Bahamas Power and Light (BPL) Chief Executive Officer Shevonn Cambridge said the power company will have to revisit is tariff rates to meet operational demands and pay off its debt.
The last tariff rate adjustment occurred in 2010, when the last Hubert Ingraham-led administration increased Bahamas Electricity Corporation (BEC) rates by about five percent, which increased the rate and total charge to customers for the first 800 units (kilowatt hours) of electricity to roughly 0.15 cents per unit use above the first 800 units to 0.1841 cents per unit.
“The fact that the government has had to refinance some of the debt shows that right now BPL is not standing on its own, but the potential is there and that potential can be achieved with any number of methods,” Cambridge said when asked about the strategy of BPL’s new board to pay of its legacy debt given the delayed rate reduction bond (RRB).
“We need to drive greater efficiency in our production, but to do that you need capital injection. And that’s one of the points that underpin the rate reduction bond, a part of it was to fund efficiency enhancement improvements. We need to revisit our tariff to ensure that it is sufficient to meet our requirements, that is to pay our bills and to fund future efficiency enhancement projects… There are any number of things. The key thing is, there is no one thing that’s the answer in this business.”
Last year, the Caribbean Electric Utility Services Corporation (CARILEC) found that BPL was among the least expensive power utilities in the region, based on tariff structure, among other factors.
Last year, the Utilities Regulation and Competition Authority (URCA) said it would conduct a tariff review of public electricity suppliers (PES), with a goal to structure the electricity sector in a way that protects the interest of consumers, while also covering the operating, maintenance and investment costs of suppliers.
Former BPL Chairman Dr. Donovan Moxey said last year that despite the review being conducted by URCA, BPL had no plans at the time to increase its tariff rate.
BPL was seeking to pay off roughly $300 million in legacy debt through a $535 million RRB, that was delayed several times due to the COVID-19 pandemic.
The Davis administration shelved the RRB while professional services firm Deloitte completes a rapid assessment of the bond and hedge strategy.
Last week, Guardian Business revealed that the government in January this year refinanced the $246 million bridge loan facility it assumed responsibility for in 2020 to cover BPL’s legacy debt.
The bridge loan facility was refinanced at a lower amount of $171.8 million, set to mature in five years.