By RICHARD COULSON

Up the hill and right back down again—that’s the story of Bahamian electric power during the five wasted, and expensive, years of PLP Government. Dr. Minnis’ new administration is now back at square one, with a clean slate for creating a brand-new energy policy, a crucial task he must soon address if he is to retain credibility.

After the usual 2012 election campaign promises for cheaper and more reliable electricity, it took until August 2013 for Prime Minister Christie to make a grandiloquent official announcement outlining his Government’s new approach. Bahamas Electricity Corporation (BEC) would be split into two companies, one for transmission, distribution, and sales to remain wholly state-owned, the other for generation, for which private partners would be sought to take an equity stake. He was advised by accountants KPMG and an American electric engineering firm, doubtless receiving attractive consulting fees.

This re-structuring proved to be pie-in-the sky. By January 2014, Deputy PM Brave Davis admitted that no private firms had come forward to bid for the generating company and that the split operation was being “reconsidered”.

After some 16 months of procrastination, he revealed in mid-2015 that a speciality company from North Carolina called PowerSecure (PS) had been retained, and in January 2016 a definitive agreement was signed for PS to manage our new Bahamas Power & Light (BPL), nothing but a subsidiary of the old BEC. Our Government then discovered to its surprise that the minnow PS had been swallowed by giant US utility The Southern Company. (Strangely, customers’ bills are still on the letterhead of BEC, not BPL.)

PS retained a recruiting firm to find American Pamela Hill as BPL chief executive, who arrived here in April 2016 to a polite but sceptical reception as she was not an electric engineer but a white-collar finance specialist. Neither PS nor Southern was required to make any equity investment in our dilapidated power plant; instead, the cash flow was all the other way — management fees paid by Government to PS, plus a cornucopia of salaries, living and traveling expenses, even reimbursement of the recruiter’s fees!

In her brief tenure of barely more than a year, Ms. Hill struggled to explain continuing power cuts, and any rate reductions were so paltry as to escape notice by most consumers or were stop-gap election measures. By the time of this May’s general election, the management agreement still had not been presented to the House, and despite Brave Davis’ continual defence of the PS executive team, relations with Ms. Hill were clearly fraying.

The new Government was decisive once they demanded and read the terms of the agreement. In September Ms. Hill was sacked, and Minister of Work Desmond Bannister, with speed of action never seen in previous days, terminated PS, now to be run by an all-Bahamian Board. He disclosed the Government had paid over $9 million in fees and expenses, with possible expectation of further “performance” bonus up to $25 million. Bahamians simply could not stomach that the boss was receiving nearly $45,000 per month in salary and allowances for residing in this “hardship post” Monday through Friday— with time shaved off both ends to cover travel time to/fro New York.

Whatever her failings, Ms. Hill was surely correct in complaining that the Christie Government never provided the financing PS needed to do its job properly. Lengthy talks about a $600 million “Rate Reduction Bond” scheduled for early this year came to nothing. This would have paid off outstanding debt, funded part of a new 140 MW generating plant at Clifton Bay, and contributed working capital.

Mr. Christie’s manifesto of August 2013 put a target of 30 percent of our total demand being met by “renewable energy” by 2030, but we are still far from that level. Government’s only positive measure was a 2015 amendment to the Electricity Act, authorizing private power generators and allowing them to tie into the public grid and apply any excess generation to increase the total supply. In our context “renewable” means primarily “solar”. Theoretically, we also have substantial capacity for wind farms in the shallow waters off New Providence’s southern coast, as is normal offshore in Europe, but to date I am not aware of any reliable cost/benefit analysis; and schemes based on thermal sea-water differences, or wave or tidal action, are still too speculative for commercial consideration, although new technology could change the picture

Fortunately, we already have plenty of experience in “distributed” solar energy facilities, that is, rooftop generation on individual residences, warehouses, hotels and office buildings.

Half a dozen local firms are licensed installers of these state-of-art systems. Government could perform a major service by cutting the regulatory red-tape that ties these firms, delaying approval time for simple permits from days to months.

A recent progressive step was taken when the Bahamas Technical & Vocational Institute (BTVI) arranged a joint venture with one of the leading firms, Alternative Power Supply, giving its 2000 students the expertise to expand into this business under the tutelage of Philip Holdom, a 27-year veteran installer of residential and commercial solar systems here and the US.

While large systems are still primarily an option for mid-market and up-scale budgets, the latest back-up technology makes reliable power available for virtually every Bahamian household.

The cost of new and better solar panels (duty-free in Bahamas), often from China, is steadily declining, but represents on average only about 20 percent of total costs, including cost of storage battery packs and installation expenses affected by local inflation and taxes

The USA subsidized standard of a 5-KW home power source costing $10,800 is still not attainable here, and is restricted by lack of banks or specialized finance houses able to provide term loans at reasonable rates for an amortized saving over the public consumer tariff. In addition to the distributed units, we still need commercial-scale wind farms, to give savings from wholesale operation.

One unfortunate legacy of the PS regime was its analysis debunking the concept of a 40-MW utility-scale wind farm as impractical and economically unsustainable, needing to cover 155 acres at a capital cost of $140 million, and only able to produce during sunshine hours.

Mr. Holdom and other local experts promptly refuted this analysis, claiming that any grid-tied MW-scale plant would have reserve storage batteries and peak-load shaving to assure 24-hour operation.

A much cheaper major solar farm would be feasible for New Providence on a Crown Land site long-term leased by Government, and smaller ones for several of the high-demand Family Islands, while tiny island communities with only a scattering of users would be served be stand-alone retail units.

Even with the most optimistic growth of solar power, there will remain a continuing demand for fossil-fueled electricity, which at present costs the average consumer $0.27-0.30 per KWH, compared with $0.08-0.10 in Florida, an obvious competitive drag on our economy. But the oil supply used by the present and contemplated generator systems at Clifton Bay and Old Pond can be converted to cheaper and more efficient LNG imported and re-gasified here.

Of course, this will not be cost- free. Government must finally bite the bullet and decide how it will finance the conversion costs, probably running into the low hundreds of millions.

Further, we cannot continue the slap-dash policies of many years ignoring maintenance expenses and scheduled replacements, which eventually result in break-downs, cuts, and brown outs.

Although consumers see a cost pf electricity on their monthly bills, this figure bears no relationship to the true economic cost of power, as BPL and parent BEC have been continually run at loss with costs simply ignored, buried, and accumulated.

The best long-term solution for Nassau and the rest of the country will be to emphasise a hybrid power system.

We can leverage our growing expertise with renewable energy—primarily solar but always keeping alert for viable wind and other sources — as an endeavour for the private sector, while leaving Government free to shift our dependence on oil towards LNG with the best available financing options.

If new sources of long-term borrowing cannot be found to recapitalize the oil-fired power industry on a sound basis for the future, perhaps, as has been suggested, a foreign firm will have to be found as majority equity partner, buying the net assets for $1.00 and transferring existing debt to a special vehicle.

The Grand Bahama Power Company handles the combined functions of generation, transmission and distributions throughout the island, and is majority owned by the Canadian utility Emera Ltd.

Unfortunately, it has been no more successful than BPL-BEC in bringing consumer billings down near the US level, but at least the Bahamian public owns a minority stake and receives a dividend yield of about 1.4 percent on a liquid investment .

Short of full equity ownership, a foreign firm could finance, build, and operate an LNG import and gasification system and enter into a typical Power Purchase Agreement with BPL to cover capital costs and allow a profit margin.

Without having every detail settled down pat, Dr. Minnis should have a broad hybrid-energy policy ready to announce by the end of the year.