Rather than apply a flat rate to every electricity consumer’s bill as part of Bahamas Power and Light’s (BPL) rate reduction bond, a sliding scale should be implemented, so that persons who use more energy, pay a greater fee.
That was the suggestion of Deborah Deal, chairperson of the Bahamas Chamber of Commerce and Employers’ Confederation’s (BCCEC) Energy and Environment Committee, who said yesterday that while she appreciates what the government is trying to achieve in implementing the bond, the proposed flat rate fee is unbalanced.
Minister of Public Works Desmond Bannister announced in Parliament yesterday that the issuance of the rate reduction bond will lead to a temporary increase in the average household bill by roughly $20 to $30 monthly for about ten months in 2020.
Bannister did not specify if business accounts would be charged the same levy.
“So, let’s say Atlantis, for example, has an electricity bill of $9 million a month, so, if they get $20 to $30 added on, they’re not even going to know it’s there, whereas somebody like – I’m going to use ‘Sparky’ as an example because he’s on the radio on a regular basis – his bill is like $60 a month,” Deal said in an interview with Guardian Business yesterday.
“So, for him, that would be a lot. That would be one third of his bill. And then somebody like me, let’s say who has done everything in my power to keep my bill under the $300 mark so that I could get the VAT exemption, as well as not have to pay a high electricity bill, if that takes you over the $300 mark, then automatically you would have to start paying the VAT as well. So, not only would you now have $20 to $30, but you’d have 12 percent of your entire bill, which would raise it up to like $60 or $70.
“I get where they’re going with this, because they have to start somewhere, but I would think that it should be like a percentage of the customer’s bill. Let’s say we say 10 percent now, it’s an easy number, so on a bill at $60 that would be a $6 fee, on a bill at $300 it would be a $30 fee, on a bill of $9 million that would be $90,000.”
Bannister said Wednesday that the increase will be wiped out in 2021 when the government expects the cost of generation to decrease drastically, due to the completed installation of a second power station consisting of more new fuel efficient engines.
In the meantime, Deal lamented the impact the fees will have. She said there should be clearer details about what is expected for residential and business accounts.
If everything goes up 30 percent, then persons are going to have to go and ask their employer for 30 percent more on their wages, which can’t happen. So, I get where they’re going, I’m grateful that they’re actually considering how they’re going to do this, but it really needs to be more of a sliding scale. So, the persons who are using more electricity, I think they should be the ones to pay a little bit more than the person who is only using $60 per month because of their financial situation. People under the poverty level, which is $5,000 a year; that has to be considered, just in my opinion. But I’m happy that they’re going with this.”
Bannister tabled the Electricity Rate Reduction Bond Bill in the House of Assembly earlier this month, as BPL attempts to tackle its more than $300 million legacy debt and looks to raise another $350 million. Of the $650 million BPL is seeking to raise, $321 million is slated to repay BPL’s existing legacy debt, $70 million is slated for the completion of a phase 2 expansion of the Wartsila generation facility, $28 million is slated for solar installations across Abaco and other Family Islands, $15 million is slated toward the conversion of Family Islands to liquefied natural gas, $30 million is slated for an advanced metering infrastructure project on New Providence and the remaining toward infrastructural upgrades at BPL stations.