NASSAU, BAHAMAS — Grand Bahama Chamber of Commerce President Dillon Knowles is cautioning that government plans to acquire Grand Bahama Power risk shifting costs to taxpayers without addressing the structural issues driving electricity prices on the island.
“The Government justifies acquiring GB Power on the basis that electricity prices on Grand Bahama are higher than elsewhere in The Bahamas,” Knowles said. “However, this comparison ignores economies of scale.”
Knowles said electricity costs in smaller markets across the Family Islands are comparable to Grand Bahama, while New Providence benefits from significantly lower costs due to its size.
“BPL’s rates are standardized nationwide, meaning New Providence subsidizes smaller islands,” he said. “As a result, Family Island rates are artificially low and would likely exceed Grand Bahama’s if priced independently.”
Knowles added that Bahamas Power and Light operates as a state-owned enterprise and is effectively subsidized by taxpayers, including those in Grand Bahama.
“Its debt now exceeds $500 million and is unsustainable, forcing the Government to privatize parts of BPL to address financial and reliability failures,” he said.
By contrast, Knowles said Grand Bahama Power, as a private entity, does not have the option of operating at a loss and must recover all costs through customer rates.
“Recent hurricanes damaged generation capacity, forcing reliance on expensive rental generators,” he said. “A $50 million system overhaul and Government-mandated solar expansion is needed, but cannot be justified without growth in demand.”
Knowles said neither Emera nor the Government can reasonably absorb those costs without losses or price increases.
“Government acquisition would simply align Grand Bahama’s rates with the rest of the country by shifting losses onto taxpayers,” he said. “This does not solve the underlying problem, nor does it improve long-term reliability.”
He warned that such a move could weaken service on the island.
“In fact, it risks reducing Grand Bahama’s relatively strong reliability to the national average, which experiences frequent outages,” Knowles said. “Governments do not run businesses better than private investors.”
According to Knowles, the long-term solution lies in expanding demand rather than restructuring ownership.
“The real solution is increased demand,” he said. “Grand Bahama needs population growth and economic investment to achieve the scale necessary for lower electricity costs.”
That, he said, will require coordinated action.
“That requires Government and GBPA to collaboratively reform the regulatory environment and attract export-driven industries and skilled workers,” Knowles said.
“Anything else is a short-term measure that cannot be sustained,” he added. “Turning GB Power into a state-owned enterprise is not in the long-term best interest of Grand Bahama.”
