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COVID-19 fears delay BPL bond fee

A rate reduction bond fee Bahamas Power and Light (BPL) previously said it would introduce to its customers this month is being affected by the impact of the new coronavirus, COVID-19, BPL Chairman Dr. Donovan Moxey said yesterday.

With worldwide fears surrounding the virus impacting certain international markets, according to Moxey, this means that BPL would also have to consider how the bond market is faring.

“Obviously, an area of concern for us is really one of timing,” he told reporters on the sidelines of the official launch ceremony for a new General Electric engine at BPL’s Blue Hills Power Station.

“Given the fact with the coronavirus and what’s going on with the U.S. equity markets, we’re trying to assess how that can possibly affect the bond market for us, and so there may be certain windows that we have to look at to determine exactly where’s the market with bonds; so that’s definitely something that we’re looking at.”

The Electricity Rate Reduction Bond Bill, 2019, which was passed late last year, aims to establish a legislative framework for BPL to raise $650 million through a rate reduction bond.

In December, in a release published by BPL, consumers were alerted that they would see their electricity bills increase by an estimated $27 per month beginning this month.

“With this new fee structure, all BPL customers, from major resorts to the average family, will see a small increase in their monthly bill starting in March,” that notice read.

“By our initial estimates, the average family will see their bill increasing by roughly $27 a month, and within the next year, most, if not all, of that cost will be offset by savings resulting from our new cheaper energy generation.”

However, Moxey said that the company has not determined the exact amount that customers will see on their bills once the fee is implemented as that “is going to be dictated by closing the bond”.

“[I]t’s very difficult for us to determine exactly what the specific impact is going to be,” he said.

“But we did do some modeling, some very conservative modeling, which is what we’ve communicated publicly.

“But until we get a [final] rate, we cannot tell exactly what that particular impact is going to be.”

He added, “…[W]here we are right now, the steps that we’ve gone through, is that [we] had the indicative rating done by the rating agencies, initially.

“Obviously we have to go through a final rating process now, and so we’re going through that process as we speak, and then once you have a final rating, then you shop the bonds of the market.”

However, he assured that the fee is moving forward.

“We’re working through the last steps and the processes of getting all of the documents in order and obviously presenting the final documents to Cabinet for final review and final approval of what we’re doing, so we’re moving that forward,” he said.

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