GRAND Bahama Power Company (GBPC) says the $0.03 base rate increase set to be imposed on consumers under its new tariff structure will be offset by fuel savings resulting from efficiencies generated by its new $80 million West Sunrise plant.

Unveiling the new tariff structure, established in conjunction with its regulator, the Grand Bahama Port Authority (GBPA), the island's monopoly electricity provider pledged that this would bring more 'accountability and transparency' to its power rates.

Tony Lopez, the GBPC's chief financial officer, said: "We have been working with GBPA for months to develop a rate structure that would provide increased transparency for, and accountability to, our customers.

"The structure also gives the utility the opportunity to provide an appropriate rate of return on capital investments."

The new regulatory process requires the GBPC to submit a base rate application to the GBPA every three years. The rate plan application will comprise a business plan for the GBPC; a three-year financial projection detailing forecasted operating costs, depreciation and capital investments; and GBPC's five-year capital budget forecast. Further performance metrics will be implemented in January 2014.

Under the new rate structure, the GBPC's electricity rates will include a base rate and fuel charge mechanism (FCM) - similar to the Bahamas Electricity Corporation's (BEC) rate structure.

The base rate reflects the GBPC's operating expenses, depreciation of capital assets, and a return on capital investment. The FCM, which is the actual cost of fuel used to generate electricity, is a pass-through mechanism that generates no profit for the GBPC.

The power company, though, pledged that the new rate structure will not result in an increase to customers' total electricity rates.

Mr Lopez, in a statement, said the base rates will be increased by about $0.03, largely to cover the $80 million investment in the new West Sunrise plant.

However, he added that total rates will not increase because of the improved efficiency of the new West Sunrise Plant.

"The new tariff enables the company to make investments to improve reliability without impacting customer rates. Although customers will see a slight increase in their base rates in the new rate calculation, the efficiency of the new West Sunrise Plant has lowered the fuel charge portion, resulting in no increase to the all-in rate," the GBPC chief financial officer said.

He added that if fuel prices remained constant, on average customers should see a reduction in their electricity rates of approximately 1.5 cents per kWh (kilowatt hours)