By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Grand Bahama Power Company (GBPC) is challenging the Utilities Regulation and Competition Authority’s (URCA) ability to license and regulate it, arguing that this “conflicts” with Freeport’s founding law.

The utility provider, in legal documents obtained by Tribune Business, is seeking a Supreme Court injunction to prevent URCA “from regulating, or seeking to exercise licensing and regulatory authority”, over it.

Its amended statement of claim, filed on July 7, 2016, also wants the Supreme Court to declare that GB Power can carry on its business without requiring a public electricity supplier licence from URCA.

GB Power’s action is founded on the basis that, as a Grand Bahama Port Authority (GBPA) licensee, it is licensed and regulated by the latter via the Hawksbill Creek Agreement - and not by URCA and the Electricity Act 2015.

It is arguing that the Electricity Act’s sections 44-46, which give URCA the legal right to licence and oversee energy providers, “are inconsistent, and conflict with, the rights and privileges vested in [GB Power] and the Port Authority” by the Hawksbill Creek Agreement.

GB Power’s statement of claim argues that itself and the GBPA “have been vested with the sole authority to operate utilities”, including electricity generation and transmission and distribution, within the Port area until the Hawksbill Creek’s expiration in 2054.

“The Electricity Act 2015, which came into force on January 28, 2016, purported to grant the defendant [URCA] the power to regulate the electricity sector in the entire Bahamas, including the Port area and any person licensed by the Port Authority to supply electricity in the Port area,” GB Power argued.

“By letter dated April 21, 2016, the chairman of the defendant (Randol Dorsett) has advised the chief executive of the plaintiff (Sarah McDonald) that, pursuant to sections 44 and 46 of the Electricity Act, the plaintiff is required to obtain a public electricity supplier license from the defendant...

“Further, by the said letter, the chairman of the defendant advised that the defendant will impose upon the plaintiff regulatory fees and charges in respect of such license.”

As a result, GB Power could face the prospect of ‘double taxation’, through separate licensee fees and other charges that would be payable to both the GBPA and URCA.

Rejecting URCA’s attempt to regulate it, GB Power added: “The plaintiff seeks a determination of the issue of whether the defendant is lawfully entitled to license and regulate the plaintiff’s business in the Port area of Grand Bahama, having regard to the rights and privileges vested in” it by the Hawksbill Creek Agreement and license agreements with the GBPA.

As a result, the Power Company is also seeking a Supreme Court declaration that the Electricity Act 2015 “contravenes the rights and privileges” granted to it by Freeport’s founding law.

Stephen Bereaux, URCA’s director of policy and regulation, did not return Tribune Business’s phone message seeking comment yesterday.

However, GB Power’s decision to initiate legal action represents an immediate obstacle to URCA’s fledgling efforts to regulate the entire Bahamian energy sector, which have yet to get past first base.

For the filing coincides with URCA’s initiation of consultation on the very ‘public electricity supplier licence’ that is the subject of GB Power’s action.

This is URCA’s first regulatory action in the energy sector since the Electricity Act, and amendments to its own founding law, transferred such obligations to it earlier this year.

Meanwhile, the GB Power action is also the first challenge to the Memorandum of Understanding (MoU) agreed between the Government and GBPA in early May 2016.

That committed the GBPA to working with the Government to create “a mechanism to ensure the exercise of the regulatory powers and functions vested in the GBPA are consistent with the national policy, regulations and laws of the Bahamas”.

This commits the GBPA to far-reaching governance reforms, and the potential devolution of some of its quasi-governmental powers/regulatory authority, via their ‘harmonisation’ with national laws and government policies/regulations.

The MoU’s clause 1.18 suggests this ‘harmonisation’ will be achieved through “existing independent regulators” such as URCA - a development that is now being directly resisted by the GB Power action.

URCA’s public electricity supplier licence consultation makes clear it contemplates licensing, and regulating, GB Power as well as Bahamas Power & Light (BPL).

“This consultation document is specific to the public electricity supplier licence (the licence) regulating the electricity generation, transmission, distribution and supply functions of the Bahamas Power and Light Company (BPL) and the Grand Bahama Power Company (GBPC) that URCA will issue to BPL and GBPC,” the document said.

The URCA consultation added that under the Electricity Act’s transitional provisions, licences were to be granted to both energy utilities by April 28, 2016 - 90 days after the new law came into force.

The complicated process involved in issuing those licences worked against meeting that deadline, and URCA said it was “unsatisfactory and inconsistent” with both law and energy sector policy for the two utilities to keep operating without a licence. This sparked the public consultation’s launch on July 6, with GB Power’s action filed one day later.

That move comes as no surprise, as Tribune Business warned last year, when the Electricity Act was brought to Parliament, that its provisions conflicted with the Hawksbill Creek Agreement and would likely spark legal action.

And these issues have already created issues for URCA in its regulation of the communications industry.

The Supreme Court ruled in 2011 that it had no jurisdiction to levy fees on Cable Bahamas’ Internet earnings in Freeport, because the BISX-listed provider operated in the city via its wholly-owned subsidiary, Cable Freeport. The latter entity was licensed by the GBPA, not the Government.

Cable Bahamas (and Cable Freeport) won their 2011 case on the basis that the former Telecommunications Act permitted URCA’s predecessor, the Public Utilities Commission (PUC), to levy fees only on its licensees. Cable Freeport, of course, did not fall into that category because it was a GBPA licensee, and the PUC’s demand for $78,747 was thus quashed.

Then-Justice Longley, though, declined to rule on the wider issues - whether the PUC, and by extension URCA, had jurisdiction in Freeport, and whether Cable Freeport should be licensed by URCA.