The Tribune

By FAY SIMMONS

Business Reporter

jsimmons@tribunemedia.net

REGULATORS yesterday again pledged to investigate Bahamas Power & Light’s (BPL) fuel charge and how this is calculated to ensure consumers are protected after last year’s up to 163 percent hikes.

Jonathan Hudson, the Utilities Regulation and Competition Authority’s director of utilities and energy, confirmed at a public hearing on its 2024 annual plan that the regulator is set to review BPL’s fuel tariff, how this is calculated it has affected consumers since 2021. URCA will also examine the methodology BPL is using to bill consumers and whether it is in compliance with regulations.

“Back in October 2022, BPL announced that it was going to be increasing its fuel charge through what they call a ‘glide path’ rate,” Mr Hudson said of the strategy that saw energy costs soar over the past 18 months.

“We reviewed that and, under the circumstances, we raised no objection to it but we committed to come back around and take a look at it once some time had passed. So back in October 2022, I think the rates were about 13 cents per kilowatt hour. They came to a peak of about 30 cents per kilowatt hour (KWh) about June of last year.

“So we’re going back to look at the methodology, how they’re calculating it, what supporting information they’re using, and whether or not that is in compliance with the regulations and the law.” According to BPL’s figures, the fuel charge was 10.5 cents per KWh in October 2022, rising to a peak of 27.6 cents per KWh last summer.

URCA came under fire from the opposition Free National Movement (FNM) and others amid accusations that, in not objecting to BPL’s ‘glide path’, it failed to live up to its legal mandate to protect consumers.

Mr Hudson said the review is about “consumer protection”, adding that the fuel costs passed directly on to consumers can be “volatile”. However, BPL consumers should pay “no more or no less” than the cost of the fuel the utility consumes.

He said: “It’s really to do with consumer protection. So the tariff that consumers pay is made up primarily of two parts - the base rate and the fuel charge.

The base rate consists of predictable, more fixed costs, while the fuel charge covers exactly that - the cost of fuel.

“For BPL that represents about 60 percent of their cost. Fuel costs can be very volatile. So that’s why it’s broken as a separate tariff and a direct pass through to the customer. So, in summary, the customer should pay no more or no less than the cost of fuel that was used in the generation.”

Mr Hudson said BPL asserted it had previously held back on passing fuel costs to consumers and needed the ‘glide path’ increases to recover these expenses, so URCA permitted it but now is investigating how BPL previously calculated these costs to determine if consumers were overcharged and how they can be “made whole”.

“So BPL proposed something,” Mr Hudson added. “It was it was forward looking in terms of its costs; to recover costs that they said they had held back, that they hadn’t passed on to the consumer previously. And they needed this increase in the fuel charge to recover that cost.

“So URCA is looking back historically at how they’ve actually determined what that charge is and whether that determination is correct, for example the formula used, and whether that cost was passed on properly to the consumer.

“If the consumer was overcharged then we have to look at how the consumer can be made whole. If the consumer was under-charged, I’m sure the consumer won’t complain.

“But it’s really sort of a review and auditing process to make sure that BPL acted within the regulations and the law in determining what that fuel charge is and in appropriately passing it on to the consumer.”

Mr Hudson said BPL’s consumer protection plan and consumer contract documents will also come under review this year. He explained that although BPL already has a consumer protection plan in place it will be reviewed to ensure it is fit for purpose.

He said complaints lodged with BPL are reviewed by URCA, which assesses how these are addressed and if the utility has been “incentivised to avoid that type of behaviour”.

Mr Hudson said: “Although BPL already has in place a consumer protection plan, we’re going back to make sure it’s fit for purpose.

“We have a corporate and consumer relations department who receives complaints.

“And we take note of those complaints.

“And, in doing so, we kind of marry that with what is in place in the consumer protection plan to make sure it’s fit for purpose that those complaints are addressed in a timely fashion or that the licensee has been incentivised to avoid that type of behaviour and not have the type of complaints - for example, in having appropriate power quality standards in place.”