The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Grand Bahama Power Company’s top executive yesterday said he believes it has made sufficient reliability improvements for regulators to restart their review of its proposed 6.3 percent base rate increase.

Dave McGregor told Tribune Business that the island’s sole electricity supplier has “shored up” its electricity generation to such an extent that the Grand Bahama Port Authority (GBPA) would be justified in restarting its analysis as he promised residents and businesses “we are taking bold steps to rebuild your trust” following frequent summer load shedding and outages.

The GBPA, which acts as GB Power’s regulator, suspended consideration of a base rate rise that was proposed to take effect from New Year’s Day 2025 due to the latter’s well-publicised service challenges. However, Mr McGregor said the utility hopes to meet with GBPA executives soon to further update them on its progress and feels it can make the case for the review’s restart.

“They haven’t announced it has resumed,” he told this newspaper of the GBPA’s position. “We’re hoping to meet with them shortly and review our reliability, particularly over the last couple of months, and see what else we might need to do to ensure they have trust in our plans. We’re hoping to meet with them shortly to see where we’re at in terms of the resumption of the review of the rate application.”

Asked whether GB Power’s improved service reliability since early October is strong enough to merit the regulator restarting its review, Mr McGregor replied: “I would say so. We have shored up reliability with temporary generation. We have a very robust maintenance plan going forward. We have the original equipment manufacturer engaged.

“I would say so. The head of the Chamber of Commerce in Grand Bahama commended us on the improvement in reliability that has taken place over the last month-and-a-half. The feeling is reliability is much better... and it will continue to be so. I would say we’re in a position to resume.”

That may not be what many Grand Bahama residents and businesses want to hear given the fears about a further increase in energy costs and what it will mean for their finances. Tribune Business previously reported that GB Power’s frequent load shedding and outages, which caused the most disruptive summer for many years, stemmed from unexpected mechanical failures on key generation units that took time to fix.

However, Mr McGregor and other GB Power executives yesterday met with the island’s private sector and other stakeholders to reiterate that the proposed base rate increase will be offset for many customers by projected reduction’s in the fuel charge component of their bill. As a result, the all-in cost or total bill will not rise for most.

“We took the opportunity to remind people that have not really heard the message before,” Mr McGregor told Tribune Business of the impact on all-in electricity costs. “I don’t think that message has landed, and it hasn’t landed.

“We need to make sure people understand that when they are paying their electricity bill they are paying a fixed portion that covers the [utility’s] capital and operating costs, and a fuel portion that does vary slightly from time to time. It’s now in the 12-14 cent range.

“Together, although the base rate needs to go up, in our view the fuel rate will be coming down so the net effect is to cancel them out... but we understand no one wants to see an increase in their bill ever.”

Mr McGregor and his fellow executives said the financial boost provided by the rate increase is “critical” to enabling GB Power to funding $53m worth of capital investments over the next three years that are intended to make energy more affordable, reliable and sustainable for Grand Bahama businesses and residents alike.

If the proposed rate adjustment is not implemented in full, or at all, he warned that GB Power would then have to “prioritise” which projects to undertake and “defer” others to a later date. “It is critical,” he added. “That is where the funding for those investments comes from. It all comes from customers at the end of the day. That’s how it works.

“We’re a cost of service utility. Our base rate covers operating costs and capital investments, and fuel is the other half of the bill. In fact, one of our customers asked what if we don’t get all of what we asked for. Our answer is we have to look at those investments and prioritise them. Some will get done, and others will get deferred.”

Of the $53m in targeted capital investments, Mr McGregor said 55 percent of this sum will be allocated to grid modernisation; substations; protection and control; and battery storage. Of the remainder, one-quarter or 25 percent is planned to go on energy Infrastructure such as generation, engine overhauls, capital spares and upgrades, with the final 20 percent “sustaining capital” for facilities, IT and customer service enhancements.

The GB Power chief acknowledged that the utility and its 100 percent Canadian owner, Emera, must work to regain consumer confidence following the summer outages and load shedding. “Over the past months you have faced disruption caused by generation shortfalls,” he told attendees at yesterday’s event.

“While we have worked diligently to address these issues we do understand that this has not been enough. Today, I want to assure you that we are taking bold steps to rebuild your trust and deliver more reliable and affordable power infrastructure.”

Besides securing additional generation capacity before summer 2025 to ensure there is no repeat of this year’s events, Mr McGregor added that GB Power is also investing in a “mobile sub-station” to improve grid redundancy, reliability and overall supply. 

And, alongside investments in battery energy storage systems (BESS) to better integrate renewable energy and ensure the grid can meet night-time demand, GB Power is also investing in “critical spare parts and maintenance” to ensure its generation units work optimally and overhauls are properly scheduled such that they do not disrupt the grid.

Nicole Godbout, GB Power’s vice-president of people and risk, reiterated that the proposed base rate change will be largely offset by a lowering of fuel costs that make up around 47 percent of the overall electricity bill. “The fuel charge is expected to reduce over the next three years such that the base rate increase is largely offset by the reduction in fuel,” she said.

“We have carefully structured this adjustment to minimise the impact on consumers, thus making it more affordable.” She added that, if projected fuel prices materialise, GB Power’s residential consumers will seen “an overall rate reduction of 0.2 percent to 1 percent” over the three years between 2025 and 2027.

Commercial and industrial customers, with the fuel costs factored in, “are expected to experience and overall increase of between 1.2 percent to 1.6 percent”, while large general service clients will see no overall impact in their total bills and large industrials will see “a slight decrease of less than 1 percent; about 0.2 percent”.