The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Grand Bahama Power Company’s top executive is lost for words over why most customers are ignoring his pledge that 75 percent of them will see lower bills under its new rate structure.

Dave McGregor, the electricity supplier’s president, and Caribbean chief operating officer for Emera, its 100 percent owner, told Tribune Business that all-in total energy costs will increase for just one-quarter of its customer base should the Grand Bahama Port Authority (GBPA) approve its 2025-2027 tariff proposal as is.

Confirming that this 25 percent are its corporate customers, which it has calculated will see a maximum 1 percent increase in their total energy costs, he reiterated that the proposed 6.3 percent base rate hike will be more than offset for three-quarters (primarily residential households) by reduced fuel costs stemming from GB Power’s hedging strategy which is now locked in through end-2027.

Mr McGregor, voicing disappointment at the knee-jerk political and public reaction that has zeroed in on the base rate, rather than all-in energy costs, contrasted the impact of GB Power’s plans with the between 15-45 percent rate hikes that Bahamas Power & Light (BPL) has imposed on its largest commercial customers in the rest of The Bahamas with effect from July 1.

“We need people to listen and understand,” the GB Power chief said. “You previously reported that the all-in impact for 75 percent of our customers was an overall decrease in their bills. That point doesn’t seem to have landed. We had FNM protests going on [last week], and PLP protests going on the previous week.

“It’s a base rate increase. Even for large industrials, it’s a 0.1 percent overall increase. Compare that to what BPL did to their large customers, increasing rates by between 20-40 percent for their highest users. I have no words. That’s OK. That’s the environment we live in. That’s Freeport, Grand Bahama. 

“I just hope that when people take the time to review that rate application, and the Port Authority is going to be doing a public consultation, they can look at the facts and data, people can look at the cost that needs to be recovered and look at what we’ve arranged to do for fuel for the last 12 years and into the future,” Mr McGregor added.

“That will allow overall bills to be lower for 75 percent of customers. Small commercial customers will see a 1 percent increase, large industrials a 0.1 percent increase.” GB Power’s three-year tariff proposal for the period 2025-2027, which has been submitted to the GBPA for its approval, would take effect from January 1, 2025, although it is unclear whether the 6.3 percent base rate hike will get the full go-ahead.

Mr McGregor, meanwhile, confirmed that GB Power’s one cent per kilowatt hour (KWh) storm recovery charge imposed following Hurricane Dorian is due to end in 2026. While “three to four months behind” in recovering the utility’s hurricane restoration costs from consumers, he added that a decision may be required on whether this eventually becomes a permanent feature in customer bills.

“When we had permission to implement that in 2021, we said it would be a five-year recovery of that hurricane debt,” the GB Power chief said. “The five years takes us to 2026. We’re a little behind schedule because, on a per kilowatt hour basis we haven’t sold as many kilowatt hours as we predicted.

“I would say we’re probably three to four months behind but we’ll stop collecting on that storm recovery in 2026. The decision the GBPA, as regulator of the Power Company needs to make, which we will give them an opportunity to make, is there’s a decision whether to continue to collect that one cent and put it into a storm reserve fund so the next time a storm comes we have a reserve fund to pay for recovery on an as needed basis.

“A decision can be given as ‘yes’ or ‘no’. That’s OK. The question is do we put money away for a rainy day or deal with it when it happens.” Mr McGregor’s comments directly linked the Dorian recovery under-performance to the lack of economic growth over the past two decades on Grand Bahama and reduction in GB Power’s customer base.

PharmaChem Technologies’ insolvency and closure in early 2024 cost GB Power 5 percent of its electricity demand, and Mr McGregor told Tribune Business: “What continues to stifle the island is lack of critical mass. If Grand Bahama continues to grow with new development and a higher population, electricity demand will grow and we will have more people sharing the burden of our fixed costs.

“What we want is more people paying less for energy rather than fewer people paying more. You then have fewer people sharing the burden of our fixed costs, and we have to get the economy moving. We’re all responsible for that: GB Power, the GBPA, the Government. 

“If we can build confidence, Grand Bahama has a strategic advantage with the Hawksbill Creek Agreement and its position. We just need a break on getting critical mass over the line and we can afford investment in new generation without burdening the customer with increased costs,” he added.

“We’ve had many false dawns in Grand Bahama. We’re all hopeful this one is not false.” Apart from Carnival’s $600m Celebration Key cruise port investment, the Grand Bahama Shipyard also recently signed a Heads of Agreement with the Government for its $650m dry docks.

Both projects, when completed and operational as well as during construction, will increase demand for GB Power’s electricity. Mr McGregor also pointed to Weller Development’s $250m Six Senses project, hopes for the Grand Lucayan’s sale and the long-anticipated redevelopment of Grand Bahama International Airport.

“All that spreads the burden of maintaining the electricity system,” Mr McGregor said, adding that GB Power was also looking forward to the “increased greening” of its network infrastructure through the addition of more solar energy capacity.