The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Opposition’s leader yesterday renewed calls for regulators to explain why Bahamas Power & Light (BPL) had “made the case” for an up to 163 percent hike in its fuel charge amid concerns they failed in their duty to protect consumers.

Michael Pintard told Tribune Business that the Utilities Regulation and Competition Authority (URCA) must publicly disclose the “comprehensive review” that led it to conclude BPL’s fuel charge hikes were justified amid growing outrage from Bahamian households and businesses over the size of the increase in their summer light bills.

Urging the regulator “not to permit” policymakers and politicians to interfere with its duties, he added that the Bahamian people are relying on URCA to be the “watchdog” that holds the likes of BPL, the Government and electronic communications providers to account. The Free National Movement (FNM) leader, though, said he will let the public decide whether URCA has upheld its mandate to protect consumers in this particular instance.

“URCA is an extremely important body for the Bahamian people, and URCA should be careful not to permit policymakers to impact their conduct and discharge of their duties,” Mr Pintard told this newspaper. “They should publish their report and address a number of concerns we have raised earlier and which have not been addressed.

“A failure to hold the Government to account to explain the rationale for their decision makes them part and parcel of the group that assisted the Government in making this ill-advised decision. The public is relying on URCA to be the watchdog, to be the agency that holds the corporation [BPL] and, by extension, the Government accountable for the decisions they made that affect the livelihoods of various businesses and the quality of life of citizens.

“URCA has to release the report, and explain why it gave the Government and BPL permission to proceed [with the fuel charge hikes] when all the facts in the public domain did not support URCA’s view.” Asked whether URCA has failed in its duty to protect the interests of consumers, Mr Pintard replied: “Clearly that is implied in all that is happening. I’ll let the public come to that conclusion themselves. I don’t need to state that.”

URCA, in responding to public complaints over sky-high light bills as a result of BPL’s fuel charge hike, said on Wednesday: “URCA considers electricity a basic necessity that should be affordable and remains concerned about the impact of high electricity bills on BPL’s customers and the economy.”

Yet, as BPL’s regulator, it late last year approved the very strategy and actions that has made electricity increasingly unaffordable for all. “As the regulator for the country’s electricity sector, URCA conducted a comprehensive review of BPL’s fuel charge increase proposal. At the conclusion of that review, URCA determined that it is satisfied that BPL has made an adequate case for the rate increases outlined in its press statement dated October 4, 2022,” URCA said.

Seeking to soften the blow from its verdict, URCA promised to undertake ongoing monitoring and reviews of BPL’s fuel charge during 2023 to ensure the utility is operating efficiently and levying the correct charges on customers.

“The regulator notes that BPL’s justification for the changes to the fuel charge is based on conditions that are likely to change,” URCA added. “Therefore, it is URCA’s intent to revisit that matter to ensure that BPL is operating efficiently and charging customers appropriately. URCA has advised its licensee (BPL) of its intent to review its fuel charge again during the projected glide path fuel charge recovery period, and it will make public notice of the same as necessary.”

URCA has never disclosed the full analysis, or review, that it conducted to justify its conclusion that BPL fuel charge hikes of up to 163 percent were warranted. And the timing of its review, and news release, was more than one month after BPL had already begun to implement the phased increases.

Mr Pintard yesterday reiterated that URCA had failed to address whether the Davis administration had broken the law by providing funding, either via a loan or subsidy, to BPL to enable it to keep the fuel charge at an artificially-low 10.5 cents per kilowatt hour (KWh) between late 2021 and October 2022 even though the utility was paying a far higher price for its fuel because the Government had not executed the trades/purchases needed to support the hedging strategy.

The repayment of that funding, and eliminating prior fuel cost under-recovery, is why Bahamians are now paying such steep prices for electricity. URCA has also failed to address questions of whether the Government, and BPL, were in violation of the law - in particular the Bahamas Electricity Corporation (Amendment) Regulations 2020 - which were enacted to facilitate the state-owned energy monopoly’s fuel hedging initiative.

These required BPL to pass 100 percent of its fuel costs on to consumers, but the present bills and prior fuel charge under-recover suggest this did not happen between late 2021 and October. And Mr Pintard yesterday called on URCA and BPL to explain why they are so confident electricity rates have peaked, while asking them to forecast what the fuel charge will ultimately decline to.

“In recent discussions, BPL confirmed that fuel charges have reached their peak and customers can expect lower rates moving forward,” URCA said in its Wednesday statement. “The company has confirmed the fuel charge will decline this month for many consumers and will be reflected in those consumers’ electricity bills next month.”

However, any decline in consumer bills is unlikely to be significant in the near-term. While it is correct that BPL’s fuel charge peaked at 27.6 cents per kilowatt hour (kWh) over the three-months between June 1 and August 31, 2023, it will only fall slightly - to 25 cents - between September and November for consumers using more than 800 kWh, before falling further to 18 cents between December 1, 2023, and February 28, 2024.

“BPL’s glide path strategy was designed to slowly increase the fuel charge to a peak this summer and then decrease the fuel charge continuously through the end of February 2024. By March 2024, BPL is expected to have paid off its outstanding fuel debt. This means that, as of March 2024, bills are expected to only reflect the actual cost of fuel used in supplying consumers,” URCA continued.

“At that point, provided the market price of fuel remains the same, or decreases, the charge for fuel will naturally decrease. Hence, consumers will receive a lower bill for the same amount of consumption.” However, the actual fuel charges incurred between now and March 2024 will also depend on international oil prices, and in the meantime there will be no relief for Bahamian households and businesses.