NO RATE HIKES!
The Grand Bahama Port Authority (GBPA) has had the opportunity to review the Hurricane Matthew costs incurred by the Grand Bahama Power Company (GBPC), to restore electricity to Grand Bahama Island, in accordance with the Electricity Regulatory Framework & Operating Protocol Agreement of 2013.
We have verified power restoration costs quantified at $27.5 million comprising extensive labour and materials, which were required during the island-wide hurricane restoration exercise. The GBPC recovery operation involved local and off-island crews – without which it is estimated the restoration would have taken 60 weeks (15 months) rather than six weeks. The adverse economic impact resulting from a slow restoration – with its extended hardship and inevitable loss of business, tourism, trade and jobs – would have implied costs many times higher for the Grand Bahama community as a whole and possibly proved irremediable, according to studies undertaken.
The Hurricane Damage Assessment Summary provided by GBPC included: 1,362 damaged transformers, 2,025 damaged poles, 1,150 damaged brackets, 6,000 damaged insulators, 3,090,000 feet of downed conductor wire and 1,000 damaged arrestors. Technical experts, 200 additional linemen plus local linemen worked over 95,000 hours. Other workers and 130 additional pieces of mobile equipment were brought to bear on the natural disaster, a Cat4 Hurricane Matthew which struck Grand Bahama with full force on October 6th destroying virtually the entire island’s electrical Transmission and Distribution (T&D) system.
The restoration criteria were principally: to complete the unprecedented restoration safely; to execute the restoration in a manner which inspired confidence by the Regulator, the Government of The Bahamas, the residents of Grand Bahama, existing licensees, businesses and potential investors; and to restore electricity supply responsibly in a timeframe which would minimize the adverse economic impact of a protracted island-wide power outage. Top priority went to energizing the city water supply system to provide running water and emergency services. In addition, high priority was given to restoring services for as many customers as possible in the shortest timeframe, continuity of industrial sector operations and restoring tourism-related assets.
GBPA’s technical Electricity Regulation expert consultant from the US spent last week in meetings with GBPC’s financial team in Freeport. Hurricane-related expenditure was examined in detail and we are fully satisfied that the relevant costs were properly and prudently incurred. Accordingly, these uninsurable costs have been approved by the GBPA and will be recovered over a five-year period commencing January 1, 2017.
In the course of our meetings with GBPC executives Sarah MacDonald, Director; Archie Collins, President and CEO; and Tony Lopez, CFO; the GBPA expressed a strong desire that such costs should not result in an increase in energy billing to customers. The GBPC concurred, and submitted an application which outlines a five-year plan to offset storm restoration costs through prudent cost management and fuel purchasing.
GBPA Vice Chairman Sarah St. George expressed satisfaction.
“As promised in our briefing of November 16th, there will be no increase to customers’ rates for the next five years when compared with 2016. In addition, GBPC has also agreed to delay the previously approved Hurricane Self Insurance Fund until Hurricane Matthew costs are fully recouped. We wanted to announce this as soon as possible to reassure everyone of rate stability as we move towards the eve of 2017”.
“The Hurricane has been a traumatic event for us all, but the power company deserves great credit for its handling of the power restoration at every level. The physical restoration was phenomenal in scope and pace, and it is a win-win situation for the island to go forward with no increase in rates over the next five years, and with an even better storm-proofed T&D system. As regulator, we understand the cost issues faced by the power company and the price issues faced by consumers without losing sight of the intrinsic value of a high quality electricity service. We are extremely pleased with this outcome, which is to everyone’s benefit and affords us a brighter future,” said Ms. St. George