The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Regulators have rejected a renewable energy provider’s argument that it should be exempted from requirements to obtain a licence under the Natural Gas Act because it will only use liquefied natural gas (LNG) to generate power from its own facilities.

Renugen Pro, which won the bid to supply Bahamas Power & Light (BPL) with solar and LNG-fuelled energy on Cat Island, San Salvador and Long Island via a power purchase agreement (PPA), argued that it should receive “a full exemption” from the Utilities Regulation and Competition Authority’s (URCA) licensing because it is not involved in the commercial sale of LNG and its activities fall outside the regulatory regime.

URCA, though, disagreed and determined that natural gas regulatory oversight is not concerned with solely economic issues but, also, health, safety standards and technical issues. As a result, it ruled that Renugen Pro should be subjected to its modified licence regime that “more appropriately balances” oversight and flexibility.

The regulator, in its ‘statement of results’ on the modified non-commercial or self-use natural gas licence, said the renewable energy provider had “advanced a broader position that its planned LNG facilities, forming part of an integrated electricity generation project, should be exempt from the requirement to obtain a licence” and instead be fully exempted from the Natural Gas Act’s licensing requirements.

“Renugen submitted that its LNG infrastructure should not be characterised as a commercial gas sector activity requiring full licensing. It explained that the facilities are ancillary to a captive electricity generation plant operating under a power purchase agreement (PPA) and therefore fall outside the intended regulatory scope of licensing provisions designed for market-facing gas activities,” URCA said of the company’s submissions.

“In support of this position, Renugen advanced several principal arguments. First, it emphasised that the LNG facilities are strictly captive and non-market in nature, as they will not supply, transport or trade gas to third parties, nor connect to any public gas network. Secondly, it contended that the imposition of full licensing requirements would be disproportionate, given that such requirements are designed for commercial terminal operators rather than integrated generation facilities.

“Thirdly, it highlighted the integrated and ancillary nature of the infrastructure, noting that it has no independent commercial function and operates solely in support of electricity generation. Finally, it submitted that granting an exemption would be consistent with broader policy objectives, including facilitating efficient investment, supporting lower-emission energy generation, and promoting reliable and cost-effective energy supply.”

URCA said Renugen Pro’s submission had thus raised “a broader question as to whether certain self-use activities should be exempt from licensing altogether pursuant to section 18 of the Natural Gas Act”.

It added: “URCA acknowledges the force of Renugen’s position that, in circumstances where LNG facilities are deployed solely on a captive, non-commercial, self-use basis, many of the economic and commercial regulatory provisions applicable to market-facing operators may not be appropriate.

“In particular, where an entity is not engaged in commercial importation, trading or supply of natural gas, the application of economic regulatory requirements designed for such activities may be disproportionate.

“However, URCA considers that the requirement for licensing under the Natural Gas Act extends beyond economic regulation. As the sector regulator, URCA’s statutory remit encompasses not only commercial and economic oversight, but also technical, operational, safety, health and environmental considerations,” the regulator added.

“These aspects of regulation are of fundamental importance irrespective of whether an activity is conducted on a commercial or self-use basis. Accordingly, URCA does not consider that a full exemption from licensing would be appropriate in circumstances where regulated infrastructure and activities remain within the scope of the Natural Gas Act.”

As a result, URCA ruled that its planned adjustments to the non-commercial or self-use natural gas licence were “a proportionate and appropriate regulatory response”. It added: “The modification provides a structured mechanism through which entities operating on a non-commercial, self-use basis may be subject to a tailored set of regulatory obligations, while remaining within the licensing framework.

“This approach ensures that core regulatory oversight, particularly in relation to safety, technical standards and environmental protection, is maintained. At the same time, the restriction operates to limit the scope of permitted activities, including by prohibiting engagement in commercial gas market activities. Consequently, regulatory measures which are specifically designed for commercial operators will not apply where they are not relevant to the nature of the restricted activity.

“In this way, the modification directly addresses the principal concern raised by Renugen, namely the imposition of disproportionate regulatory burdens while preserving the integrity of the statutory licensing regime,” URCA continued.

“URCA therefore considers that the adoption of the licence modification more appropriately balances the objectives of proportionality and effective regulation than a full exemption. It ensures that entities engaged in self-use activities are not subject to unnecessary economic regulation, while confirming that such entities remain subject to licensing and to the broader regulatory oversight required under the Natural Gas Act.”