The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An investigation into whether Bahamas Power & Light’s (BPL) 2022-2023 fuel charge hikes, which soared by 163 percent in just eight months, were legal has been delayed until this year.

The Utilities Regulation and Competition Authority (URCA), the energy industry regulator, in its just-released 2025 annual plan revealed it had to “re-bid” the contract for a third-party consultancy to carry out this probe because the costs involved exceeded the budget it had allocated for this task.

Listing the review and audit of BPL’s fuel tariff at the top of its 11 energy sector-related projects for the New Year, URCA said: “BPL announced a fuel cost recovery plan in October 2022. The project aims to determine if the fuel charge complies with the law and regulatory frameworks.

“The project addresses URCA’s mandate to ensure efficiently incurred costs, consumer protection and efficient operation. In 2024, proposals were requested for a consultant to carry out the audit. The bids received exceeded the budget. The scope was adjusted, and the project was rebid. It is scheduled to be completed in 2025.”

The “adjusted” scope was not detailed, and no mention was made of whether the contract was awarded and to whom. However, Bahamian businesses and households alike are likely to be keen to know why they were burdened by such excessive charges for at least a 17-month period from October 2022 to February 2024 as BPL’s ‘glide path’ strategy sought to regain what was described as ‘under-recovered’ fuel costs.

Tribune Business reported at the time that the BPL ‘glide path initiative violated the law and accompanying regulations in at least two instances. In the run-up to the ‘glide path’s’ implementation, the state-owned energy monopoly seemingly breached regulations introduced in 2020 that mandated it pass 100 percent of incurred fuel costs on to consumers via fuel charge portion of their bill.

For the period from November 2021 to October 2022, BPL seemingly failed to do this by keeping its fuel tariff at a constant 10.5 cents per kilowatt hour (KWh) even though its fuel hedge was unwinding because the newly-elected Davis administration had elected not to carry out the trades required to source more low-cost oil/fuel to support this price. As the hedge unwound, BPL’s rising fuel costs were not passed to customers.

And, in the second instance, several sources suggested there was no legal or lawful basis for BPL to segment clients into two groups based on whether they consumed less or more than 800 kilowatt hours per month and charge them different fuel tariffs based on this. They explained that the law and regulations only allowed BPL to charge the same rate for all customers on the fuel charge portion of the bill.

It remains to be seen whether URCA’s promised review will be completed and ever made public. Both BPL and the Government are likely to be less eager for its publication not least because it will revive memories of ruinous energy costs for many as a result of the soaring fuel charge, which resulted from the failure to support the hedge and the Prime Minister’s decision to hold the tariff at 10.5 cents when it was not supported.

Elsewhere, URCA said it was ready to review a new BPL tariff application should one be submitted in 2025. The Electricity Act requires that this be done by 2027 at the latest, it added, with the regulator also working with the Ministry of Energy and Transport to revise the National Energy Policy. The upgrade will last for five years until 2030 as the new law requires that it be reviewed every five years.

And, besides a focus on energy efficiency, URCA plans to “conduct a review of BPL’s consumer protection plan to ensure it is fit for purpose and amend where necessary. Similarly, the contracts signed between BPL and its customers should be reviewed to ensure they are fair and fit for purpose. This project commenced in 2024 and is ongoing”.

The regulator, adding that it was overseeing the preparation of consumer protection plans for all public electricity supplier licensees, the main one of which is BPL, said some entities - which it did not name - were struggling to understand their customer obligations and to prepare a plan.

“The objective is to ensure that the consumer protection plans are in place for all [licensees] and that they comply with the Electricity Act’s section 16. The project commenced in 2024. URCA found that several licensees required assistance in understanding their obligations and preparing a plan. The project is ongoing,” URCA added.

As for the communications sector, URCA said its 2025 priorities will include a regulatory framework to support the roll-out of fifth generation (5G) mobile technology throughout The Bahamas; management of the Communications Act licence fee reduction to incentivise operators to invest in their network infrastructure; and evaluating the creation of a fund to support universal customer access to services.

“URCA will facilitate and manage the Communications Licence Fee reduction mechanism aimed at encouraging licensees to invest in new technologies and expand their networks to underserved areas, as well as to regions that are economically challenging to serve,” URCA added.

“In addition, to promote investment in new technologies, URCA will implement a regulatory framework to support the rollout of 5G services across The Bahamas and will regularise and codify the licensing framework for satellite-based service providers.

“Efforts to bridge the digital divide by enhancing access to basic communication services will proceed to the next phase, which involves reviewing the Universal Service Obligations (USO) and evaluating the potential advantages of establishing a Universal Services Fund (USF).”

As to the latter objective, URCA added: “This.. addresses the inequities in access to basic communications services in The Bahamas. This is in recognition of the importance of electronic communications services as a crucial enabler for participation in the digital economy and society.

“URCA is in the process of conducting a comprehensive nationwide assessment, which will inform the basis of this consultation. It is expected that after consultation, URCA will determine the details of the USO implementation and access to the USF. As there are multiple components, URCA may consider it appropriate to conduct more than one consultation exercise.”

Tying the 5G roll-out’s efficiency to infrastructure sharing, URCA added: “During URCA’s consultation on the road map to enable 5G deployment in The Bahamas, the importance of infrastructure sharing was emphasised as a critical element for the effective deployment of electronic communications networks and services.

“Several respondents to the consultation underscored that infrastructure sharing is vital for reducing deployment costs, enhancing network efficiency and promoting competition, which in turn will help expand access to advanced electronic communications services such as 5G.

“URCA also recognises the need to review the existing infrastructure sharing regulations in light of the passage of time and the continued development of the electronic communications sector. URCA considers that this review will ensure that the regulations remain relevant and effective in addressing the evolving demands of consumers while facilitating the deployment of 5G and other technological advancements.”