NASSAU, BAHAMAS – A Bahamas Chamber of Commerce executive has called into question several elements of the recently tabled Electricity Rate Reduction Bond (ERRB).
Debbie Deal, head of the Chamber’s energy and environment division, told Eyewitness News Online Bahamas Power & Light (BPL) consumers should not be made to continually pay for inefficient service and decades of mismanagement.
Deal said it was disappointing the ERRB’s introduction made no mention of renewable energy, which likely suggests that Bahamian consumers will be made to bear the cost of fuel charges in addition to fee adjustments related to the bond.
“I understand that the historical debt has to be refinanced,” said Deal.
“I totally get that but this RRB is talking about resulting in better outcomes for all Bahamian households and businesses even though the structure of electricity bills will change and then it talks about how by doing this we will be able to get reduced fuel costs and a more efficient generation plant.
“This will actually double the burden on Bahamians because we are not getting rid of the debt we are just refinancing the debt and adding more to it. The Bahamian people have to pay for it and have not been getting decent electricity.”
She continued: “It seems as though the purpose of this rate reduction bond vehicle is to really ensure that the investors get their interests and keep the company’s balance sheet clean so they can go and borrow more money.
“There is nothing in there about alternative energy. They are simply talking about cheaper fuel costs but will we even see it. This is absolutely insane. I understand that they have to refinance but how many times do the Bahamian people have to pay?”
On Wednesday, the Government tabled an Electricity Rate Reduction Bond Bill 2019 which will allow Bahamas Power and Light (BPL) to restructure more than $320 million in inherited debt, and secure more than $350 million in new funding to address longstanding issues.
The purpose of the ERRB 2019 Bill is to establish a legal framework for the organization of the Bahamas Rate Reduction Bond Limited (BRRBL) and the issuance of rate reduction bonds that will be secured by the property or other assets of the BRRBL for the sole purpose of indirect payment and satisfaction of the rate reduction bond financing liabilities.
The Bahamas Rate Reduction Bond Ltd, is the special purpose vehicle that will be responsible for issuing the bonds and making investor interest payments.
The Bill was welcomed by BPL, with its Chairman Dr Donovan Moxey indicating in a press statement that the proposed Rate Reduction Bond issue will ultimately result in “better outcomes” for all Bahamian households and businesses even though the “structure” of electricity bills will change.
Apart from paying out BPL’s $321m legacy debt, the RRB will also provide $350m in new financing to enable BPL to invest in its generation and transmission and distribution network.
The Order to issue the bonds, according to the Electricity Rate Reduction Bond Bill 2019, has to “approve the imposition and collection by BPL of the rate reduction bond fee” and stipulate the initial level at which this will be set.
The Bill, which will replace the Act passed previously by the former Christie administration, provides that the fee can be adjusted “at a minimum semi-annually – to ensure that the collection of such fee will produce sufficient revenues to pay all ongoing financing costs as the same become due and payable”.
The Bill says fee adjustments “will take into account historical and reasonably foreseeable differences between amounts billed and amounts collected”, listing “customer defaults and delays” as a key factor determining this variable.
“That is insane, it’s unbelievable,” said Deal.
“Why should I pay my bill on time if I am going to be penalized for it and if Im going to have to pay for other people who don’t. That offers no incentive to customers who actually pay their bills on time,” he added.