Bahamas Power and Light (BPL) is not seeking a tariff rate adjustment although the Utilities Regulation and Competition Authority (URCA) is about to conduct a comprehensive tariff review.
BPL Chairman Dr. Donovan Moxey said while the power company is supportive of the review, it is not requesting any changes to the current tariff rates.
“This is the very first time, starting January this year, that URCA has been able to come in and do a tariff review on BPL. When BPL was initially formed, it essentially got a tariff review holiday from URCA in terms of actually getting to review our financials and our operations to really determine that the path we were charting was actually justified. That’s what happened earlier this year, URCA reached out to us and indicated that they are going to look at everything associated with our operations and they are going to do a tariff review,” he told Guardian Business.
“To be clear, it does not mean that BPL is seeking a tariff increase or a tariff adjustment or a tariff rate change. That’s not coming from us at all. What you see here is URCA essentially carrying out its regulatory duties by looking at the utility and making a determination if the tariff that we’re charging is consistent with our specific financial position.”
As it stands, the rate and total charge to customers for the first 800 units (kilowatt hours) of electricity is about 0.15 cents per unit and the rate and total charge for each unit of electricity used above the first 800 units is 0.1841 cents per unit.
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.
BPL is currently seeking to place a rate reduction bond (RRB) on the capital markets to raise funding to pay of legacy debt and invest in new infrastructure. The bond is expected to be paid off via a fee added to customer bills.
BPL has said that whatever considerations are made by URCA in relation to a tariff change should not be determined by the RRB.
Earlier this month, URCA released its “Tariff Review Framework, Guidelines and Procedures for Public Electricity Suppliers”, noting that the rationale for the tariff review is to assess the continuing appropriateness of tariffs, both in terms of their level and structure.
“As the regulator, URCA’s aim is to find the right balance between the interests of the consumers, of the utility and the government. In short, consumers should not pay more than necessary to receive electricity service of a given standard. The utility should be able to charge tariffs in such a manner that it can cover all its costs and this includes operating, maintenance and investment costs; and finally, the government needs to keep the long-term growth and economic development of The Bahamas in view and thus wants present tariffs to support improvements and future investments in electricity supply,” URCA notes in the document.