Bahamas Power and Light (BPL) Chairman Dr. Donovan Moxey said plans for Shell North America to handle power generation for the company, through a power purchase agreement (PPA), are in an effort to limit political influence and ensure efficiency.
Moxey said the priority for BPL has been figuring out a way to ensure stable electricity prices. But he noted that BPL does not have the history needed to guarantee that efficiency is maintained in the long term to keep prices stable.
“One of the challenges that we’ve had at BPL over the years is inefficiencies in generating power,” Moxey said yesterday on the Guardian Radio 96.9 FM talk show “The Revolution” with host Juan McCartney.
“Too many people, too much cost to generate power, all those costs you run into. And as a result of it, our margins have been squeezed over the years.”
Moxey added, “How many people really believe that we, as BPL, as a government entity, are going to maintain the efficiency and productivity rates over the next 20 years?
“…I’m just telling you the realities across the board.
“…Look at where we are now at BPL. I can tell you now if someone were to look at our generation costs and you look at industry averages, we’re way outside the norms.
“And so, those are the kinds of things that you have to keep in mind.
“So, if you’re now saying one of your largest costs is generation and you want to maintain that cost, fixed, because the mandate that the government has given us is stable energy prices, we’ve already known our track record for doing that as an entity just isn’t there.
“And so, if you want to do that, you’ve got to find a way that allows you to be able to do that, because what you’re focused on is price stability, and that’s what the driving force is here, which is why the PPA comes into play.”
Moxey said the power purchase agreement is one of the best ways to remove political influence when it comes to power generation.
When asked whether BPL could perform efficiently with the removal of political influence, Moxey said: “But how do you remove the political influence from these decisions?
“…The best possible solution is this baseload PPA.”
Moxey said that while Shell will own majority shares in the companies, Power Co. and Terminal Co., 49 percent of shares will be Bahamian-owned.
He also noted that Bahamians will comprise the majority of employees at the plants.
There has been significant confusion in the public over the company’s intended relationship with Shell over the past year.
According to a memorandum of understanding the current board signed with Shell Gas and Power Development B.V., Shell would pay for marine infrastructure to receive liquefied natural gas; a gas pipeline to bring gas to shore; an onshore LNG regasification terminal and a new gas-fire 220-plus megawatt power plant.
However, BPL ended up paying for a 132-megawatt plant at Station A at Clifton that came online last December at a cost of $95 million.
Minister of Public Works Desmond Bannister has said that $70 million raised by a rate reduction bond would be used to build another 90-megawatt plant at Station D at Clifton.
Last January, Moxey announced BPL’s plans to sell those plants to Shell and enter into an agreement to buy energy from a new company formed through the sale.