The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Grand Bahama Power Company was yesterday urged to provide “greater disclosure” so consumers can have a better understanding of the justification for its proposed three-year rate structure.

James Carey, Grand Bahama Chamber of Commerce president, told Tribune Business it was critical that businesses and residents have a full appreciation of the utility’s financial performance and whether it has consistently been enduring annual losses given that it wants customers to finance its five-year, $76.6m capital investment plan via rate hikes.

He added that Grand Bahama could “easily absorb” the new rate structure, which calls for a maximum increase in all-in electricity costs of between 4.05 percent and 4.52 percent in 2026 compared to 2023’s rates, if it becomes “a boom town” but, in the economy’s present condition, it could represent a further setback.

Questioning why GB Power seems to be 100 percent reliant on its customers to finance capital improvements, as opposed to using its retained earnings and financing from its 100 percent owner, Emera, the GB Chamber chief told this newspaper: “We just need disclosure. We need to understand.

“If they’re losing a lot of money, we need the electricity and appreciate that this [the rate structure] is something that has to happen. But we also need to see what the outflow is.” The “outflow” refers to the dividends that Emera, the Canadian-owned utility giant, may have been taking out of GB Power in recent years.

None of this has been disclosed because GB Power is now a private company, no longer a publicly-traded one. Mr Carey also voiced misgivings about the utility relying so heavily on its customer base for capital investment financing, adding: “If it’s capital expenditure that they’re asking the customer to pay for, that becomes an issue.

“The returns, I’m sure, are not what they’d like it to be. In an area of New Providence that’s fairly populated, for example, you have a tremendous number of customers connecting into the grid. In Freeport, you can have power supply going into an area where there are only a couple of people.

“The Power Company is still having to provide these energised lines throughout the whole area. I have to say it’s not cost effective for them, and maybe the returns aren’t as rapid as they’d like them to be. But it’s one thing going into business. I’m in business myself. The returns are not what I’d like them to be, but it’s one of those things you try to improve and grow and participate in the growth.”

Asked whether Grand Bahama’s economy can bear what GB Power is proposing, Mr Carey told Tribune Business: “We can absorb it easily if we can get the economy moving in Freeport. If it’s going to stay as it is, no, but Freeport becoming a boom town, of course, we can easily afford it. But with so many business houses struggling and being marginal it’s not really conducive at this point in time.”

Besides the 6.32 percent base rate increase, which has been the focus of political and public protest, GB Power’s tariff application for 2025-2027 is also seeking to “transfer the charge associated with the PharmaChem shutdown” to its rates.

What this means, and the implications for consumers, is not explained but PharmaChem - which went into Supreme Court-supervised liquidation earlier this year - was GB Power’s largest customer accounting for 5 percent of total load demand.

Documents released by the Grand Bahama Port Authority (GBPA), in its capacity as GB Power’s regulator and which would have to approve any tariff increase, affirm that the storm recovery charges related to Hurricanes Matthew and Dorian, which added around one cent per kilowatt hour (KWh) to customer bills, will fall away in 2024 and 2026, respectively.

However, GB Power is now seeking what it terms an “additional regulatory asset recovery” via its fuel charge “to catch up on amortisations that were suspended after Hurricane Matthew” to ease the financial burden on long-suffering businesses and residents.

This will add 0.5 cents to per KWh to consumer bills in 2025, it was revealed yesterday, and one cent n 2026 and 2027. As a result, even with the benefits of hedging that has locked in the price that GB Power will pay for much of its fuel, the utility is predicting that the fuel charge consumers will pay will increase from 12.44 cents per KWh in 2025 to 13.83 cents in 2026 and then to 14.39 cents in 2027.

As to what this means for consumers, the data released yesterday projects that - despite the 6.32 percent base rate increase - residential consumers who use less than 600 KWh per month will see a modest $1 reduction in their all-in total monthly electricity costs in 2025 when compared to current rates.

However, residential consumers using above 600 KWh per month are forecast to see a slight increase in their monthly bill of $1. And commercial customers using from 1,000 KWh per month to 50,000 KWh per month will see their all-in cost jump by between $3.10 to $67.97, or 0.79 percent to 0.37 percent, based on GB Power’s submission.

While estimates for commercial customers will vary based on their specific demand, GB Power’s estimates showed that all classes of customers - from the smallest residential user to the large industrials - will see their total monthly energy costs rise in 2026. The extent of the increase will range from $2.64 to $803.91 (largest users), representing a rise of between 4.05 percent and 4.52 percent in percentage terms.

GB Power, using current rates and fuel charges as the base for its calculations, then forecast that the all-in electricity cost for 2027 will drop compared to 2026 although prices will still be slightly higher than those seen next year. It is also targeting an increase in average base rate revenue from $269.9m in 2023 to $277.5m over the next three-year period - a rise of $7.6m.

GB Power is forecasting that a 10 percent increase in electricity sales over the three-year period through end-2027, calculated in mega watt (mWh) hours, will help it to achieve this base rate increase. Sales are forecast to jump from 286,431 mWh in 2023 to 315,177 mWh driven by increases in all GB Power’s major customer categories - residential, commercial and general service/industrial.

Among the key investments that the tariff increase will finance are a $3m expansion of GB Power’s sub-station three next year, which the utility touted will “ensure system reliability in a critical area that is experiencing growth”.

What was termed “major maintenance” at GB Power’s generation plants, worth $2.8m in 2025 and $2.6m in 2027, is required “to ensure plant reliability and availability”, while a collective $9m investment in battery energy storage systems (BESS) is needed to support the utility’s solar power drive.

“These investments increase the availability of solar power to days and times when power is required, and the solar projects are not able to produce due to weather and/or time of day issues,” it was stated.

GB Power plans to make some $13.5m worth of capital investments in 2025, followed by $16.3m in 2026 and $22.9m in 2027. That totals $52.7m across the three years covered by the present tariff proposal, with a further $11.9m and $12m planned for 2028 and 2029, respectively.