By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Freeport’s energy regulation battle is coming to the boil after Grand Bahama Power Company was told the Electricity Act “implicitly repealed” key parts of the Hawksbill Creek Agreement.

The Utilities Regulation and Competition Authority (URCA), which has taken almost three years to respond to the utility’s challenge to its regulatory authority within the Port area, is arguing that Parliament was “constitutionally entitled” to override Freeport’s founding treaty when it passed the Act in 2015.

The energy and communications regulator, in legal documents obtained by Tribune Business, is now seeking a Supreme Court declaration that the Electricity Act “applies in its entirety” to Freeport and “prevails” over the Hawksbill Creek Agreement provisions that GB Power is relying upon to resist its jurisdiction.

The national regulator is also arguing that GB Power’s stance in refusing to submit to its supervision and licensing powers is “undermining” the Electricity Act and the ability of URCA to perform its mandate in accordance with the National Energy Policy (NEP).

URCA’s March 26, 2019, defence and counterclaim thus reignites a precedent-setting legal fight that will determine whether it is the national regulator or the Grand Bahama Port Authority (GBPA) which has the authority to regulate utilities within the Port area.

It also has major implications for the Hawksbill Creek Agreement’s survival and integrity, and whether its provisions can be overridden by statutory Acts of Parliament, as well as other utility companies such as Cable Bahamas and the Bahamas Telecommunications Company (BTC).

For Cable Bahamas, the BISX-listed communications provider, has initiated its own litigation with the Supreme Court that asks the same questions as GB Power’s original action - whether URCA has the jurisdiction to regulate its businesses in the Port area, which are carried out through its wholly-owned subsidiary, Cable Freeport.

URCA’s 2018 annual report, confirming that this case is also ongoing, said: “The Cable Bahamas action commenced on 7 July, 2017, and seeks to determine inter alia whether telephony and internet services within the Port area of Grand Bahama provided by Cable Bahamas are subject to URCA’s licensing requirements.”

The energy sector battle was sparked by GB Power’s original action, filed on July 7, 2016, which challenged URCA’s ability to license and regulate it on the basis that this “conflicts” with the provisions of the Hawksbill Creek Agreement as Freeport’s founding treaty.

The filing of URCA’s defence and counterclaim, though, indicates that the regulator is making good on the recent pledge by its chief executive, Stephen Bereaux, to do everything it can to progress the GB Power matter through the court system “as quickly as possible” after the utility provider left it “languishing” for almost three years.

In its response, crafted by the ParrisWhittaker law firm, the regulator said section 4 (2) of the Electricity Act showed it was intended to apply to Freeport when it said: “This Act applies to the entirety of The Bahamas, inclusive of the Port area in the island of Grand Bahama.”

“Parliament has therefore made its intentions clear that the Act, and the powers of the defendant [URCA] thereunder should apply to the Port area, and by extension to the Port Authority and its licensees,” URCA argued.

Pointing to the authority bestowed by the Act, which authorises it to licence and regulate all providers involved in the public generation, transmission, distribution and supply of electricity, URCA alleged that Parliament wanted it to cover the whole of The Bahamas including Freeport.

“In so providing, Parliament thereby expressly recognised the importance of including the whole of The Bahamas within the remit of [URCA’s] licensing and regulatory functions such that the exclusion of the Port area or any other part of the island of Grand Bahama from the regime of the Act would undermine the statutory purposes of the Act and the proper performance of [URCA’s] statutory functions under the National Energy Policy and Electricity Sector Policy Objectives,” URCA’s legal filings alleged.

While agreeing that the Hawksbill Creek Agreement provisions relied upon by GB Power were inconsistent with the Electricity Act, URCA’s position is this shows Parliament intended that statute law override Freeport’s founding treaty.

“It is apparent from the terms of the provisions cited that Parliament nevertheless determined that the Act should apply within the Port area,” URCA argued.

“Parliament has therefore derogated from the rights (whether contractual, statutory or otherwise) granted to the Port Authority by the Government of The Bahamas under the Hawksbill Creek Agreements, as it is constitutionally entitled to do.

“To the extent necessary for it to do so, the enactment of the Act has thereby implicitly repealed the said clauses of the Hawksbill Creek Agreement and/or the Acts permitting or giving effect to the same. It is denied (if it be alleged) that there is any constitutional principle or other principle of law that precludes Parliament from so acting.”

GB Power’s position is 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.

It wants its own Supreme Court declaration that the Electricity Act 2015 “contravenes the rights and privileges” granted to it by Freeport’s founding law, and that URCA has no authority over it - including its operations outside the Port area in east and west End.

Yet URCA retaliated: “By its claim herein, the plaintiff [GB Power] has put in issue the application of the Act within the Port area, and the jurisdiction of the defendant thereunder.” As a result, it wants a declaration that “the Act applies in its entirety within the Port area notwithstanding the provisions of the Hawksbill Creek Agreement” and “prevails” over the latter.

The regulator also wants the Supreme Court to rule that GB Power must accept a licence from it and abide by its terms, including the payment of regulatory fees.

Responsibility for utilities regulation in Freeport has been an unresolved issue for years, with both the Government and GBPA remaining relatively silent on the matter. GB Power’s stance, though, contradicted the 2016 Memorandum of Understanding (MoU) between the then-Christie administration and the GBPA’s owners.

Contemplating fundamental and sweeping changes to Freeport’s regulatory and governance structure, it committed the GBPA to far-reaching 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.

Several observers have suggested that the whole idea of an enclave such as the Port area, with its own separate regulatory regime, is outdated and ill-matched with modern governance and the concept of having a national regulator.

Some, too, believe that GB Power may be using its legal action as leverage or a bargaining chip in its negotiations with the Government over renewal of its East and West End supply agreements, which expired last year.

The revival of its legal battle with URCA comes at a delicate time, with the regulator set to hold a series of town meetings on Grand Bahama to remind residents of what it does and possibly swing public opinion behind its position.

GB Power has also recently come under fire from some quarters over the way it handled the controversy surrounding “fake” energy-saving devices installed by some customers.