By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Grand Bahama Power Company (GBPC) yesterday said it had saved consumers $1.5 million in 2014 through slashing system losses by 30 per cent, although its adoption of compressed natural gas (CNG) as an alternate fuel might not happen until “beyond 2018”.

The monopoly utility supplier, responding to Tribune Business’s e-mailed questions, said it improved its customer reliability by 55 per cent in 2014 when compared to the previous five-year average.

But, while touting its progress, Grand Bahama Power warned that investing in CNG as a fuel alternative was “now not in the best interest of our customers” due to the decline in global oil/fuel prices.

While it will still work to obtain the necessary CNG export permits from the US authorities, Grand Bahama Power said the timing for such an investment “would appear beyond 2018”.

The company was responding after a 2014 in which its net income year-over-year fell by 4.8 per cent, from $11.766 million to $11.204 million.

Grand Bahama Power told Tribune Business that the decline had been expected, due to “planned outages” that enabled it to improve network and infrastructure reliability.

This offset an increase in electricity sales volumes to Grand Bahama-based industrial companies, plus a reduction in technical and non-technical losses from its distribution system.

“In 2014, GBPC reduced system losses by 30 per cent, bringing our total system losses to 7 per cent overall. This reduction represents just under $1.5 million in fuel savings annually to our customer,” the company told Tribune Business.

“Technical losses relate to the normal operations of the utility, while non-technical losses relate to theft and other losses. We estimate that our technical losses are approximately 5 per cent and consistent with what we would expect for our system configuration. Non-technical losses represent approximately 2 per cent of total losses.”

When it came to alternative fuels to heavy fuel oil (HFO), Grand Bahama Power said it was assessing “multiple sources” of renewable and alternative energy, and remained committed to supply diversification.

Solar and biofuel energy are being examined along with CNG, but the utility told Tribune Business that current global economics were working against rapid adoption of the latter.

“CNG will be brought into the fuel portfolio of GBPC only when we are confident that there will be a direct benefit to our customers,” Grand Bahama Power said.

“With the recent drop in world market prices for heavy fuel oil (HFO), the decision to invest in CNG is now not in the best interest of our customers, since oil is cheaper.”

It added further: GBPC believes that this is short-term and, at some point in the future, the economics behind such an investment may improve such that CNG can be part of our fuel mix. We will continue with our process to get an export permit from the US.

“The decision to bring gas to the island must prove to be of long-term benefit for the customer. We will continue to watch the market and future looking prices to determine the right time for such an investment. Currently, it would appear to be beyond 2018.”

Grand Bahama Power’s financials for the 12 months to end-December 31 were contained in the annual report for ICD Utilities, the BISX-listed holding company that owns a 50 per cent equity stake in the utility.

Despite a strong net income performance, Grand Bahama Power suffered a comprehensive loss of $11.443 million due to “unrealised losses related to hedges”.

The company said this was an “accounting practice” that did not reflect the business’s operational performance, adding that net income was a better measurement of its progress.

ICD Utilities’ financials also reveal that Grand Bahama Power is budgeting for a 37 per cent increase in its capital expenditure for 2015, with the budget growing from $7.3 million to $10 million.

This represents a further increase from the $6.45 million invested in 2013, with the company set to spend $4.1 million on its generation assets; $1.7 million on transmission; $3.4 million on facilities, equipment and vehicles; and $800,000 on distribution.

Grand Bahama Power told Tribune Business that it had an “extensive workplan” to meet the August 1, 2015, deadline for it to apply to the Grand Bahama Port Authority (GBPA) for a review of its tariff rates. The review period will cover January 1, 2006, to December 31, 2008.

The company added: “Over the past two years, great progress has been made in reducing the number and duration of outages that customers experience.

“In fact, we have improved our outage performance by 55 per cent when compared to the past five-year average. In 2015, GBPC is primarily focusing on decreasing the number of forced generation-related outages and sustaining the improvements that we have made in the duration of an outage, when one does occur.”

Grand Bahama Power said that while no study had been completed, it felt “a significant portion” of its current generation load could be met by renewable energy sources.

“An attribute that makes Grand Bahama different from many other islands is the nature of its load,” it added. “In particular, the heavy industrial customers represent about 30 per cent of the island’s load.

“These customers have very different electrical load demands and profiles than typical commercial and residential customers. As such it is difficult to convert these to total renewable sources of energy. Separate from the industrials, it is highly probable that a significant percentage of the remaining load could be renewable based.”