by Larry Smith
The new Progressive Liberal Party government, which took office in May, has issued its first statement on the future of energy in the Bahamas.
In a communication to parliament last week, Environment Minister Kenred Dorsett said the PLP government was committed to lowering the cost of electricity by continuing the previous FNM government's upgrade of generating facilities on New Providence.
"Reliability upgrades and replacement and rehabilitation of auxilliary equipment, and considering additional heavy fuel baseload generation, is an integral part of reducing electricity prices, and is a priority for the Bahamas Electricity Corporation," he said. "Increasing baseload generation could save BEC $100 million annually."
But former BEC Chairman Michael Moss said this would cost hundreds of millions in upfront costs that the utility simply could not afford. "To achieve $100 million in savings would mean doubling the installed capacity at Clifton Pier," Moss said. "BEC's bottom line cannot sustain that, so unless the government is coming to the rescue I don't see it happening."
Dorsett also said the government was considering serious proposals from the private sector for the production of energy from solar plants, waste-to-energy plants, ocean thermal conversion facilities and wind farms. None of the proposers was identified, but a quick review of this site will confirm that talks have been ongoing with a variety of investors for years.
Perhaps the most substantive part of the minister's communication was his confirmation that the government would "work assiduously" to amend the 1956 Electricity Act, introduce a Renewable Energy Act with provisions for net billing, and create an independent sector regulator. Reform of the regulatory framework for energy was a key recommendation made by German consultants to the previous government.
"We must remove the legal impediments of exclusive rights for the generation and sale of eletricity," Dorsett said. "The prohibition of self-generation and interconnection to the grid." He added that incentives would be put in place to help reduce energy demand and promote the use of alternative energy sources.
These incentives would include further reductions of import duties on energy-efficient appliances, as well as tax deductions for businesses that carry out independent energy audits and undertake energy conservation measures. He said the government would also conduct energy audits and retrofit public buildings with solar panels.
Dorsett said the Bahamas Electricity Corporation would pursue alternative sources of fuel, such as liquified natural gas or compressed natural gas, in an effort to reduce costs. BEC Chairman Leslie Miller has also talked about negotiating a long-term fuel supply contract with the Venezuelan state oil company - PDVSA - in the belief that this will cut fuel costs.
But former Chairman Michael Moss told the Nassau Guardian that he doesn't see how any deal with Venezuela could make the price of oil for the Bahamas cheaper in the long term. Venezuela is bound by OPEC pricing and production quotas, but the country operates a regional alliance called Petrocaribe that provides for deferred payments, but at market prices.
"At some point it must be paid," Moss said. "It's low-interest credit - like going to the gas station and buying your fuel with a credit card. I don't think the Bahamas wants to increase its debt at this point."
Forecasting a public-private partnership for the production of solar power by BEC, Dorsett also said consumers should be encouraged to generate their own renewable energy.
"In time we can become known as the islands in the sun for our tourism business as well as for power generation. The Bahamas can and will become a world leader in alternative energy, creating hundreds of good-paying jobs and economic opportunities for Bahamians."