While the government is concerned about the planned electricity rate increase that is about to hit Grand Bahama, Deputy Prime Minister and Minister of Finance Peter Turnquest said yesterday that it seems like the only way to fund the CAD$15 million cost of repairs to the electricity infrastructure downed by Hurricane Dorian.
Turnquest, speaking to the media yesterday, added that it is important for the Grand Bahama Power Company (GBPC) to have the resources to repair the transmission lines to East Grand Bahama, so that developments that need to start and those that need to be restarted can begin.
“Obviously any increase in any utility cost or any tax cost is of concern to us as representatives, as well as to the government,” Turnquest said.
“This unfortunately is one of the costs which I think is unavoidable. That fact of the matter is we need to restore services to the entire island and that comes at a cost.
“And so we’ve had conversations with the power company since the storm as to how we facilitate this restoration and unfortunately this seems to be the only option that is available to us to ensure the efficient restoration of power.
“It is important that we extend those power lines out to the east, because there are projects that are waiting right now to get started and to begin reconstructing and expanding in some instances; and so again while it is certainly regrettable, unfortunately it’s necessary.”
Emera, the parent company of the GBPC, gave the go-ahead for the rate increase, which was revealed in the company’s most recent financial statements.
“It is currently estimated that restoration costs for GBPC self-insured assets will be approximately US$15 million,” the financial statements note.
“In January 2020, the GBPA (Grand Bahama Port Authority) approved the recovery of these costs through rates over a five-year period. Approximately US$12 million (CAD$15 million) of these estimated costs were incurred in 2019 and recorded as a regulatory asset.”
The statements also explain that GBPC is still dealing with restoration costs from 2016 associated with Hurricane Matthew; and the costs from the decommissioning of a steam turbine in 2012.
“Hurricane Matthew costs are being amortized over five years and included in the rate base as approved by the Grand Bahama Port Authority for full recovery. The balance as at December 31, 2019 is $23 million,” the statements note.
Also referenced is stranded cost recovery due to the decommissioning of a GBPC steam turbine in 2012. “The GBPA approved the recovery of a US$21 million stranded cost through electricity rates; it is included in rate base for 2019 and 2018 and is expected to be included in future years.”
Turnquest said these costs are the reason long-term risk mitigation strategies will be important.
“The government and private entities need to ensure that we spread this risk over a period and not just after an event; that we build in a more resilient way so that we can deal with these storms that are predicted to be ever increasing and frequent. And again spread the risk a little bit more so it doesn’t become such a burden after an event, particularly when people are suffering as we know,” he said.
Turnquest added that the government will ensure that after GBPC has recovered its costs that it reduces its rates.
“The power company in its statement has said that this is specifically for hurricane recovery costs and so we certainly expect and we will hold them accountable to that statement,” he said.
“This is not a profit making fee, this is to recover the cost of reconstruction and so we will hold them to that as we move forward.”