By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A former Democratic National Alliance (DNA) leader yesterday blasted that electricity regulators “have got to be out of their minds” to determine Bahamas Power & Light (BPL) has made the case for up to 163 percent fuel charge hikes.

Branville McCartney told Tribune Business that “I suck my teeth” after the Utilities Regulation and Competition Authority (URCA) said the state-owned energy monopoly’s decision to massively increase its fuel charge via a series of rolling rises throughout 2023 - a move that will allegedly impose $100m in unnecessary costs on Bahamian businesses and households - was justified.

URCA, in a short three-paragraph statement, said it had undertaken a “comprehensive review” of BPL’s proposal to drastically increase the fuel charge component of its bill over the next 12 months as it seeks to repay a $90m debt to Shell, its main supplier, as well as taxpayer financing (loans and/or subsidies) provided by the Davis administration.

“As the regulator for the country’s electricity sector, URCA conducted a comprehensive review of BPL’s fuel charge increase proposal. At the conclusion of that review, URCA determined that it is satisfied that BPL has made an adequate case for the rate increases outlined in its press statement dated October 4, 2022,” URCA said.

Seeking to soften the blow from its verdict, URCA promised to undertake ongoing monitoring and reviews of BPL’s fuel charge during 2023 to ensure that the utility is operating efficiently and levying the correct charges on customers.

“The regulator notes that BPL’s justification for the changes to the fuel charge is based on conditions that are likely to change,” URCA added. “Therefore, it is URCA’s intent to revisit that matter to ensure that BPL is operating efficiently and charging customers appropriately. URCA has advised its licensee (BPL) of its intent to review its fuel charge again during the projected glide path fuel charge recovery period, and it will make public notice of the same as necessary.”

URCA did not disclose the full analysis, or review, that it conducted to justify its conclusion that BPL fuel charge hikes of up to 163 percent are warranted. And the timing of its review, and news release, is more than one month after BPL had already begun to implement the phased increases.

Mr McCartney questioned whether URCA’s assessment took into account that the fuel charge increases would have been unnecessary, and not have occurred, if the Davis administration had executed the trades to purchase more cut-price oil immediately after taking office to underpin BPL’s existing hedging strategy.

“This administration completely dropped the ball on that,” the ex-DNA leader told this newspaper. “I’m sorry, URCA can say all they want in that regard, but that certainly doesn’t alleviate the Bahamian people from spending extra money on their electricity bill. I’m sorry; that doesn’t wash....

“Justifying that increase, I’m curious if the review that URCA did made mention of the fact this could all have been avoided. That would be interesting to know. The summary of that report, saying it’s OK for the Government to drop the ball and cost the Bahamian people money, they’ve got to be out of their minds. Please. I suck my teeth.

“We shouldn’t even have been in this position in the first place. For URCA to even have to do a report, we shouldn’t have been in this position in the first place. No, please. What do young people say? SMT (suck my teeth)? Unfortunately, it’s a position that the administration has put the people in where they’ve got to pay more for electricity at a time when they cannot afford it at all with the other increases going on.”

Mr McCartney, calling for URCA to publish its full review, said: “If they’re going to put out a release and say it’s justified, how is that so, and have they taken into consideration or has the report indicated it could have been avoided? You are justifying something that could have been avoided. The question is: Did the report focus on that aspect as well?”

He voiced doubt that URCA’s review would have “changed anything” should it have determined that BPL’s fuel charge hike was not justified, as the Government and state-owned utility would likely have pressed ahead anyway. However, Mr McCartney said the regulator’s apparent blessing of BPL’s plan “isn’t going to hold water with the Bahamian people”.

“Every month the Good Lord sends, and those electricity bills are astronomical, the Bahamian people will feel it and any type of report by URCA justifying it will be of no consequence to them or the money coming out of their pocket,” he told Tribune Business. “The Bahamian people have been given a sack of coal in terms if electricity bills for Christmas and New Year.”

The fuel charge component of BPL bills is set to increase by up to 163 percent compared to the stable 10.5 cents per kilowatt (KwH) enjoyed by the utility’s customers for the just over two-year period to October 2022. Without the cut-priced fuel produced by those trades, BPL has increasingly been purchasing its oil at spot market prices from late 2021 onwards but not passing the full cost on to customers - in contravention of the Electricity Act regulations - for some months.

With BPL’s mounting debts to Shell, its fuel supplier, increasingly unsustainable, the Government has reached an agreement to pay the global oil giant $90m over a nine-month period at $10m per month. It is this payment, and BPL’s huge hiking of the fuel charge to recover this debt and government loans previously made to support the 10.5 KwH price, that has prompted Opposition charges that the Davis administration has cost the Bahamian people over $100m.

Michael Pintard, the Free National Movement’s (FNM) leader, yesterday told Tribune Business that URCA’s brief statement was noticeably silent on how the revenues generated by BPL’s fuel charge hikes will be used.

The rolling series of increases will generate more monies than are needed to cover BPL’s fuel costs, which are supposed by law to be passed on 100 percent to customers, and he questioned what proportion will act as “a claw back” from businesses and households to repay the debts and unpaid bills incurred from maintaining the fuel charge at 10.5 cents per kWH for so long.

“What URCA did not say in its brief statement, which we expect to be detailed in their report, is the amount of funds being applied,” Mr Pintard explained. “What is the nature of the funds? What percentage of that is to claw back from consumers that, up to this time, BPL has not passed on? What percentage is to replenish the funds made available to BPL as subsidies?”

He reiterated that the Government has “no standing in law” to subsidise BPL’s fuel charge, and said: “All of this should have been part of the consideration for BPL’s explanation of the increasing fuel charge.”