The Tribune

By NEIL HARTNELL 

Tribune Business Editor 

nhartnell@tribunemedia.net

BAHAMAS Power & Light (BPL) has operated as “a power unto itself” with regulators failing to hold it and the Government accountable for unnecessary costs inflicted on the economy, the Opposition said yesterday.

Michael Pintard, the Opposition’s leader, told Tribune Business that the Utilities

Regulation and Competition Authority (URCA) had “not been as bullish as it should have been” in ensuring BPL meets its licence obligations and this was reflected in the audit findings that the regulator released yesterday.

The report, by third-party consultant Castalia, revealed that BPL was non-compliant with 13 legal and regulatory obligations set out in the public electricity supplier licence it has received from URCA.

Many of these relate to the timeliness of its financial and other reporting, but the report also noted the utility’s failure to submit annual five-year forecasts of projected generation and demand increases.

BPL was also found to have not submitted annual five-year capital investment plans, as required by its licence, or “forecast and plan for sufficient power generation”. The state-owned enterprise (SOE) also lacked a plan for developing the electricity system using the lowest-cost power generation options possible.

And, while URCA unveiled a seven-step road map for BPL to address multiple identified concerns, the regulator admitted it had failed to use its legally-mandated powers to review how the utility calculates the fuel costs that typically account for between 50-60 percent of customer bills.

The regulator’s plan, which in truth has likely been overtaken by events as the Government presses the accelerator on BPL and wider energy reform, involves a fuel audit and review of its consumer pass through charges “with the goal to minimise fuel costs” to Bahamian businesses and households.

“URCA has the legal power to assess how BPL manages fuel costs but has not done so in the past. The process will require close co-operation and information sharing,” URCA added. “Reducing fuel costs could require ensuring sector-wide stakeholder support and action, including from the Government.”

Another goal was a review of BPL’s base tariff, which is supposed to cover both its non-fuel costs and enable the energy monopoly to make a profit, so that it can start to build-up its own capital reserves instead of relying on “short-term government capital injection” for support. However, URCA conceded that the Government may take an “unfavourable” view of this if it calls for increased base tariffs and electricity costs.

“The Government may not have a favourable view of the study if the results are contrary to its interest” the regulator warned.

Mr Pintard, though, told Tribune Business that audit findings such as these confirmed that BPL’s performance and management had “gotten worse under this administration”.

Speaking directly to the report, he said: “It reflects that BPL is a power unto itself. It’s not been listening to URCA, and URCA has not been as bullish as it should have been in hold- ing them accountable.” The Opposition leader again pointed to URCA’s failure to reveal its rationale for backing BPL’s 2022-2023 ‘glide path’ recovery strategy that saw fuel charges spike 163 percent higher than they were in October 2022.

“We thought that URCA needed to offer a transparent explanation as to why they permitted the glide path,” Mr Pintard added. “We were not satisfied it was a compelling enough reason. We thought URCA had an obligation to address the issue of the Government’s $110m loan because it had a direct obligation to track the ‘over and under’ account and what costs should be passed through.”

The Government provided a $110m taxpayer loan to BPL to cover its fuel costs after it allowed the hedging strategy put in place by the Minnis administration to unravel. This loan was supposed to be repaid from monies generated by the ‘glide path’ recovery strategy.

“The $110m sought to circumvent or camouflage that it was a subsidy by the Government to BPL in a way that was not permitted by the law,” Mr Pintard added. Acknowledging that the Government may use the URCA audit findings to justify its BPL and wider energy reform strategy, Mr Pintard added there were several aspects of this process that it does not support.

“It does not justify the Government single-sourcing critical assets of the Bahamian people to various companies,” he added. Both the transmission and distribution deal with Bahamas Grid Company’s investors and its management firm, Island Grid, and the baseload generation contract being worked out with FOCOL Holdings’ Bahamas Utilities Companies appear not to have been subjected to competitive bidding.

Mr Pintard also queried whether Bahamas Grid Company and Island Grid have the necessary licences from URCA to operate in The Bahamas and carry out the work they plan. He added that the Government had already negotiated BPL’s restructuring and then retroactively amended the Electricity Act 2024 to facilitate the deal’s completion.

BPL union leaders, meanwhile, yesterday suggested the audit findings show the utility is commercially viable if it was allowed to collect outstanding debts due to it - especially the $89m owed by government entities and the entire public sector.

“Persons are owing near almost $100m and we’re not collecting it,” said Kyle Wilson, the Bahamas Electrical Workers Union president. “That almost tells you what the problem is with BPL. I’m trying to figure out how, then, would a third party come in, providing the same service for persons who are not paying.