’s (BPL) base tariff should be increased, it was revealed yesterday.

Toni Seymour, BPL’s chief operating officer, told the Exuma Business Outlook conference that the Government’s project execution unit (PEU) recently released a request for proposal (RFP) seeking bids from consultants to conduct such a review.

She added that BPL’s base tariff has not been altered since 2010. Separate and apart from the fuel charge, the base tariff accounts for around 50 percent of customer bills and is the portion from which BPL covers its operational expenses, finances investments and capital upgrades, generates its cash flow and, supposedly, generates its profits.

Though a monopoly provider, it has long been thought that BPL is selling electricity to consumers ‘below cost’ and is unable to cover all its operating expenses. Ms Seymour yesterday said BPL’s rates are “comparatively lower” than many other energy providers in the region for commercial customers.

“The base rate that you see on your electricity bill is what we use to fund our operational expenses. Therefore, we have to look for ways to streamline our operations to realise savings,” she added.

“We look at things like centralising some of our key functions, and streamlining our operations to work more efficiently. As an example, when we seek to purchase new units, we look at what exists in our network so that we can use these economies of scale to impact purchasing power.”

Ms Seymour continued: “BPL’s tariff is what is collected to run the operation as well as fund advancement. We are well overdue for a tariff review, and the Government of the Bahamas’ project execution unit recently released an RFP for an independent tariff study. A tariff redesign is necessary to ensure that we can incorporate different rate classes to meet our present and future needs.”

The new tariff study will examine both residential rates and commercial rates based on the type of operation, where it is expected smaller ‘Mom and Pop’ stores will have their rates adjusted to fit their scale of operation. “So, in some instances, a tariff study could actually drive down the rate of electricity for some of our end users,” she said.

BPL is also aiming to finally implement Advanced Metering Infrastructure (AMI), and move towards pre-paid metering so customers can have better control over their energy usage.

Ms Seymour said: “Efficiency is one of the primary drivers of affordability as a utility and consumer. When it comes to the former, BPL must look at all aspects of its operations, generation being chief among them.

“The most obvious answer to bolstering BPL’s efficiency is the procurement of new assets that operate on cleaner fuels and use less fuel to create electricity. It is BPL’s plan to incrementally upgrade plants across the country, including to be able to meet demand growth and leverage more environmentally-friendly technologies.”

She continued: “New generation, particularly those non-reliant on fossil fuels, typically have a longer life expectancy and require less maintenance and downtime.

“From a financial perspective, a solar plant, although requiring higher up-front costs, can last two times longer than a traditional plant, and one Mega Watt (MW) produced from renewable energy could result in an annual fuel cost savings of approximately $400,000 based on fuel costs today. If we were to install a 4 MW solar plant in Exuma, with battery storage, savings alone would be around $1.6m.”