Electricity cost rise ‘pretty dangerous’ for economy

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

Bahamian businesses yesterday warned any increase in electricity costs will be “pretty dangerous” for an economy still recovering from COVID-19’s devastation, although some said spiking global oil prices make such a hike “inevitable”.

The private sector reacted negatively to recent power outages and confirmation by Shevonn Cambridge, Bahamas Power & Light’s (BPL) newly-appointed chief executive, that electricity costs are set to rise as the state-owned utility adjusts the fuel charge component of customer bills upwards in line with high global oil prices. Others said Bahamians will just have to “ride it out in the dark”.

Gregory Sherman, owner/operator of G.S. Landscaping Company & Property Management, told Tribune Business he was troubled that BPL is threatening to increase electricity costs at a time when it still cannot keep the power on. “I have a problem when governments change. All of these power cuts and problems with BPL were supposed to be a thing of the past,” he added.

Mr Sherman voiced concern that BPL is still having to rely on rental generation leased from Sun Utilities, a subsidiary of BISX-listed FOCOL Holdings, and Aggreko, when its New Providence power generation woes were supposed to have been solved by the 2019 purchase of some 132 Mega Watts (MW) in new turbines/engines from Wartsila.

However, Alfred Sears QC, minister of works and public utilities, who has responsibility for BPL, told the House of Assembly during the recent Budget debate that the utility has delayed $15m in maintenance overhauls beyond summer 2022 “to manage cash”, while conceding that such practices have undermined generation “reliability”.

As a result, he explained that BPL’s current generation capacity of 241.1 Mega Watts (MW) cannot cover the island’s projected peak summer demand of 260 MW. Thus faced with a near-19 MW, or 7.3 percent, generation shortfall and the total absence of any spare capacity, BPL had no choice but to contract with Aggreko and Sun Utilities for the provision of a combined 83 MW in rental generation to minimise summer load shedding and outages.

Maintenance would allow for the proper cleaning of BPL’s engines, removing excess debris, and enables them to function without any blockages or impediments that may take them offline. Mr Sherman said: “I was shocked as I listened to Alfred Sears and heard that they have gone back to rental generators again when we didn’t need to.

“We have more than sufficient power. We have a total of 350 MW of power, which is more than enough to carry us through the summer. We went through the summer months last year and there wasn’t a problem.”

Philip Darville, owner/operator of SolveIT, added of the impending increase in electricity costs: “I think the rate rise at BPL is inevitable. The reality is I don’t think we have seen a fraction of the rising cost that our peers are experiencing around the region.”

BPL, a state-owned enterprise, subsidises the Family Island islands through New Providence. Mr Darville said this burden cannot continue to be placed on New Providence to keep BPL an operating and viable corporation. “BPL can only be subsidised so much by the Government,” he added. “Something is going to have to give in raising costs or taxes or whatever.

“We may need to find a way to get fuel from one of our regional partners. Guyana has just now started to produce oil. Maybe we should create a partnership with them so we can get cheaper oil. Other than that, the best thing we can do is continue to move towards renewable energy.

“But for now, we just have to be prepared to ride it out in the dark nights because the reality is we’re consuming more than what’s being generated, and even with the deal for the rental generators there may be gaps if any of those units go down for some reason.”

Dr Kent Bazard, owner/operator of Empire Fitness, said it is “never a good time” to raise electricity rates. However, he acknowledged this was a possibility with global oil prices last night standing at $110.7 and $114.1 per barrel on the West Texas Intermediate and Brent Crude indices, respectively.

He added: “This is definitely going to have an impact on businesses, but hopefully this will be temporary. We are still on the road to recovery from the COVID-19 fall-out, so any rise on the cost of operating a business is pretty dangerous.”

Vasco Bastian, owner/operator of the Esso service station at the East Street and Soldier Road junction, said: “I don’t think this is the right time; I think the timing is off. We are just coming out of a pandemic. The Government hasn’t been in a year yet and the board at BPL was just now appointed.

“I think we need to give the Board and the new chief executive, Shevonn Cambridge, a chance to land on his feet, and I think the Board needs to sit down and really look at the overall picture of BPL in its current condition and the model that it has in providing electricity before they even suggest any type of increase for consumers at this time. Let’s work on power generation and distribution before we work on increasing the cost to consumers.”