By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Bahamas Federation of Retailers co-chair yesterday warned that electricity fuel charge hikes of up to 163 percent will be “the final nail in the coffin” for COVID-ravaged businesses yet to regain financial viability.
Tara Morley told Tribune Business that many retailers and other companies had undertaken such “extraordinary” cost-cutting efforts during and after the pandemic that there was little left to “trim” as she slammed Bahamas Power & Light’s (BPL) proposed fuel tariff increases as “completely insane”.
Describing the situation as “infuriating for every single Bahamian citizen in the country”, she added that it was “mind boggling” that this nation has yet to begin the transition to renewable energy at an great scale despite its abundance of sun and other natural resources.
Demanding that BPL and the Government “stop playing around and fix the problem”, Ms Morley told this newspaper it was “absurd” that electricity costs for Bahamian retailers - which are almost equivalent to the monthly rental costs they pay - are now poised to increase even further.
The Davis administration and BPL have sought to emphasise that the fuel charge increases should be short-term in nature, and this component - which typically accounts for between 50-60 percent of total customer bills - will start to reduce in about 11 months’ time from September 1, 2023. And, by giving advancing warning and phasing the increases in, they are hoping businesses and households have sufficient time to prepare and mitigate any impact.
Ms Morley, while acknowledging that other countries are going through their own respective energy crises, was unconvinced that Bahamian retailers and the wider private sector will emerge unscathed even if BPL’s fuel charges start to moderate as the state-owned utility monopoly is predicting.
“Honestly it’s completely insane that we are continuing to have these astronomically high energy costs here in the country,” the Federation co-chair told Tribune Business. “We have a lot of businesses that are already struggling and all this is going to do is exacerbate the problem. We’ll see some businesses no longer able to make ends meet, so that means less customers for BPL.
“There’s no doubt this is going to be the final nail in the coffin for some businesses. For a lot of retailers electricity is almost the cost of rent. It is absurd that now that becomes a even larger expense... People are going to have to look at every single cost on their books and operate accordingly because you cannot operate without light.
“I feel so many people have done extraordinary cost-cutting on the back of COVID so I don’t know how many can trim back more. That’s why I think it’s going to be a matter of some people having to shut down. That’s always something that’s on the line.” Many businesses were yesterday crunching the numbers to determine how much their energy bills will likely increase over the next 15 months, with the highest users bracing for six to seven-figure rises.
BPL has segmented the fuel charge increases, which all customers will see for the first time in their November billings, into two categories in what it described as an effort to protect the most vulnerable low income families. Customers that consume less than 800 kilowatt hours (kWh) of electricity per month will see their fuel charge rise via a series of rolling two cent quarterly increases, while for those using more than that threshold it will be a 4.3 cents per kWh quarterly leap.
However, analysis seen by Tribune Business shows that, at the peak of the fuel tariff increase between May 1 and August 31, 2023, Bahamian families consuming 800 kWh or less will suffer up to a 76 percent hike compared to the current 10.5 cents per kWh rise.
That three-month period also represents peak summer, coinciding with maximum demand and the greatest energy consumption. As for businesses and households that use over 800 kWh, fuel charges are set to increase by 138 percent, 163 percent and 138 percent - more than doubling compared to the present 10.5 kWh rate - during the periods of March 1 to May 31, 2023; June 1 to August 31, 2023, and September 1 to November 30, 2023.
Having warned that business failures and closures may well result from BPL’s fuel cost spike, Ms Morley said it was “extremely frustrating” that The Bahamas has made so little progress in replacing fossil fuels with cleaner renewable alternatives despite having spent the better part of two decades talking about such a move.
“A solution seriously needs to be put into effect,” she told Tribune Business. “This is getting infuriating for every single Bahamian citizen in the country. Forget businesses. As a citizen I’m outraged. It’s totally mind boggling to me. I don’t understand.
“Everyone globally is going through increases in rates, so I can appreciate everything is going up, but it’s frustrating that we as a nation have not addressed our severe energy issues. It seems more important than ever, and we need to be shifting away from these fossil fuels. For a country that relies on sun, sand and sea for its tourism marketing, with sun being the first word, why would they not invest more in solar infrastructure?
“It’s not only a much greener solution but also a more economical solution for consumers and businesses alike. I think the Government and BPL need to stop playing around and fix the problem,” Ms Morley continued. “Obviously it’s [the BPL fuel charge increases] not positive news for the nation. I just feel like it’s consistently negative, negative, negative news coming out of what’s going on with energy in the country.
“This problem has been in existence for some time now. Why are we not addressing it? I would have less of an issue with the rate increase if, in a year’s time, we switch to solar and be more energy efficient. That’s not the case. There’s not been any positive movement in energy for decades now. I just wish there was some way to get moving forward.”
Alfred Sears KC, minister of public works and utilities, yesterday sought to reassure Ms Morley that the “movement” she is seeking is about to happen. He told the House of Assembly yesterday that BPL was “in the advanced stages of an implementation plan” for a 60 Mega Watt (MW) solar photovoltaic (PV) power generation plant for New Providence, which was touted as reducing the state-owned utility’s annual $300m fuel bill by some $23m.
Pledging that BPL is also set to implement a Battery Energy Storage System (BESS) in New Providence over the next 12 months in a bid to smooth out electricity grid volatility, and facilitate the integration of renewables, he added that the Government is also moving to roll-out microgrid solutions through the Family Islands.
Sir Franklyn Wilson, FOCOL Holdings’ chairman, told Tribune Business that the steep fuel charge increases unveiled by BPL were “very concerning” but unavoidable given the surge in global energy costs that peaked at $127 per barrel in March 2022.
“It’s negative any way you skin the cat,” he said. “It’s energy, so you’ve got to pay more in expenses and overhead. There’s no spin on that. But the fact of the matter is this. How can you avoid it? You have to pay for the fuel. No one will give you the fuel. You have to find ways and means to reduce demand. You have to find ways in the short run to conserve. That’s all you can do.”
